Evaluating the Environment for Public-Private Partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean the 2017 Infrascope
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Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope An index and study by The Economist Intelligence Unit Commissioned by Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope About this report This document is the frst edition of an informational tool and benchmarking index that assesses the capacity of countries in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean to carry out sustainable public-private partnerships (PPPs) in infrastructure. The original methodology for the Infrascope was developed in 2009 and has been applied to assess multiple regions since. This edition features a new methodology developed in 2016. The analysis and content of this index covers the period between September 2016 and March 2017. The index was built by The Economist Intelligence Unit (EIU) and is supported fnancially by the European Bank for Reconstruction and Development (EBRD). The views and opinions expressed in this publication are those of The Economist Intelligence Unit and do not necessarily refect the position of the EBRD. The index results, as well as country summaries, can be viewed on this website: Infrascope.eiu.com Please use the following when citing this report: The Economist Intelligence Unit. 2017. Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean: The 2017 Infrascope. The EIU, London. For further information, please contact: Economist Intelligence Unit Leo Abruzzese, Project Director: [email protected] Camilo Guerrero, Project Manager: [email protected] Jennifer Wells, Marketing Executive: [email protected] European Bank for Reconstruction and Development Matthew Jordan-Tank, Head of Infrastructure Policy and Project Preparation: [email protected] Marcos Martinez, Infrastructure Specialist: [email protected] © The Economist Intelligence Unit Limited 2017 1 Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope About The Economist Intelligence Unit The Economist Intelligence Unit is the research arm of The Economist Group, publisher of The Economist. As the world’s leading provider of country intelligence, we help governments, institutions and businesses by providing timely, reliable and impartial analysis of economic and development strategies. Through our public policy practice, The Economist Intelligence Unit provides evidence- based research for policymakers and stakeholders seeking measureable outcomes in felds ranging from gender and fnance to energy and technology. We conduct research through interviews, regulatory analysis, quantitative modelling and forecasting, and display the results via interactive data visualisation tools. Through a global network of more than 350 analysts and contributors, The Economist Intelligence Unit continuously assesses and forecasts political, economic and business conditions in over 200 countries. For more information, visit www.eiu.com. About the European Bank for Reconstruction and Development The EBRD is investing in changing people’s lives from central Europe to Central Asia, the Western Balkans and the southern and eastern Mediterranean region. With an emphasis on working with the private sector, we invest in projects, engage in policy dialogue and provide technical advice which fosters innovation and builds modern economies that are competitive, well governed, green, inclusive, resilient and integrated. We provide fnancing for well-structured, fnancially robust projects of all sizes (including many small businesses), both directly and through fnancial intermediaries such as local banks and investment funds. The Bank works mainly with private-sector clients but also fnances municipal entities and publicly owned companies. Our principal fnancing instruments are loans, equity investments and guarantees. We maintain close policy dialogue with governments, authorities, international fnancial institutions and representatives of civil society, and provide targeted technical assistance using funds donated by member governments and institutions. 2 © The Economist Intelligence Unit Limited 2017 Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope Acknowledgments As part of the research process for this project, 62 in-depth telephone interviews were conducted with policymakers and country infrastructure experts from multilateral and consulting institutions and from the private sector. We would like to express our thanks to all the interviewees for their advice and inputs. The following researchers, country analysts and specialists also contributed to this report. We thank them for their participation. Country analysis: Justin Alexander, David O’Byrne, Benjamin Godwin, Filip Drapak, Nino Evgenidze, Dmitry Kirilenko, Sladjana Sredojevic, Marina Maluk, Juna Miluka, Razvan Orasanu, Nikola Rogatchev and Matus Samel Report development: Adam Green Model development: Will Shallcross © The Economist Intelligence Unit Limited 2017 3 Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope Contents Introduction 5 Infrascope categories and indicators 7 Key fndings 8 Category scores 11 Special: “Facilities management” PPPs in health and education 18 Infrascope country summaries 21 Albania 21 Belarus 23 Bulgaria 25 Egypt 27 Georgia 29 Jordan 31 Kazakhstan 33 Morocco 35 Romania 37 Serbia 39 Slovakia 41 Turkey 43 Ukraine 45 Appendix I: Project background 53 Appendix II: Methodology, sources and detailed indicator defnitions 57 Glossary 77 Bibliography 80 4 © The Economist Intelligence Unit Limited 2017 Evaluating the environment for public-private partnerships in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean The 2017 Infrascope Introduction his report is the latest regional edition of the Infrascope, a research programme begun in 2009 by TThe Economist Intelligence Unit to benchmark the capacity of countries around the world to deliver public-private partnerships (PPPs) in infrastructure sectors. Stretching from Morocco to Kazakhstan, the regions in Eastern Europe, Central Asia and the Southern and Eastern Mediterranean (EECA-SEMED) covered in this report comprise a culturally diverse and economically varied group of countries. They range from Bulgaria and Albania, which are aligning their political and market systems with the legislation of the European Union, to economies such as Kazakhstan, which are primarily oriented towards Russia and China. This vast area also includes countries undergoing profound domestic changes, notably Turkey. The economic landscape across these regions varies considerably. In Albania, Bulgaria, Romania and Slovakia real GDP grew by more than 3% in 2016, a respectable rate. But political and economic shocks have weighed on the economic performance of Ukraine and Turkey, placing their currencies under pressure. Political and security risk has also weakened investor sentiment in Egypt. Throughout the broader Eurasian region, growth has been held back by the recession in Russia. Across most of these countries, infrastructure needs signifcant improvement, as does the ability to fnance it. The World Economic Forum estimates a worldwide infrastructure fnancing gap of around US$1trn per year, representing 1.4% of GDP.1 The challenge is especially acute in emerging markets and in the newer members of the EU. The European Commission estimates that up to US$220bn in annual infrastructure investment will be needed in the EU through to 2020, building on the investment in transport and energy infrastructure that has been channelled in recent years into new EU member states.2 The Asian Development Bank (ADB) forecasts that countries in Central Asia will require US$492bn in infrastructure investment between 2016 and 2030, representing almost 7% of GDP.3 The Middle East and North Africa (MENA) region will need more than US$100bn per year in investment to close its own infrastructure building and maintenance defcit, according to the World Bank.4 Productive and effective infrastructure programmes can make a powerful contribution to long-term development, reducing unemployment and inequality and fostering sustainable growth. Transport assets can spread economic activity to lagging regions, while safe, effcient and affordable energy and water infrastructure can beneft consumers and businesses alike. Indeed, in recognition of infrastructure’s benefcial impact on social and economic progress, the UN’s Sustainable Development Goals (SDGs) include a pledge, in Goal 9.1, for member states to develop “quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.” A large body of international evidence demonstrates that PPPs can be an effective way of bridging the infrastructure gap in both emerging and developed economies. PPPs combine the government’s regulatory oversight and long-term perspective with the capital and expertise of the private sector. PPPs are also potential instruments in the delivery of public