Rapid growth in project finance, driven by huge increases in liquidity, helped fuel the gains in private participation in infrastructure (PPI) in developing countries in the past decade. But when the financial crisis hit, the excess liquidity began to dry up as lenders backed away from practices...

In developing countries the global financial crisis is leading to serious difficulties for infrastructure projects with private participation. In some cases governments are responding by simplifying their project approval processes or by substituting public for private financing. Even if markets...