Government and Market-based Instruments and Incentives to stimulate Long-term Investment Finance in Infrastructure

This report presents an overview of the main types of government (i.e. public) and market (i.e. private) based instruments and incentives able to boost the mobilisation of financial resources to long-term investment. The focus is on public assistance to private investors in infrastructure and on the development of new instruments and techniques that financial markets have developed in response to the recent financial and sovereign debt crisis. The report outlines the typical characteristics of infrastructure as an alternative asset class for private investors and focuses on the riskiness of infrastructure projects from a financial investor’s standpoint. When an acceptable risk/return profile cannot be reached, some form of public intervention is needed to leverage private capital intervention. This public intervention refers obviously, but is not limited to, provision of financial back up and support that can take many alternative forms.