CDEP-CGEG WORKING PAPER NO. 32

From Global Savings Glut to Financing Infrastructure

Rabah Arezki, Patrick Bolton, Sanjay Peters, Frederic Samama, and Joseph Stiglitz

Abstract:

This paper proposes an institutional solution that can help unlock the flow of low yielding longterm savings towards high-return infrastructure investments. The solution is to transform public-private partnerships in infrastructure and the classic model of multilateral development banks. Instead of thinking of public-private partnerships as bilateral contracts between a private concession operator and a government agency, we argue that they should be conceived as partnerships that also involve a development bank and long-term institutional investors as partners. We propose a new model for development banks, which is to transform themselves into originate-and-distribute banks for PPP infrastructure projects. This way they can conserve their valuable capital and leverage their expertise and capabilities by making them available to longterm institutional investors.

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