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Political risk in project and infrastructure finance: rising challenges and modern mitigation strategies
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Drawing on transaction experience across Europe the CIS Asia and Africa this article examines the most material political risks affecting project finance today and assesses how mitigation strategies have evolved in response.
Project finance has always involved the allocation and management of complex risks across financing construction legal operational and political domains. Among these political risk has become a central constraint on bankability particularly for large infrastructure energy and natural resources projects operating across borders.
This shift reflects a broader change in behaviour of states. Governments are more interventionist in sectors viewed as strategic fiscal pressures are increasing and geopolitical fragmentation has reduced tolerance for long-term private contractual arrangements that limit public policy flexibility. As a result political risk can no longer be treated as a residual issue addressed through standard documentation; it has become a core structuring consideration for lenders and...
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