The impact of the East Asia crisis on private infrastructure projects has been comparatively little discussed. Yet the collapse or renegotiation of many of the power, transport and other deals struck in the region in the years before the financial crash (many with direct World Bank advice and support) can teach many lessons. And the inter-relationship between macroeconomic, structural and poverty policies is currently subject of much discussion in Washington.
In early December three World Bank studies were being finalised:
(I) Impact of the East Asia Crisis on Private Infrastructure – How the Bank Should Respond;
(ii) Country Report on Private Infrastructure for the Philippines; and
(iii) Country Report on Private Infrastructure for Vietnam.
The two Country Reports are to be disseminated externally, but the regional study will not be made available, as it is “internally-focussed”. Many outside the Bank urge that the report should be released so that NGOs, parliamentarians and trade unions can discuss the quality of the World Bank’s influential advice and financing, past and present. Consultation on the reports themselves was mainly limited to aid agencies and Chambers of Commerce, with various other public and private organisations consulted on the regional study.
The reports follow a 1996 Bank study which called for a big increase in infrastructure investment and advocated private sector financing to achieve it. The risks of currency devaluation and tariff hikes were barely mentioned.
The proposal for the regional study recognises that “the financial crisis has profoundly jeopardized these initiatives.” Currency devaluations heavily affected infrastructure projects with foreign financing, as the projects earn local currency but have to repay their debts in hard currency. Meanwhile, demand for services has declined and governments face difficult negotiations with companies about how to maintain vital public services at reasonable prices. Further complexities include IMF restrictions on government spending and private sector uncertainty about the region’s future.
The Bank’s manager of these reviews is Aldo Baietti: abaietti@worldbank.org.
To argue for the public release of the regional review, contact your country’s World Bank executive director. Please send copies to the Bretton Woods Project.
