While we’re waiting for the G20 Summit to begin here in Los Cabos on Monday, let’s recall some of the commitments G20 leaders made last year towards investing in large infrastructure. By and large, all the commitments boost public sector spending in order to lower the risks of private sector participation in highly risky sectors, including hydropower.
Such a trend to commit massive public subsidies to the growth of private sector profit by way of large infrastructure investment is expected to continue this year, as Tuesday’s discussion agenda includes the topics “green growth,” infrastructure, and food security. In the hydropower sector, these massive public subsidies often play out like a bad dream, involving waste, tragic social and economic impacts, and huge cost overruns. Betting public funds on humongous hydropower schemes like the Grand Inga Complex – in order to grow private sector economic returns – may set G20 countries down a dangerous path that is not “green” at all.
Here are the G20 commitments to infrastructure spending made in 2011:
Argentina committed to provide up to AR$8 billion in central bank funding to banks for long-term investment in infrastructure and private sector real investment. Equal to up to 10% of total commercial loans of the banking system.
Brazil committed to provide, through its Growth Acceleration Program (PAC 2), US$545.71 billion for the period 2011-2014 and $360.8 billion after 2014, totaling $883.42 billion to improve investment in housing, urban development, citizen community, water and electricity, transportation, and energy. The PAC 1 and PAC 2 invstment programs have been responsible for the destructive Belo Monte, Santo Antônio, and Jirau dams, among others, and have earmarked spending for huge dams in the Tapajós basin.
India committed to mobilize US$1 trillion of infrastructure investment during 2012 to 2017, increasing the role of public-private partnerships.
Indonesia committed to accelerate infrastructure development, and promote private sector involvement in infrastructure projects. Completion is estimated by 2015-2016 (listed under the published document of MP3EI / National Master Plan for Economic Development Expansion and Acceleration).
Mexico committed to increase access to credit for housing, small and medium-sized firms, agriculture and infrastructure through the development bank system. In the last quarter of 2011 and first quarter of 2012, credit programs in the development bank system will be enhanced in order to increase financing for strategic sectors, including housing, SME’s, agriculture and infrastructure development.
South Africa committed to public sector investment in roads, rail, ports, electricity and water, and budgeted public sector expenditure of R802 billion by 2014/15 (7.3% of GDP per annum). Such support could include finance for the gigantic Grand Inga Complex on the Congo River.