US plans more funding for developing countries

The Biden administration has announced that it has increased the amount of U.S. public and private funds allocated to a multilateral program aimed at building infrastructure in developing nations. This increase surpasses the $30 billion figure that was initially announced in May. However, some observers are skeptical about the U.S.’s ability to fulfil its pledge to raise $200 billion over the next five years for the program.

The program, called the Partnership for Global Infrastructure and Investment (PGI), was launched by the Group of Seven (G7) advanced economies as a competitor to China’s Belt and Road Initiative (BRI). While the U.S. has increased its commitments to the program, other G7 members have pledged to raise $400 billion by 2027.

The primary objective of PGI is to address the infrastructure gap in low- and middle-income countries, promoting inclusive and sustainable growth. Observers have noted that one unspoken objective is to provide higher-quality infrastructure projects to developing nations compared to those offered by China’s BRI.

The U.S. has made new financial pledges to PGI, adding between $1.1 and $1.6 billion to the initial $30 billion commitment announced in May. These commitments involve both government funds and contributions from organisations like the Bill & Melinda Gates Foundation and Microsoft.

PGI aims to develop two international economic corridors, including the India-Middle East-Europe Economic Corridor (IMEC) and the Lobito Corridor in sub-Saharan Africa. IMEC, founded by the U.S., India, and other nations, seeks to build new connections between India and Europe through railway lines, ports, and undersea cables. The Lobito Corridor aims to link the Democratic Republic of Congo and Zambia to the Lobito port in Angola via new transport infrastructure.

Observers have highlighted various shortcomings in the U.S.’s strategy for PGI implementation, including the need for a more coordinated effort and a dedicated team of senior officials to work with various agencies and partners. The success of PGI in reaching its $200 billion goal may require greater efforts to recruit private sector funds and support for anti-corruption and procurement programs in developing nations.

One program that could help attract more private capital to PGI is the Blue Dot Network (BDN), which certifies infrastructure projects as “high quality” with sustainable and climate-resilient features. BDN, funded by the U.S. and other countries, aims to improve the appeal of PGI projects to private investors. The certification framework is being developed in collaboration with the Organisation for Economic Co-operation and Development (OECD) and is expected to enhance private sector interest in PGI initiatives once publicly released.