Investment in infrastructure across emerging markets can provide meaningful improvements for populations —in terms of wealth and job creation, enhanced competitiveness, as well as reduced poverty and income inequality— resulting in high returns for government investment and improved credit quality, Moody's Investors Service has affirmed.
In Peru (A3 stable),
infrastructure investment will support
the growth momentum and enhance competitiveness, but debt financing will carry credit risks.
According to Moody's,
Peru's infrastructure gap holds back economic development and productivity growth, weighing on competitiveness and wealth.
"The infrastructure gap is wide relative to both domestic economic needs and relative to other countries at similar levels of development. The government estimates its overall infrastructure gap at around US$159.5 billion," it expressed.
In this sense, closing that gap would support growth, boost wealth levels, and enhance the country's competitiveness on a global scale.
The government's current medium-term macroeconomic fiscal framework envisions public investment will average 4.6% of GDP through 2025, falling short of needs.
"Thus, the use of public-private partnership (PPP) frameworks could be a way to make up for the shortage," it concluded.