How to Control the Fiscal Costs of Public-Private Partnerships

By Timothy C Irwin, Samah Mazraani, Sandeep Saxena

October 16, 2018

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Timothy C Irwin, Samah Mazraani, and Sandeep Saxena. How to Control the Fiscal Costs of Public-Private Partnerships, (USA: International Monetary Fund, 2018) accessed November 14, 2024

Summary

This note discusses what finance ministries can do to ensure that public-private partnerships (PPPs) are used wisely. By inviting private participation in infrastructure development and service provision, PPPs can help improve public services. Yet, strong governance institutions are needed to manage risks and avoid unexpected costs from PPPs. While in the short term, PPPs may appear cheaper than traditional public investment, over time they can turn out to be more expensive and undermine fiscal sustainability, particularly when governments ignore or are unaware of their deferred costs and associated fiscal risks. To use PPPs wisely governments should (1) develop and implement clear rules for their use; (2) identify, quantify, and disclose PPP risks and expected costs; and (3) reform budget and government accounting frameworks to capture all fiscal costs comprehensively.

Subject: Accounting standards, Contingent liabilities, Expenditure, PPP Fiscal Risk Assessment Model (PFRAM), Public financial management (PFM), Public investment and public-private partnerships (PPP), Public investment spending

Keywords: Accounting standards, Africa, Balance sheet, Contingent liabilities, Cost, FADHTN, Firm, Global, HTN, Investment, PPP, PPP company, PPP contract, PPP Fiscal Risk Assessment Model (PFRAM), PPP law, PPP portfolio, PPP program, Public investment and public-private partnerships (PPP), Public investment spending

Publication Details

Pages:

14
Volume:

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DOI:

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Issue:

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Series:

How-To Note No. 2018/004
Stock No:

FADHTNEA2018004
ISBN:

9781484380925
ISSN:

2522-7912

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