Risk Perspectives on Sustainable Finance for Infrastructure Development
By Prasanta Kumar Praharaj
A featured article of our February 2021 edition of PRMIA's Intelligent Risk quarterly newsletter
Infrastructure development is the key determinant of economic growth. Developing countries need to invest $1.0 trillion annually and around 5% of GDP on infrastructure. Notwithstanding the importance, there is sluggishness in the sector as infrastructure projects are characterized by high level of capital investment coupled with a myriad of risks; construction risk, sponsor risk, concessionaire risk, policy risk, financial risk, business risk, operation and maintenance risk, technology risk, socioenvironmental risk, and climate risk are notable. As a result, funding infrastructure takes place on no-recourse or limited recourse basis and the physical and financial structuring happens in such a manner that risks are shared among all the stake holders.
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