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Guimaraes-Filho, Roberto and Ju Pyun, manuscript.
India’s development strategy is laid out in five-year Plans. The current Eleventh Plan covers the period 2007-2012; the Twelfth Plan will be published in 2012.
In this sense it is similar to India’s Five Year Plans, though in Brazil most public sector investment will be undertaken by public enterprises rather than directly by national and local governments.
Formal-sector workers in Brazil contribute to a Workers’ Assistance Fund (FAT), which in turn invests much of its capital in BNDES. The FAT receives a return on its investments based on the TFLP.
World Bank (2007).
In particular, given Chile’s high historic inflation and the requirement that pension annuities be indexed, there was a large demand for inflation-indexed financial instruments. Most domestic Chilean debt, and almost all debt of maturity greater than five years, is denominated in unidades de fomento (UF), an inflation-indexed unit of account.
Chile’s sovereign rating is A+ (S&P) for foreign currency debt.
An important consideration of the PPP program was to improve infrastructure specifically for exports. Access roads to ports, which given Chile’s geography tend to be short, constitute around half the concessions that were not for Santiago freeways or Route 5.
The Chilean government also allows a small increase in tolls if highway operators are able to reduce the number of car accidents resulting in to injuries and fatalities during the course of the concession.
This program shifted financing currency risk from the concessionaire to the government by requiring the government to reimburse the concessionaire if the peso weakened below an agreed level, but in turn requiring the concessionaire to reimburse the government if the peso strengthened. Three PPPs took advantage of this program at its inception, but as the peso strengthened in 2005, all the companies ended their involvement with it.
A PPP to rebuild Santiago’s international airport also included participation by a Canadian airport operator.
There is no definition of infrastructure in China’s national account statistics. It is broadly accepted that the “narrow” definition of infrastructure would include electricity, gas, water production and supply; transport, storage, and postal service; and water conservancy and environment management. Other infrastructure may involve investment in agriculture (including irrigation systems), information transmission, computer and software, resident services, education, healthcare, culture, sports and entertainment, public administration and social organization, etc. In this paper, we use the “narrow” definition.
Bank financing may have given rise to maturity mismatches. However, given the high saving rate and relatively sound performance of most infrastructure projects, the mismatch has so far not had a significant impact on bank performance. Also, some working capital loans may actually be used for infrastructure investment, to be renewed later when the loans mature.
The land premium refers to the proceeds the authorities receive from real estate developers for the use of lands previously acquired by the authorities minus the associated cost of land acquisition.
Local governments are not allowed to issue debt. However, there are no regulations prohibiting SPVs from issuing debt. As a consequence, local governments have established infrastructure SPVs as a platform to secure financing for infrastructure projects.
The five SOE groups are China Huaneng Group, China Datang Corporation, China Guodian Corporation, China Huadian Corporation and China Power Investment Corporation.
Grid companies are mainly state monopolies and their performance is beyond the scope of this note.
Even FDI was negligible until a 1998 foreign investment promotion law came into force. With domestically financed investment a relatively small share overall, it is likely that infrastructure, too, was heavily reliant on foreign sources.
The ratio of private investment to public investment decreased to 15.4 percent in 2009 as the government raised infrastructure investment spending to respond to the global financial crisis.