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AmericasJune 1 2017

How will Latin America's infrastructure needs be financed?

As recession and scandals continue to blight the region's economy, can Latin America’s infrastructure needs dovetail with those of international banks and investors? Silvia Pavoni reports.
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Infrastructure finance has changed over the past decade. Traditionally, banks’ balance sheets bore the risks of those long-term loans; now, feeling the squeeze of heavier capital constraints, lenders prefer to keep their project financing at shorter tenors and structure bonds instead. Attracting new sources of funds in the shape of specialists or institutional investors is vital both for banks wanting to remain active in the infrastructure space and for governments needing to get public works off the ground.

This is important for Latin America, where infrastructure needs are pressing and largely unmet. The region’s infrastructure gap would require $180bn a year to fill, according to industry estimates, while government budgets have been drained by the economic troubles of the past two years, from Brazil’s deep recession to Colombia’s slowing growth.

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Silvia Pavoni is editor in chief of The Banker. Silvia also serves as an advisory board member for the Women of the Future Programme and for the European Risk Management Council, and is part of the London council of non-profit WILL, Women in Leadership in Latin America. In 2019, she was awarded an honorary fellowship by City University of London.
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