Ongoing investigations into widespread corruption in Latin America involving Brazilian construction giant Odebrecht has "stalled" infrastructure growth in the region, Moody's said on Wednesday.
According to the credit rating agency, the investigations "are slowing major energy and infrastructure development across the Latin American region, creating negative spillovers for governments, companies and banks."
Revelations that the company paid hundreds of millions of dollars in bribes and kickbacks to government officials in more than 10 countries in return for lucrative public works contracts have led prosecutors to open the books into past and present projects.
"Several infrastructure concessions have been halted and will need to be relaunched as a result of the Odebrecht corruption scandal," Moody's said, adding "the legal and administrative hurdles for these projects will likely take another 12 to 24 months."
In Peru, Colombia and Panama, projects to build pipelines and improve river navigation have been cancelled, the agency said.
"The repercussions have been felt across the economy, contributing to recent reductions of Moody's growth forecasts in several of these countries. Companies participating in these projects are now facing cash flow pressures, and banks that lent to developers or operators are confronting higher asset risks," said Moody's.
While the scandal worsens Latin America's already lacking infrastructure, the probe should "lead to a region-wide push to strengthen anti-corruption and procurement procedures," said the agency.
"In the long-run, public works projects will benefit from increased transparency," the agency added.
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