On Thursday, World Bank President David Malpass presented a new strategy for increasing private sector involvement in financing projects in developing and emerging economies, given the annual financing needs of $2.4T, according to a recent World Bank estimate. Malpass stated that private capital is necessary to address the consequences of climate change, war, and pandemics. Malpass, who announced his resignation from the World Bank in February, expects his successor to be chosen by early May.
The strategy consists of three main components, the first of which focuses on improving capital flow by promoting macro stability and transparency while creating databases that aid in decision-making. “The output of these analytics will concentrate on the measures that countries must take for a sound investment climate, competitive markets, and a balanced role for the state in the economy,” Malpass said at an event hosted by the Center for Strategic and International Studies in Washington.
The second component of the strategy addresses liquidity problems while highlighting opportunities for state-owned enterprises to attract private investment. The third pillar aims to establish a market for investment-grade securities that can entice institutional investors, according to Reuters.
“Our aspiration over time … is to see the creation of a massive, dynamic, investable asset class for infrastructure in developing countries that spans borders and sectors in order to diversify risk and achieve lower financing costs,” Malpass said.
“The initiative will boost sustainable development that is inclusive and environmentally friendly, reduces carbon, enhances energy access, alleviates poverty and achieves the required pace of global digitalization.”
