Gillian TETT, US Managing Editor Financial Times; Gloria ALONSO, Director of the National Planning Department, Colombia; Christine LAGARDE, Managing Director, IMF; Nicolas DUJOVNE, Minister of Treasury, Argentina; Vera SONGWE, Executive Secretary of the United Nations Economic Commission for Africa; Paschal DONOHOE, Minister of Finance, Ireland
This panel discussion raised the paradox of how boosting investments in infrastructure without spending too much public budget. Christine Lagarde, Managing Director of the IMF pointed to a clear shortage of public investment in advanced economies of 1,7% compared to the 90s. There is a need to develop tools to manage good and well-prepared investment projects that are attractive for the private sector. Especially developing countries are in need of private sector investment. The problem identified by Christine Lagarde is that, as for now, the returns are not attractive enough for the private sector. The issue of investing in soft infrastructure was mentioned, meaning services which are required to maintain the economic, health, and cultural and social standards of a population.
Nicolas Dujovne explained that during the Argentinian Presidency of the G20, investments were put into the center of the discussions as they are key to economic prosperity and growth. Only few parts of investments go to infrastructure.
Gloria Alsono stated good practices used in Colombia on how to deal with the budget in a more efficient way and how to improve budget quality in expenditures. She also pointed to the fact that Colombia is trying to connect many regions and people to the market to enhance a better and inclusive growth.
Paschal Donohoe pointed to the importance of adopting a long-term approach when talking about investments to give the private sector more certainty.
Vera Songwe pointed to the Sustainable Development Goals (SDGs) explaining that each of them represent a cost. The SDG on health would cost $60 billion a year while the one on infrastructure would be around $80 billion a year. When talking about the SDGs every country has to prioritize.
An important issue in Africa is that domestic savings are not mobilized. Huge pension funds do exist. Kenya for example gathers $30 billion savings that have not been used. In Africa the state funds most of the projects. A diversification of funding sources is necessary.
The panel concluded that they are many impediments to private funding, among them:
- Lack of pipeline for bankable projects
- Lack of standardization
- Lack of data
However, the financial means for investment are given. Capacity Building has to be improved in the public sector especially of low and middle income countries. Also the need of fighting corruption and introduce external and internal audits in the countries was mentioned.