Impressions from the IMF / World Bank 2024 Annual Meetings

MMM Infra Blog No. 10 9 November 2024

The Annual Meetings of the International Monetary Fund (IMF) and the World Bank took place in Washington from 21-26 October 2024, and there were a number of significant discussions on the topic of promoting private sector investment in infrastructure in Emerging Markets and Developing Economies (EMDE) countries.

On the 21st, I attended the meeting of the Global Infrastructure Facility (GIF) Advisory Council. The GIF is a global collaboration platform focused on helping EDME governments bring sustainable climate-smart infrastructure projects to the marketplace of investors, and its Advisory Council event was a gathering of the GIF’s funding governments, beneficiary countries and private sector advisory partners (https://www.linkedin.com/company/global-infrastructure-facility/posts/).

At the October Advisory Council meeting, we heard of the important work which the GIF has undertaken, alongside the IMF, in responding to a request from the G20 Infrastructure Working Group to provide a framework for addressing foreign exchange risks in infrastructure – a critical issue in Public-Private Partnership (PPP) projects, particularly in EDME countries. The forthcoming report is entitled Addressing Exchange Rate Risk in Infrastructure Projects in EMDEs – and the framework therein will definitely be worth studying.

During the GIF Advisory Council meeting, there was also an outstanding presentation on the São Paulo Smart Mobility Program, which involves an extremely ambitious rail and metro network upgrading which is being undertaken by the Municipal Government of São Paulo, with the assistance of the GIF, the International Finance Corporation (IFC), and other donors (https://www.globalinfrafacility.org/gif-events/sao-paulo-mobility-program-market-outreach). The program is expected to mobilise approximately USD 50 billion in investment through PPPs, significantly increasing sustainable mobility options throughout São Paulo State.

Another highlight for me was the well-attended presentation given by the consortium of Multilateral Development Banks (MDBs) and other International Financial Institutions (IFIs) which collectively maintain the Global Emerging Markets Risk Database (GEMs). This consortium, which began in 2009 as a joint initiative between the IFC and the European Investment Bank, has created a consolidated database showing the performance of financing provided by the member organisations to borrowers in a wide range of EDME countries – both in terms of loans to private investors and loans to State-Owned Enterprises. The presentation that was given during the IMF/World Bank Annual Meetings showcased the recently-released GEMs report on Default and Recovery Statistics: Private and Public Lending 1994- 2023 (available at https://www.gemsriskdatabase.org/#PRESS%20RELEASE), which provides data on how the MDB and other IFI loans have performed, in terms of default rates and the associated ‘recovery rates’ (i.e., the extent to which defaulting loans have been recovered). The report reveals that the annual average default rate for MDB/IFI loans to private businesses in EDME countries is very low: 3.56%; while the recovery rates are extremely high: with half of the defaulted loan agreements having a recovery rate greater than 90%.

This is critically important data, since it helps to challenge the widespread – and erroneous – perception that infrastructure investments in EMDE countries are highly risky. Indeed, this is why the G20 has been encouraging the GEMs consortium members to release this information, to give international commercial banks and other prospective investors more confidence to participate in infrastructure projects in emerging markets and developing economies.

All in all, the IMF/World Bank Annual Meetings week was an encouraging one, showing the potential for transformational investment in private sector infrastructure markets in those countries where it is most needed.

This blog is in a series that appears on this website. It has been written by Mark Moseley, the Principal of Moseley Infrastructure Advisory Services (Mark.Moseley@MMMInfra.com). Unless otherwise noted, the copyright in this blog is owned by Moseley Infrastructure Advisory Services. The blog is made available for use under a Creative Commons Attribution 3.0 Licence, whereby users are free to copy and redistribute the contents of the blog, if they give credit to the author, and clearly indicate any changes that have been made.