Financing Growth & Infrastructure

Infrastructure has long been recognized by G20 leaders as a fundamental driver for economic growth.

Physical and digital connectivity ensures inclusive, safe, resilient and sustainable human settlements. The last decades have witnessed an extraordinary urban growth and the trend is expected to continue, but adequate infrastructure and a reliable energy matrix allow regional economies to flourish, while digital infrastructure and collaborative efforts allow innovation to occur in every community, fostering investment and trade.

But most importantly, infrastructure is essential to guarantee a good quality of life and, ultimately, to sustain the social contract between communities and the State.

Estimates indicate that between 3-4% of the global GDP needs to be invested each year in infrastructure to achieve the growth goals and projections of G20 countries. According to estimates, in some regions like Latin America, investment needs may reach 8% per year as the infrastructure gap includes electricity access and drinking water coverage for rural populations.

Yet still an extremely insufficient ratio of the world’s financial funds is directed towards long-term infrastructure investment. This has been a staple of past B20 discussions, but more needs to be done and clear milestones need to be set to measure success.

Externalities impeding private capital flows need to be openly dealt with in order to move forward. By bringing together representatives of the financial community of B20 countries and experts in infrastructure, B20 can help by providing recommendations to foster private investment in well-defined, visible, transparent projects. Furthermore, establishing an adequate role for multilateral banks will ensure the consideration of infrastructure investments as an asset class attracting institutional investors in every infrastructure category.

We all acknowledge the role played by G20 in dealing with global financial crises in the past. But more work may be necessary in regulatory coherence and tax cooperation to foster business development and sustainable GDP growth. B20 will continue to support and actively participate in this discussion.

CHAIR:

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Eduardo Elsztain
Grupo IRSA - Banco Hipotecario
“A very important aspect of the work of the B20 is its promotion of infrastructure as an asset class and the fostering of technical work to facilitate its development. This is increasingly important since modern growth is highly dependent on the transfer of new knowledge and technologies, which, in turn, is facilitated by more and better infrastructure. Therefore, the stable flow of finance for these activities is at the core of sustainable long term growth.”

 

DEPUTY-CHAIR:

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Mario Blejer
Banco Hipotecario
“A neglected aspect of infrastructure investment is its potential beneficial impact on income distribution. While conventionally measured income distribution has recently suffered clear deterioration, the distribution is more equalitarian if we look at `all encompassing´ income, that includes the inputed personal value derived from the utilization of public goods and services. This is particularly true for social infrastructure but it applies also to overall infrastructure investment given its impact on labor productivity growth and wages. Investing in infrastructure can result, therefore, in significant welfare as well as political benefits.”

 

CO-CHAIRS:

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José Manuel González Páramo
BBVA
"Regulatory cooperation between countries and coordinated actions will be paramount to seize new challenges that emerge from digital innovation. This will help also to contribute to a more sustainable and inclusive society."

 

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Enrique Cristofani
Santander Río
“Looking forward, Argentina has a great opportunity to become a regional leader. There is a society and a leadership that want to participate and commit with a better future. Every change starts in society and its leadership, continues in politics and then goes to the economic and financial.”

 

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Timothy Adams
Institute of International Finance
“The B20 is a platform for global private sector leaders to come together to establish and promote a G20 agenda that includes sustainable investment into infrastructure for economic growth.”

 

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John Denton
International Chamber of Commerce
“The massive capital flows into infrastructure from the world’s pension funds are not happening. Why? Because there are just not enough investable projects around. We need to work harder to make this happen.”