Economic and financial crisis of 2008–2009 had a significant impact on PPP globally. Investment in PPP declined by 48 percent in the second half of 2008 compared to the first half of that year. The first half of 2009 saw a recovery to the levels of the first half of 2008, driven by large, high-priority projects in a handful of countries. Whereas volumes appear to have recovered, there is a clear “flight to quality,” with projects more likely to reach closure characterized by strong economic and financial fundamentals, the backing of financially solid sponsors, and government support, with energy reporting higher investments, telecom seeing stable investments, and transport and water receiving lower investments. Current projects evidence lower debt/equity ratios, higher cost of financing, and more conservative structures. Financing has become increasingly focused on local state-owned banks as well as multilateral and bilateral agencies.

Whereas the crisis was massive and global, some consideration of past experiences in regional crises is also useful. The Mexican crisis of 1994–1995, the Asian crisis of 1996–1997, and the Argentinean crisis of 2001, to name but a few, have had critical implications for infrastructure, in particular:

• difficulty to access, and increased cost of, debt and equity;

• reduced demand for infrastructure services (in particular from industrial users);

• reduced ability to pay and therefore less political appetite to increase tariffs;

• re-allocation of government budget funding away from project preparation;

• reduced appetite of international sponsors to take developing market risks.

These challenges tend to result in:

• the delay or cancellation of PPP projects still in the preparation stage;

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