tailieunhanh - Economic Watch: Pension funds and infrastructure in Peru

Previous work has explored or referenced instances of fund sponsor support including that of Baba et al. (2009), Kacperczyk and Schnabl (2012), McCabe (2010), and Moody’s (2010). However, this paper is unique in presenting a complete data set of direct support instances and related amounts formed through a detailed review of the financial statements of all prime MMMFs. We observe that some past work has evaluated support by reviewing funds that received SEC no-action letters related to affiliate transactions. . | BBVA RESEARCH Economic Watch Pensions Lima 20 May 2011 r. . I _ I J . I _ Econimic Analysis Pension funds and infrastructure in Peru Rosario Sanchez rdpsanchez@ Peru still has a high infrastructure deficit which can be financed using pension fund resources. The slow process of awarding concessions leads to a lack of projects to finance and thus to an accumulation of committed resources that are still awaiting investment. Significant efforts have been made in recent years to channel investments into the infrastructure sector through a series of measures that range from the creation of financial instruments an infrastructure trust and infrastructure fund to regulatory changes. There is still much room for improvement in regulatory matters. These changes could range from alterations in the concession process to more specific regulations covering limits to investment in pension funds. Chart 1 Participations in investment by pension funds 100 - 90 -80 -70 -60 -50 -40 - 30 -20 -10 - 0 - Dec-2007 Dec-2009 Feb-2011 Foreign Investment Non-Financial Companies Government Infrastructure Other These include financial companies fund administrators and securitization companies Source SBS and BBVA Research BBVA RESEARCH Pension Economic Watch Lima 20 May 2011 Infrastructure financing through pension funds is still insufficient Although Peru has improved 18 positions on the infrastructure quality ranking of the Global Competitiveness Index prepared by the World Economic Forum from 110th to 92nd in 200920111 infrastructure development in the country remains among the poorest in the world with an investment gap of an estimated USD 37 760m in 2008-2018 particularly in the transportation and electricity sectors2 . This situation could limit economic growth generate problems of competitiveness and restrict improvements in social welfare. The resources gathered by pension funds are thus an attractive alternative for financing infrastructure investment projects .