US President Joe Biden and other G7 leaders have unveiled ambitious plans to mobilise $600 billion in funding by 2027 to deliver transparent and game-changing infrastructure projects in developing countries like India, in a move seen as a counter to China's Belt and Road Initiative.
The Partnership for Global Infrastructure and Investment (PGII) unveiled on Sunday here during the G7 Summit relaunches a scheme unveiled at last year's G7 talks in England.
President Biden said the plan would deliver returns for everyone.
"Today, the nations of the G7 launched the Partnership for Global Infrastructure and Investment (PGII)," Biden said.
"Collectively, we aim to mobilise nearly $600 billion from the G7 by 2027 to invest in critical infrastructure that improves lives and delivers real gains for all of our people," he tweeted.
"I want to be clear – the G7's announcement of a new global infrastructure partnership isn't aid or charity. It’s an investment that will deliver returns for everyone – including the American people – and boost all of our economies," Biden tweeted.
Chinese President Xi Jinping's multi-trillion dollar Belt and Road Initiative (BRI) has been criticised for hitting many developing nations with too much debt.
The PGII has been hailed as a way to counter China's ambitious BRI. Launched by President Xi in 2013, the BRI provides financing for emerging countries to build infrastructure like ports, roads and bridges.
While it has developed trade links, it has also been criticised as a means of providing "predatory loans", forcing debt-saddled countries like Sri Lanka to cede key assets if they fail to meet their debt repayments.
The PGII scheme would allow countries to "see the concrete benefits of partnering with democracies," President Biden said.
He said the PGII will "mobilise strategic investments in areas vital to sustainable development and our shared global security."
The White House, in a fact sheet, said the US will mobilise hundreds of billions of dollars and deliver quality, sustainable infrastructure that makes a difference in people’s lives around the world, strengthens and diversifies the supply chains, creates new opportunities for American workers and businesses, and advances our national security.
It said that President Biden will announce that the US aims to mobilise $200 billion for PGII over the next 5 years through grants, Federal financing, and leveraging private sector investments.
"Together with G7 partners, we aim to mobilise $600 billion by 2027 in global infrastructure investments. And this will only be the beginning. The United States and its G7 partners will seek to mobilise additional capital from other like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and more," it said.
On India, the White House fact sheet said the U.S. International Development Finance Corporation (DFC) will invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3, an impact venture capital fund that invests in entrepreneurs building the future of agriculture, food systems, climate, and the rural economy in India.
It said the Fund seeks to invest in companies that increase food security and promote both climate resilience and climate adaptation in India, as well as improve the profitability and agricultural productivity of smallholder farms.
The Fund is targeting a $65 million first close in September 2022 and a final close in 2023 to reach its target capitalisation of $130 million. Through this investment, DFC expects to mobilise $30 million in private capital, the fact sheet said.
Internationally, infrastructure has long been underfunded, with over $40 trillion in estimated need in the developing world –– a need that will only increase with the climate crisis and population growth. Many low- and middle-income countries lack adequate access to high-quality financing that meets their long-term infrastructure investment needs, according to the Memorandum on the Partnership for Global Infrastructure and Investment released by the White House.
While the US has promised to raise $200 billion of the total through grants, federal funds and private investment, while the EU has announced a further 300bn euros, the BBC reported.
The initiative will be geared towards tackling climate change, improving global health, achieving gender equity and building digital infrastructure.
European Commission President Ursula von der Leyen said the aim of the latest project was to present a "positive powerful investment impulse to the world to show our partners in the developing world that they have a choice".