NEW REPORT: Infrastructure amid Latin America's coronavirus crisis

Latin America’s infrastructure builders and operators have been battered by the coronavirus pandemic, and bolstering their recovery – and pushing ahead with new initiatives – will be a key element of the overall recovery the region’s economies will be seeking as we overcome the immediate health crisis.

Lockdowns restricting the movement and gathering of people have halted or slowed construction projects in most countries, and concession operators have been particularly walloped. Brazil’s airports, for example, saw passengers reduced by about 95% year-on-year in April.

And pressure on government finances as a result of the pandemic, as tax collection and GDPs slip, has raised the risk of payment delays to infrastructure projects in the region, exposing liquidity risks, according to Fitch Ratings.

“In some projects, liquidity requirements were underestimated and the longer than anticipated collection days results in unexpected stress on cash flows,” Fitch wrote in late May. Projects experiencing prolonged payment delays have turned to reserve funds, accrued dividends and delaying their own supplier payments to cover working capital needs.

Governments’ financial woes have sparked growing indebtedness as some states borrow to try to stabilize their economies, giving rise to a dilemma between raising infrastructure spending to stimulate the economy, or cutting committed spending to save, according to Richard Abadie, global leader of PwC’s capital projects and infrastructure group.

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