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PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY
REGIONAL UPDATE
April 2012
PPIAF’S WORK IN LATIN AMERICA AND THE CARIBBEAN
Latin America has the most unequal income distribution in the world as well as high
rates of extreme poverty.
Since inception PPIAF has provided $24,780,304 in funding to 122 projects in the Latin
America and Caribbean (LAC) region, representing 12% of PPIAF’s total portfolio.
Brazil leads with the most funding received ($3.1 million) for 15 activities, but is closely
followed by Colombia with 17 projects worth $2.9 million and Peru with 12 activities
worth $2.9 million. Twenty-six region-wide activities worth $4.7 million have also been
approved since inception. Multi-sector activities represent 39% of PPIAF’s portfolio in
the region, followed by 21% in transport and 18% in water and sanitation.
In recent months, PPIAF has approved one activity in Uruguay to provide transaction
assistance with the review of existing road projects, assess their overall bankability,
and identify financial instruments for the public-private partnership (PPP) structure.
Another significant activity recently funded by PPIAF seeks to improve the forestry
concession model in the Amazon, one of the first concessions of sustainable forestry
management concessions carried out by the Brazilian Forest Service. On the subnational
side, one noteworthy activity recently approved through PPIAF’s Sub-National
Technical Assistance (SNTA) program supports the feasibility study for the development
of tradable air rights instruments to mobilize private financing in Bogotá, Colombia.
The LAC region has consistently led the way in terms of private participation in infrastructure. At the
beginning of the 1990s, all developing countries in the region suffered from large infrastructure defi -
cits, dismal service standards, tight fi scal constraints, and deep problems with the traditional mode
of public infrastructure service delivery. There were weak incentives for effi ciency and infrastructure
delivery was often embedded within patronage-drive political systems. In most of these countries,
the decline in public fi nance was larger than the increase. The exception was Colombia, where the
decline was slight and, on average, public investment levels remained roughly unchanged (albeit
with major fl uctuations) throughout the period.
In recent years, however, privatization has slowed dramatically in the region. Disparities in LAC are
also refl ected by the different maturity levels of private participation in infrastructure markets across
the region. Numerous countries in the region are moving towards a second phase of programs for
private participation in infrastructure—mostly through PPP schemes—while other countries are just
beginning the process. As of 2012, several countries in the region—including Brazil, Chile, Costa
Rica, and Peru—have created government departments to foster investment through PPPs. Most
recently, in December 2011 the Mexican Congress approved the Public-Private Partnership Act,