The World Bank’s Rapid Response
“We want to come in fast, and to be able to provide the technical advice to make sure governments aren’t overlooking issues,” says Jemima Sy, Public Private Infrastructure Advisory Facility (PPIAF) program manager, and head of the Covid-19 PPP Rapid Response Umbrella Program.
“PPPs are not exempt from the impact Covid-19 is having on the real economy,” she says. “We are making sure that governments have access to the advice and support to look at what the implications might be on specific PPP projects or on a portfolio of projects.”
In May 2020 the World Bank’s PPP tailored fast-track program was launched, aiming to spearhead emerging markets' response to the virus by helping countries assess their position, and restore the investor confidence needed for economic recovery. “The rapid response does mainly two things,” explains Sy. “Firstly, it allows governments to have access to experts to look at the financial, legal and fiscal implications of Covid-19 and to assess where there might be stress in the system, and secondly to look at different options for workout.”
Run by the PPIAF, a global facility dedicated to supporting government PPP institutions, the rapid response initiative aims to provide the analytical tools and technical assistance to “governments that have less access to expertise than private partners might” as they look to navigate uncharted fiscal territory in the coming months.
Supported by a trust fund backed by donors from North America, Europe and Australia, the PPIAF’s program is split into two regions based on the maturity and similarities in the markets, as well as geographical considerations. Asia, Latin America and the Caribbean comprise one group, and Central Asia, Africa, Europe and the Middle East the other.
Early demand for the scheme has been dependent on many factors, and regions with more mature and developed PPP programs have been quick to register their interest. “Latin America has shown significant demand, they will probably be first to be responded to,” says Sy. “It is a similar story in Asia, but there is also a number of supporting institutions and multilaterals in the region to help as well.”
So far, eight governments have registered interest in the program, with Sy expecting the figure to double over the coming weeks.
Although governments are dealing with a variety of circumstances and differing situations, Sy says that in general, authorities are chiefly concerned with getting ahead of the medium term fiscal impacts of a pandemic and exploring opportunities to use PPPs as a way to fast-track economic recovery to mitigate long-term fiscal impacts.
She explains: “Given the fact that all growth around the world will decline, it’s understandable why they’re concerned about that.
“One thing we will do is give them some updates on stress scenarios in the portfolio, for jobs, demand and supply.”
Sy explains that the support comes in the form of a solid, independent analysis. “We use our analytical tools to be able to do this kind of stock-taking and risk analysis. We are going to use our new version of that and run some analysis with experts and deploy legal experts to look more specifically around contracts. This analysis enables us to present governments with a stock-take of their situations, and options to implement going forward.”
Sy believes that the analysis has been well received not just because of the reach of the analysis, but because of its speed. “We expect we can do it, if the data is available, in four to six weeks.”
Although its main goal is to preserve business continuity, and make sure that vulnerable economies can weather the pandemic in terms of supply and jobs, the program is aiming to have a systemic impact by shoring up much needed confidence in emerging markets, which are expected to use infrastructure as a foundation stone in economic stimulation.
Sy explains: “We are hearing that most countries are looking at how to fast-track PPPs and shovel-ready projects. They see infrastructure as a key pillar of stimulating the economy and some countries do see PPPs as a way of expanding fiscal space.
“Governments are concerned about continuing investor confidence,” says Sy, keen to explain the role that the private sector has to play in the long-term plan for the program. “The initiative is not about giving governments more in their arsenal, but we want to inspire confidence in the market and be a partner to the private sector, and if they generate that confidence then it’s even better for everyone.
“We see this as an opportunity in terms of restarting economies and we see that the private sector can only be helpful in that.”