World Bank lends $751.9m to Mexico

One of four 'pillars' of the loan is to increase private investment in the country's infrastructure, a sector increasingly targeted by fund managers raising capital from local pensions.

The World Bank has established a $751.9 million development loan to support regulatory, administrative and legal changes in the Mexican economy.  One of the four “pillars” of the loan is to “promote public-private partnerships in the field of infrastructure,” according to a World Bank statement.

Esperanza Lasagabaster, senior financial economist at the World Bank, said the loan would support regulatory reforms and financial stability in the country, as well as investment in infrastructure.   

“One fourth of the loan is oriented toward recognizing the efforts done to enhance private participation in infrastructure,” Lasagabaster said. 

Lasagabaster added the Mexican government recognizes that it does not have sufficient resources to develop all necessary infrastructure projects. 

“They want to leverage private resources and this is why facilitating the framework for private participation in infrastructure becomes very important,” Lasagabaster said. 

She said that this is not a “one-shot reform”, but part of a larger process to implement legal and regulatory changes, as well as changes in financing.

One major new financing initiative has generated about Ps.$36 billion (€2.3 billion; $3 billion) for private funds in Mexico.  New stock certificates called certificados de capital de desarrollo have enabled private funds to raise money from Mexican pensions, which were previously barred from investing in private equity. 

Of the money raised thus far, about Ps.$14.8 billion has been raised for four infrastructure funds, according to data recently released by Comisión Nacional del Sistema de Ahorro para el Retiro, Mexico's regulatory body for pensions.

ProMexico, the country's trade and investment promotion arm, also posted a video on YouTube summarising the country's plans for infrastructure investment.