Publication: New Private Infrastructure Projects in Developing Countries Continue to Take Place But Projects are Being Affected by the Financial Crisis
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2009-03
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2012-08-13
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Throughout the financial crisis, new private activity has continued to take place in developing countries with projects being tendered and brought to financial closure. In the first months of the full-scale of the financial crisis (Aug-Nov 2008), the rate of project closure was 26 percent lower than in the same period in 2007. However, since then private activity recovered and the project closure rate in Aug-Dec 2008 was just 15 percent lower than in the same period in the previous year. The slowdown reflects an initial impact of the financial crisis which has made financing (both debt and equity) more onerous and difficult to secure. Infrastructure projects are facing higher cost of financing, and lower demand for infrastructure services is beginning to impact some sectors. The major impact to date is projects being delayed, and, to a lesser extent, cancelled. Transport and energy are the worst affected sectors so far, while Europe and Central Asia (ECA) and upper middle income countries are the most affected groups of countries. It is too early to assess the full impact of the crisis on new Public Private Infrastructure (PPI) projects. Financial markets remain volatile while the financial crisis has now turned into a global economic crisis. As the 'flight to quality' sets in for banks and other financiers, the likely impact will be more stringent financial conditions, not only via higher cost of financing but also with lower debt/equity ratios, reduced maturities and more conservative risk allocation structures.
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“Izaguirre, Ada Karina. 2009. New Private Infrastructure Projects in Developing Countries Continue to Take Place But Projects are Being Affected by the Financial Crisis. PPI Data Update; Note No. 21. © World Bank. http://hdl.handle.net/10986/10991 License: CC BY 3.0 IGO.”
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Transport is the worst affected sector so far, while the most affected group of countries are middle-income countries, especially in the Eastern Europe and Central Asia region.Publication Assessment of the Impact of the Crisis on New PPI Projects - Update 4 : New Private Infrastructure Activity in Developing Countries Recovered in the First Half of 2009 Thanks to the Electricity Sector, But the Crisis Continues to Impact Projects(World Bank, Washington, DC, 2009-10)This review of new private participation in infrastructure (PPI) projects, covering the period up to June 2009, sheds some light on the recent activity and the short-term impact of the financial crisis, compared with the previous updates on the impact of the crisis, this note incorporates several improvements: a larger sample size (714 projects versus 522 in the previous update) over a longer period of time (from January 2008 to June 2009 compared to the previous update, which covered January 2008 to March 2009). 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