End of investment makes room for the private sector in infrastructure

O Government argued that the end of the investment cycle associated with the Recovery and Resilience Plan (PRR) makes room for greater private sector participation in infrastructure, denying the return to historically low values.

“The end of the investment cycle associated with the PRR also makes room for greater private sector participation in the development of national infrastructure”, reads in the report accompanying the proposed State Budget bill for 2027 (OE2027), today delivered at the Assembly of the Republic in Lisbon.

The executive said that the concentration of financial, technical and administrative resources in the implementation of the plan limited the ability to launch new projects, “subsists in alternative financing models”.

In the post-PRR that margin will be recovered, assured the government, explaining that this will happen with a greater mobilization of private capital “for projects of public interest”.

It therefore stressed that public-private partnerships, concessions or other models of cooperation could play a more relevant role.

“ Investment will no longer be based predominantly on an extraordinary and temporary instrument, and will be based on a more diversified, sustainable and appropriate model for the long-term challenges of the Portuguese economy,” he said.

According to the same document, Banco Português de Fomento will continue to play a central role in the mobilization of private investment, through the provision of guarantees and the provision of capital instruments and almost capital.

With the end of the investment associated with the RRP, the total investment volume “will naturally slow down against the exceptional levels observed in previous years,” he said.

Nevertheless, the government has ensured that this adjustment will not mean a return to ‘historically insufficient past’ levels.

This month the government approved a financing line of up to EUR 200 million to ensure the completion of the works associated with the RRP that are still under way.

“What was decided in the Council of Ministers is that we will ensure that the works that are under way will not be stopped,” said Minister of Economics and Territorial Cohesion, Manuel Castro Almeida, in the briefing after the meeting of the Council of Ministers, which took place in the Guard, on October 1.

According to the ruler, the works can be completed provided the respective beneficiaries undertake to complete them by December 2027.

The RRP is intended to implement a set of reforms and investments for the recovery of economic growth.

Besides having the objective of repairing the damage caused by covid-19, this plan aims to support investments and generate jobs.