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Scaling Up Quality Infrastructure Investment
Author:
Olivier Bizimana
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,
Laura Jaramillo
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, and
Mr. Saji Thomas
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 117
Language:
English
Publication Date:
30 Apr 2021
DOI:
https://doi.org/10.5089/9781513582450.001
ISBN:
9781513582450
ISSN:
1018-5941
Pages:
32
Keywords:
infrastructure investment; tax financing; quality of investment; PPP financing; efficiency gap; multiyear investment planning; Public investment spending; Infrastructure; Capital budget; South Asia; Asia and Pacific; Caribbean
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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South Asia needs large infrastructure investments to achieve its development goals, and public investment can also support the Covid-19 recovery. Regression estimates that account for the quantity and quality of investment suggest that public infrastructure was a key driver of productivity growth in South Asia. Going forward, higher public infrastructure spending can raise growth, but its benefits depend on how it is financed and managed. Model simulations show that tax financing, concessional lending, or private sector financing through public private partnerships (PPPs) are more advantageous than government borrowing through financial markets because they support growth while containing the impact on public debt. However, the optimal choice also depends on available fiscal space, taxation capacity, implementation risks, and public investment efficiency. To reap the most benefits from higher infrastructure investment, South Asian countries need to manage fiscal risks carefully, including from PPPs and state-owned enterprises, and improve public investment efficiency.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2021: Issue 117