The fourth and final meeting of the Infrastructure Working Group (IWG) under the Brazilian presidency of the G20 ended this Tuesday (1st). The meeting of heads of State and Government of the group made up of the 19 largest economies in the world, plus the African Union and the European Union, will be held in November in Rio de Janeiro.
The IWG coordinator, Marden Barboza, said that in this last meeting the members tried to close the discussions around the remaining deliveries of the Brazilian presidency. Throughout the year, the working group discussed four priorities. The first was how to finance infrastructure resilient to climate change, the document for which was concluded at the June meeting and has already been accepted by Finance Ministers. In this last meeting, the three remaining documents were worked on.
“The results were very positive. The delegations welcomed the recommendations that were presented. We had three reports that are close to being finalized. Small technical adjustments are missing. It is a group that works by consensus. We received some suggestions for adjustments and we expect to complete these reports in the next few days. These reports will be brought to the attention of Finance Ministers at the meeting that will be held on October 22nd and 23rd, in Washington, to be endorsed”, said Barboza.
According to the IWG coordinator, the second priority is infrastructure and poverty reduction, that is, how can infrastructure provision mechanisms be created that are inclusive.
“We tend to look at infrastructure from the supply side. We need to create highways and electrical connections, but during our presidency we sought to have a different approach. On the user’s side, how do you ensure that this person actually has access. There’s no point in having a bus service that stops at a worker’s doorstep if they don’t have money to buy a ticket. We discussed how governments and multilateral banks can collaborate to come up with solutions that address this issue of access”, he explained.
The third priority is mitigating foreign exchange risk for infrastructure investments. “Foreign investors often face a challenge when investing in countries with high exchange rate volatility, which is the general situation in most developing countries. There is always the risk that if you invest in the country and there will be a currency devaluation, and that at the end of the process you will end up losing due to exchange rate volatility. The investor works with a large volume of resources and cares about it. We try to bring some solutions that can mitigate this risk. The idea is for countries to be more attractive to foreign investors in developing countries,” said Barboza.
The fourth priority is infrastructure financing in border regions. “That’s always a big challenge. Countries often have incentives that are asymmetrical, but the bill needs to be split equally. How to make these ventures viable? How do you deal with regulatory instruments that are different, different political situations? We work on this priority to try to think of some recommendations very targeted to development banks that can unlock investments in border regions”, said the coordinator.
