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Innovative partnerships

The Asian Development Bank urged developing member countries to explore innovative partnerships to fund crucial infrastructure projects at a time when government resources are challenged by pandemic response.

ADB advisor Yesim Elhan-Kayalar of the Economic Research and Regional Cooperation Department said developing countries in Asia have relied on partnerships with the private sector to finance infrastructure projects but this could be “in jeopardy” amid the prevailing crisis.

She said that while governments are still keen on using public-private partnerships, many investors are now reluctant to pursue long term infrastructure investments because of uncertainties over economic recovery.

Many private companies are now preserving cash flow to manage the delays in existing project timelines and are not taking on new investments. Government have also had to reallocate funds to prioritize support projects for furloughed workers, struggling businesses and health care systems.

“This approach will not be financially sustainable over an extended period,” said Elhan-Kayalar.

Among the approaches put forward is to ensure that existing infrastructure PPPs continue construction with increased government support such as extending the concession term, providing credit guarantees, purchase agreements, tax holidays or deferrals, and providing refinancing options. Another is to issue contracts to private construction companies to build fully government-funded public works and at the same time, help them remain in business until they are once again able to obtain institutional financing.

Economies are also urged to support investments in the new normal, such as mass transportation configured for social distancing as well as digital infrastructure. The need for tax reform and prudent borrowing strategies was also raised.

Innovative partnerships between the public and private sector will be a crucial ingredient for economic recovery from the pandemic. In the Philippines, where the private sector has been ready and willing to step up for months, the ball is in the government’s hands. As the world slowly starts to get on the path to recovery, the next few months should show Filipinos the quality of our government.*

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