Financing Infrastructure Projects Research Articles

Міжнародний досвід фінансування інфраструктурних проєктів

Abstract. Introduction. The article is devoted to issues of international experience in financing infrastructure projects. At the current pace of development, the load on infrastructure in most countries of the world will increase many times over the next decade, and its timely development will become the main guarantee of sustainable growth of the world economy and trade. The design, construction, and expansion of large infrastructure facilities will take years, and decisions regarding their financing mechanisms must be made quickly, which necessitates additional research into this issue. Purpose. On the basis of the conducted research, it was found that the main factors of economic growth will be the increase of humanity (+19% by 2030) to 8.3 billion people, urbanization (the urban population will increase by 40% by 2030; and its share will grow from 52% to 58%), outpacing the growth of population incomes, further development of international trade and tourism. The authors formed the structure of investments in the world for 2020 and found out that the share of state budgets and national funds, according to analysts' estimates, accounts for the main volume of investments in infrastructure - more than 65%. The tendency of the predominance of debt financing in the general structure of liabilities of infrastructure projects has been studied. The results of the OECD study, which was conducted among the largest institutional investors, were analyzed. Results. The research examines modern state proposals for new financing mechanisms, in particular, foreign experience in implementing the prospects of debt and equity financing of international projects, as well as the experience of individual countries - China, India, and Brazil. It has been proven that in the past the investment risks in this area were too high and the profitability was insignificant, which limited the range of investors. Conclusions. Investor interest in infrastructure projects is growing every year, and financing infrastructure projects requires new sources, in particular, an increase in private investment in the industry. It was noted that it is important for Ukraine to take into account and use successful world experience to finance its own infrastructure projects.

Methodology for managing compensatory financing of infrastructure projects in the post–war recovering of Ukraine

Methodology for managing compensatory financing of infrastructure projects in the post–war recovering of Ukraine

Socio-political factors underlying the adoption of green bond financing of infrastructure projects: the case of Ghana

PurposeThere is a pressing need to increase investments in sustainable infrastructure to promote low carbon economic growth and ensure environmental sustainability. Consequently, this study examines the socio-political factors underlying the adoption of green bond financing of infrastructure projects.Design/methodology/approachPrimary data was gathered from experts with advanced experience in, or knowledge of green bonds in the Kumasi Metropolis. To identify respondents with pertinent knowledge that is relevant to the study, purposive and snowball sampling techniques were used. One-sample t-test and relative importance index were used in this study's statistical analysis.Findings‘Training and experience with sustainable finance’ was seen as the most important social factor underlying the adoption of green bond financing of infrastructure projects by the respondents and ‘Governmental tax-based incentives’ was rated as the leading political factor.Originality/valueThis pioneering research attempts to ascertain the socio-political factors affecting the adoption of green bond financing of infrastructure projects. Emergent results of analysis and concomitant discussions add knowledge to fill a void in literature on the social and political factors affecting the adoption of green bond financing of infrastructure projects in developing countries.

Финансовые и экономические условия энергоперехода для национальной экономики

This study reveals the financial conditions and drivers of the energy transition in the world and in Russia. The purpose of the study is to characterize the essence, content and financial conditions of the energy transition for the national economy. The objectives of the article are to study the features of the energy transition models for developed and developing countries; to consider the impact of "sustainable financing" on the energy transition process; to identify the specific financial conditions and risks. It was found that two major concepts of the energy transition have been formed, reflecting the vision of the goals and timing of completion, conditions and financing formats. The analysis of global investments in the energy transition showed high investors’ optimism: the renewable energy sector is the most attractive; the Asia-Pacific region has become the largest region in terms of investment volume; more energy transition financing programs are implemented in the European Union. The author reveals relationship between policies to achieve carbon neutrality and the phenomenon of "sustainable financing" subject to the principles of ESG, which was expressed in the refusal of the world's leading financial institutions to finance any fossil fuel projects, which could lead to higher demands and direct pressure on the energy and oil and gas sector in developing countries. The main financial risks and financial losses that the Russian economy may face in process of energy transition are outlined. Russia, as the largest exporter of hydrocarbons, will have to adapt to the new conditions despite the unprecedented sanctions pressure on the financial system and the withdrawal of major investors from the oil and gas and electric power sectors. First of all, this is cooperation in the BRICS format — both in the energy and in the financing of infrastructure projects, including within the framework of the BRICS New Development Bank activities. State loans, subsidies, grants, tax incentives, etc. may be used as financial measures of state support for the energy transition.

Determinants of Effective Information Sharing in Publicly Funded Infrastructure Projects: A Scoping Review

Using qualitative (content) analysis, we provide a framework highlighting the determinants of effective inter-organization information sharing in developing infrastructure projects. We examined the determinants of effective inter-organization information sharing in publicly funded physical infrastructure projects, focusing mainly on health, education, and transportation projects. The literature search identified 2,330 citations. A review of these abstracts led to the retrieval of 86 full-text articles, of which 40 met the inclusion criteria. Coordination and collaboration were identified as two of the most important inter-organization processes required for the successful development of transportation, health, and education infrastructure projects. These two processes are enabled by several elements of inter-organization information sharing such as human resources and expertise; incentives and rewards; and effective contract management and record-keeping. Our review also demonstrated that for organizations to effectively implement the determinants of inter-organization information sharing, they must first ensure they form effective interpersonal and intra-organization information sharing.

Financing of Large Infrastructure Projects: Chinese Experience and Russian Practice

The purpose of this work is to research the problems of financing large infrastructure projects in Russia and abroad (on the example of China) and suggest ways to improve and develop financing in Russia. The tasks of this work are as follows:Consider the theoretical aspects of financing large infrastructure projects.Make a solution of the problem distribution of project risks of infrastructure construction in Russia.Identify the prospects for improving the Russian practice of financing infrastructure projects based on foreign experience.Explore and find the best financing option for major infrastructure projects.Find new features of financial instruments in the Russian financial market that may create new condition for infrastructure projects.In this work methods of scientific knowledge have been used such as induction, deduction, analysis, synthesis, generalization, description. The object of the research was financing of large infrastructure projects. The subject — problems of financing large infrastructure projects in Russia and abroad (on the example of China).

Analyzing the Truth about China’s Belt and Road Initiative

The Belt and Road Initiative (BRI), formerly known as One Belt One Road Initiative, is China’s and President Xi Jinping’s ambitious policy that globally fosters infrastructure and economic development in an effort to create a trade network with African and European countries with China as the central hub. Founded in 2013, the BRI has historically sought out third-world and developing nations that are abandoned by the West and offered loans to fund infrastructure and economic stimulus projects. However, out of a number of successful projects, a few failed economic ventures in BRI countries resulted in the third world perspective of the BRI inaccurately shifting from mutually beneficial to predatory debt-trap diplomacy. In reality, there is no evidence of China purposely bankrupting BRI countries in order to achieve a secret military or neo - colonial agenda and in fact, China has been a net economic benefit to the majority of BRI countries. This paper will disprove the “debt-trap narrative”, argue for the benefits of the BRI, and recommend that in order to overcome this perceived predatory perspective of the BRI, China needs to be clearer about their interests in BRI countries and reshape the adversarial debtor-collector relationships that they approach BRI countries with.

Analysis of the Practice and Risks of Using Infrastructure Bonds in the Project Financing Market

The article discusses the role and features of project financing of facilities, the need for new instruments and forms of attracting investments that would allow linking debt obligations with the project being implemented. Financial sources of construction of facilities within the framework of public-private partnership are investigated. It has been established that the relevance of the use of infrastructure bonds is confirmed by the lack of financial resources for infrastructure projects, as well as the growing market for non-mandatory pension insurance. It is noted that only the conditions necessary for the targeted use of funds received from the sale of infrastructure bonds and the rules for financing the construction and reconstruction of infrastructure facilities using SOPF bonds are fixed at the legislative level. The goals of creating infrastructure bonds have been determined. The analysis of the ratio of the application of loans and bonds in project financing was carried out, the stages of project financing are considered. Municipal targeted and corporate forms of issuing infrastructure bonds were identified and the main conditions for financing infrastructure projects were formulated. It is noted that despite the fact that infrastructure bonds are reliable, it is necessary to increase their protection against inflation and indicate a competitive yield on securities compared to federal loan bonds. Additional measures are proposed to increase the attractiveness of the infrastructure project. It is noted that an important condition for the completion of infrastructure projects is the effective distribution of risks and effective management of them. Financial, political and project assessment risks were identified as the main risks. The latter are classified as mandatory monitoring and control, since they affect the incompleteness of the project. The advantages and disadvantages of this project financing mechanism are formulated.

Investor Legitimate Expectation and Indirect Expropriation in Domestic Regulation Concerning the Application of Domestic Raw Application

Law No 11/2020 concerning Job Creation (Omnibus Law’) mandates the use of domestic raw materials for all industries in Indonesia. Following the passage of the Omnibus Law, Indonesia issued Government Regulation No 28/2021 concerning Industrial Management and Presidential Regulation No 12/2021 concerning the amendment of Presidential Regulation No 16/2018 concerning Government Procurement of Goods and Services. Both regulations oblige all industries in Indonesia to use domestic raw materials pursuant to the Omnibus Law. In investment law, this kind of policy could lead to indirect expropriation because when an investor makes an investment in a host country, the raw material and machines for production might come from their home state or other states. Furthermore, a public-private partnership contract with investors funding infrastructure projects for at least 50 years using materials agreed upon in advance will lead to indirect expropriation. The method used in this research was legal research theory with statute and conceptual approaches. From this research, the policy of the Indonesian government can be described as indirect expropriation because the regulation is effective and enforced.

Infrastructure Financing through Asset Monetization: Is it Sustainable in the Long-run?

Infrastructure development is a key building block towards enhancing domestic economic growth and sustaining the higher growth trajectory. Therefore, creating new and upgrading existing infrastructure will be critical to improve India’s global competitiveness. Nevertheless, financing infrastructure projects continues to remain the most difficult aspect to tackle with. The National Infrastructure Pipeline (NIP) envisages investing Rs. 100 trillion on infrastructure projects across various States during the five years up to 2025. The Government of India has recently launched a four-year National Monetisation Pipeline (NMP) worth an estimated Rs. 6 trillion, with an aim to unlock value of hitherto unutilized or underutilized public assets in the brownfield projects by engaging the private sector and to tap the operational efficiencies of private sector along with the management of existing physical infrastructure. In addition, this paper provides various perspectives on the asset monetization and its sustainability as a robust infrastructure financing tool.

Can Tax Increment Financing Benefit U.S. Rust Belt Communities?

Place-based economic policies and value-capture instruments are resurging in many American communities looking for alternative ways to fund infrastructure projects and support local economic revival. Using principal component methods, the authors construct an index for identifying distressed neighborhoods to enable the targeting of place-based policies involving tax increment financing (TIF). In addition, the authors use the Monte Carlo method to simulate the impact of a TIF intervention on employment and property values in neighborhoods. The analysis focuses on Broome County in upstate New York, a region that witnessed massive deindustrialization as manufacturing firms moved to other states and overseas. The authors find that a significant fraction of neighborhoods in the study area would qualify for TIF-type policies that would lead to significant improvements in property values and, likely, modest employment effects.

Strategies for financing infrastructure projects in the sphere of public-private partnership

Purpose. Coverage and systematization of the main approaches to the development of strategies for financing infrastructure projects in the field of public-private partnership, in particular, in the construction sector of Ukraines economy. Methodology. The methodological basis of the article are scientific publications, regulations of Ukraine, analytical reports of world financial institutions, Internet resources. The research used a systematic approach, methods of analysis and synthesis, comparison and logical generalization. Findings. The most acceptable models of financing infrastructure projects and creating conditions for attracting private capital on the basis of public-private partnership in Ukraine are identified. Originality. The work analyzes the classification of projects according to the type of source of cost financing, summarizes the experience in building contract models for their financing, explores the most common tools for financing infrastructure projects, identifies the provisions on which project financing is based, and finds out what underlies it. Practical value. The results of the study can be useful for public authorities, which should encourage private partners to participate in long-term projects. The research may be of interest to businesses that are potential investors in public-private partnership projects.

Impact of Enabling Environment Drivers on Public-Private Partnership investment in the Transport Sector

The research aims to analyze the impact of some drivers of the enabling environment, represented by the macroeconomic stability index (GDP, inflation, foreign exchange reserves and the ratio of debt reserves to short-term foreign exchange). And the financial market stability index (the amount of credit provided to private sectors, value of shares traded) on public-private partnerships in financing infrastructure in the transport sector for selected countries. The drivers of the enabling environment in general are considered one of the main pillars in the process of partnership between the public and private sectors. And the tangible results of the partnership between the public and private sectors that affect the daily lives of individuals have a clear impact on the economic construction of countries that seek advancement and development in all directions. On the other hand, there is an urgent need to increase the volume of financing infrastructure projects, as a result of the widening gap between the demand for infrastructure and the shortfall in the volume of supply that corresponds to it. Which requires the public sector to move towards partnership with the private sector, which has capabilities and efficiency in implementation and management. The research adopted the ARDL model to perform the regression, using longitudinal data for a group of selected countries (Brazil, Colombia, India, Mexico, Peru, Philippines, China) for the period (2000-2020). It was found that the flexibility of participatory investment in relation to changes in the gross domestic product, the inflation rate, the percentage of credit granted to the private sector, and the value of traded shares was high, while there was no significant effect of foreign exchange reserves and the ratio of short-term debt-to-foreign exchange reserves on investment. Participatory. On the other hand, it was found that the impact of GDP, the percentage of credit granted to the private sector and the value of traded shares were positive, while the effect of inflation was negative.

Financing infrastructure projects in the context of sustainable development: theory and practice

In the period of the post COVID recovery of the global economy many countries with both developed and developing financial systems have faced problems of slowing economic growth and deteriorating social and environmental conditions. The key factor that could give a new impetus to the global financial system is increasingly seen as large-scale investment in infrastructure development, as an integral material base for modern technological development. Financing of infrastructure facilities in terms of anti-crisis neo-Keynesian measures is designed to solve social problems and provide a multiplier effect on other sectors of the economy. At the same time, for a country like Kazakhstan, there is an opportunity to qualitatively modernize obsolete and outdated infrastructure networks, as well as to realize its transit potential According to McKinsey Global Institute, the needs of the world economy in financing infrastructure investments during the period till 2030 will amount to $57 trillion. And according to the OECD, the annual deficit in financing infrastructure investments is about $ 1 trillion. The article summarizes theoretical and practical approaches to the problems of financing infrastructure projects to ensure the post-pandemic development of the national economy of Kazakhstan. Key words: Infrastructure projects, financing, investment, sustainable development.

The obsolescing bargain crosses the Belt and Road Initiative: renegotiations on BRI projects

Abstract Over the past decade, there has been an extremely rapid increase in bilaterally financed infrastructure projects globally, as part of China’s Belt and Road Initiative (BRI). The BRI is a broad initiative involving many Chinese state-owned enterprises to develop transport and other infrastructure across the developing world, with bilateral financing from either the China Development Bank (CDB) or the China Export–Import Bank (CEXIM). More recently, many large BRI projects have undergone renegotiations with borrower nations or caused financial distress. This provides a useful opportunity to evaluate the BRI through the lens of the obsolescing bargain model. The obsolescing bargain has historically been used to describe the relationship between multinational corporations (MNCs) and the developing countries they invest in. For large capital investments paid off over a long operating period, such as infrastructure projects, the obsolescing bargain describes a shift in leverage from MNCs to the host nation once the capital investment is complete, often leading to renegotiation or even expropriation. This study examines the BRI through the lens of the obsolescing bargain to evaluate the practices of China’s state-owned enterprises (SOEs) and policy banks in mitigating political risk.

Arthur Cotton and the Development of Public Works

In the long history of violence and cruelty that defined the period of British rule in India, Arthur Cotton is one of the few men remembered today not for his crimes, but for the good he did for the people of India. Cotton’s irrigation projects protected millions of Indians from the threat of famine, but the true legacy of his work is global in scope. As a major figure in the development of India’s infrastructure for most of the nineteenth century, Cotton witnessed the British Empire struggle with questions about its role in facilitating public works projects. Despite the Empire’s dedication to the principles of free-market capitalism for issues relating to India, by the final decades of the nineteenth century the British had recognized the need for government- funded infrastructure projects, and they became the first modern nation to leverage public debt for major infrastructure projects. Arthur Cotton played an instrumental role in the development of state-supported public works through his highly successful irrigation projects on the Cauvery and Godavari rivers, promoting the success of these projects in his writing, and by providing a solution to the challenge of developing Indian cotton agriculture.

Pension Funds as an Infrastructure Financing Avenue: An Exploratory Study

Development of infrastructure is a sine qua non of economic development. Development of agriculture depends, to a considerable extent, on the adequate expansion and development of irrigation facilities. Industrial progress depends on the development of power and electricity generation, transport, and communication facilities. Of course, if proper attention is not paid to the development of infrastructure, it is likely to act as a severe constraint on the economic development process of the countiy. As evidenced, India has reemerged as one of the fastest growing economies of the world. India could unleash its full potential, provided it improves its infrastructural facilities, which are at present not sufficient to meet the growing demand of the economy. A major concern in perpetual infrastructure development is funding. Taking into consideration the current recessionary trends in world economy, slow industrialization and volatile FDI scenario, financing infrastructure development seem to be a major obstacle. Innovation in finance in the recent past has provided large number of avenues such as BOT, BOLT etc. To extend this innovation further, this paper aims to explore the use of pension funds as an option to finance infrastructure projects. The paper shall discuss the Cost-Benefit Analysis of use of Pension Funds in infrastructure financing with specific reference to India. The paper also aims to discuss the learning from similar experiments carried out in other parts of the world.

On project financing of infrastructure projects in Russia

On project financing of infrastructure projects in Russia

Socio-Economic Role of Infrastructure Projects in the Spatial Development of the Volga Federal District

The article is devoted to assessing the role of infrastructure projects in the spatial development of the Volga Federal District. First of all, the regions of the Volga Federal District were ranked by the factor of financing infrastructure projects. Then, regression dependencies of this factor with socio-economic indicators of the constituent entities development were identified. In addition, a map was developed reflecting the spatial differentiation of the Volga Federal District regions on the development of infrastructure projects.

Evaluacija efikasnosti banaka u Srbiji korišćenjem MABAC metode

In recent times, as is known, various methods of multi-criteria analysis are used more and more in order to evaluate the efficiency of financial institutions as accurately as possible. One of them is MABAC (Multi-Attributive Border Approximation Area Comparison) method. Bearing that in mind, this paper analyzes the efficiency of banks in Serbia based on this method. The results of the research on the efficiency of banks in Serbia based on the MABAC method show that Banca Intesa ad Beograd is in first place. The ranking of banks in Serbia according to the MABAC method was influenced by numerous macro and micro factors (economic climate, foreign direct investments, exchange rate, inflation, employment, living standards of the population, financing of infrastructure projects and debts). The impact of the Covid-19 corona virus pandemic on the efficiency of banks in Serbia is negative. A reduced number of employees was recorded and credit activities were "frozen". This also affected the efficiency of banks in Serbia. In order to improve the efficiency of banks in Serbia in the future, it is necessary to manage human resources, assets, capital, income and profit as efficiently as possible.