April 2016 G20 Finance Ministers and Central Bank Governors Meeting: Remarks on investment and infrastructure


G20 Finance Ministers and Central Bank Governors Meeting

Session 3: Investment and Infrastructure

Remarks by Angel Gurría,

Secretary-General, OECD

15 April 2016

Washington, D.C.

(As prepared for delivery)



Minister Lou Jiwei, Governor Zhou, Ministers and Governors, Ladies and Gentlemen:


In a context of stubbornly weak investment, the OECD strongly supports the focus of the G20 Chinese Presidency on infrastructure investment.


The role of private financing in infrastructure is at the core of this programme. The OECD, jointly with other international organisations, is working on a guidance note that will inform your objective of promoting more diversified and innovative infrastructure and SME financing, with a specific focus on equity. This G20/OECD progress report constitutes a milestone along the way.


The diversification of funding sources for infrastructure — banks, institutional investors, and sometimes development banks — is critical to designing an optimal blend of finance. The focus on equity finance is highly relevant too: securing an adequate amount of equity is crucial to detonate infrastructure projects, achieving higher credit ratings, and providing support for the issuance of debt at acceptable costs.


As I said, institutional Investors have a key role to play in the financing of infrastructure. Yet, the updated OECD Survey of Large Pension Funds and Public Pension Reserve Funds indicates that while institutional investors exhibit a growing “appetite” for infrastructure investment, their actual average allocations in infrastructure have been stagnant over the past four years — at only 3.5% of the total portfolio of funds that reported holdings of infrastructure exposure.


Interestingly, more than 85% of this exposure comprises investment in unlisted equity. Promoting further equity investment by these funds is therefore fully consistent with their evolving investment strategies.


It also appears that pension funds are increasingly interested in green investment, including green bonds, which continue to grow very rapidly, most recently in the Chinese and Indian markets, with public sector guidance. We are analysing the potential contribution of green bonds to the 2 degree climate stabilisation target as well as the barriers and policy actions for the development of this market – in the context of the G20 Green Finance Study Group.  


Strengthening connectivity is another priority of the Chinese Presidency. Ongoing OECD work for the G20 suggests that the impact of behind-the-border infrastructure on intermediate trade is greater than on overall trade flows, highlighting the importance of connectivity infrastructure for firms’ participation in GVCs.


These issues will be discussed at forthcoming meetings of the G20 in Singapore at the end of this month, and also at the OECD/Global Infrastructure Hub Forum on Infrastructure Financing organised back-to-back with our July meeting in Chengdu.


The OECD will also continue supporting the implementation of the G20/OECD Corporate Governance Principles through a new assessment methodology that will already be used this year for a review of the corporate governance of financial institutions in all FSB member countries. We will be working as well as on effective approaches to the implementation of the G20/OECD High-Level Principles on SME Financing endorsed by Leaders last year. I was very pleased to release yesterday, with Governor Zhou, the 2016 Financing SMEs OECD Scoreboard: it shows that, while improving, the financing of SMEs remains very challenging at the current economic juncture.


Thank you.