Country: Global / Non-Specific
Keywords: Knowledge Lab
The main objectives of this paper are to present policymakers an insight on infrastructure financing challenges, opportunities and modalities in Asian LLDCs as well as to make specific policy recommendations to address the aforementioned challenges. The paper will also benefit, among others, international development partners, foreign investors, private sector, and academic communities in these countries.
The governments of LLDCs are advised to consider all the relevant global potential sources of infrastructure financing and exploring new sources of international funding. The main recommendations are to:
Implement a project prioritization process, so that the projects presented to bilateral and multilateral finance institutions are those that already have a strong economic, social, environmental and political justification.
Draw on resources of regional development banks and regional integration funds. To take advantage of most of these funds, a LLDC project needs to have regional benefits beyond its own borders and preferably beyond its transit neighbors.
Maximize the use of technical support from specialized agencies and funds, from project preparation to project design in order to make it more attractive for private investors and to be able to enhance their negotiating position with private partners.
Review all the potential sources of multilateral and bilateral funding. In addition to traditional sources, there are now many specialized funds with specific social or environmental objectives, that can be used to supplement conventional financing.
Before considering PPPs for specific projects, undertake a diagnostic of the country’s readiness to implement PPPs (PPIAF and UN ESCAP offer examples) and implementing the measures indicated therein.
Approach and involve potential new bilateral and multilateral sources (such as the AIIB, Silk Road Fund, etc.) as early as possible, especially during the project identification and preparation stage, to increase the chances of making the projects attractive to them.
Consider potential climate change impacts to ensure the environmental sustainability of infrastructure projects and consider climate finance as a means to cover any additional costs.
Expand and updated the catalogue of all the various infrastructure financing solutions that are available to the Landlocked Developing Countries in Asia.
Updated: April 12, 2022