ISLAMABAD, July 10: The Board of Executive Directors of the World Bank Group has approved a new Infrastructure Action Plan (IAP), signalling a reinvigorated embrace of infrastructure development through project financing and private-public partnerships.
An announcement of the World Bank has said the action plan was developed in response to strong client country demand for infrastructure, and it encompasses innovative ways of financing infrastructure projects.
Under the plan, the World Bank Group will apply new and existing instruments more effectively, including a spectrum of public-private partnerships, and project financing at regional, national and sub-national levels. The plan will also strengthen the knowledge base and country analytic work in infrastructure to provide a better framework for policy dialogue.
The IAP highlights linkages between infrastructure and the millennium development goals agreed to by world leaders in 2000. Infrastructure development is one of the key pillars of growth, along with macroeconomic stability, and good governance and the existence of a business-friendly regulatory environment.
“It can either play a direct role, as it does through the provision of safe water and its impact on reducing child mortality, or an indirect role, as with the contribution of transport to increasing children’s access to education,” said WB president James Wolfensohn.
The world bank vice president for infrastructure Nemat Shafik said that during the 1990s, the Bank Group moved towards relying more on the private sector to handle infrastructure investment. However, private financing for infrastructure plummeted to $58billion in 2002 from $128 billion in 1997.
“We realized that such reliance on private sector financing would not be sufficient either,” she says. “Going forward, the Infrastructure Action Plan will help us work on infrastructure service delivery along the entire spectrum of public and private involvement.”
The statement said the Bank expected to take on more infrastructure projects like the Pamir Power project in Tajikistan, where International Development Association (IDA) financing helped reduce average tariffs and provided a subsidy for lifeline electricity tariffs for the poor.