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Mr. M. Cangiano, Mr. Barry Anderson, Mr. Max Alier, Murray Petrie, and Mr. Richard Hemming

Abstract

Public-private partnerships (PPPs) refer to arrangements under which the private sector supplies infrastructure assets and infrastructure-based services that traditionally have been provided by the government. PPPs are used for a wide range of economic and social infrastructure projects, but they are used mainly to build and operate roads, bridges and tunnels, light rail networks, airports and air traffic control systems, prisons, water and sanitation plants, hospitals, schools, and public buildings. PPPs offer benefits similar to those offered by privatization, which is the sale of government-owned enterprises or assets. By the late 1990s, when privatization was losing much of its earlier momentum, PPPs began to be widely seen as a means of obtaining private sector capital and management expertise for infrastructure investment. After a modest start, a wave of PPPs is now beginning to sweep the world. This Special Issue paper provides an overview of some of the issues raised by PPPs, with a particular focus on their fiscal consequences. It also looks at government guarantees, which are used fairly widely to shield the private sector from risk and are a common feature of PPPs. And it examines the consequences of PPPs and guarantees for debt sustainability. The paper concludes with a list of measures that can maximize the benefits and minimize the fiscal risks associated with the use of PPPs. Various appendices augment the discussion by examining country experiences with PPPs, summarizing the statistical reporting framework used to discuss fiscal accounting and reporting, explaining accounting for risk transfer, examining how guarantees are modeled and estimated in Chile, and summarizing international accounting and reporting standards for contingent liabilities.

International Monetary Fund

. The concessions program in Chile covers 44 contracted projects, in transportation and other areas, with a total value of US$5.7 billion. In several of these contracts, the government provides a minimum revenue guarantee to concession operators, and in return, the concession firm enters into a revenue sharing agreement by which it shares revenue with the government once a threshold is exceeded. Chile’s success with PPPs has been underpinned by a solid institutional framework, well-developed procedures to identify, evaluate and tender projects, efforts to ensure

International Monetary Fund

demanding in terms of technical capacity and information requirements. The accompanying background paper on Government Guarantees and Fiscal Risk (SM/05/120) describes these techniques and illustrates their application in Chile, where it is estimated that the contingent liabilities associated with minimum revenue guarantees provided to concession firms amount to only about ¼ percent of GDP in expected value terms. The maximum exposure is about 5½ percent of GDP, while total investment under the concessions program is around 6¼ percent of GDP. Interestingly, similar

International Monetary Fund
This paper reports on findings from eight pilot country studies on public investment that were carried out during the second half of 2004. The pilot country studies covered a diverse group of countries. Specifically, they included countries in Latin America (Brazil, Chile, Colombia, and Peru), Africa (Ethiopia and Ghana), the Middle East (Jordan), and Asia (India).
International Monetary Fund

and from the concession firms, but it also reports the present value of future payments for the period 2004-2030. This makes it possible to have a complete picture of the long-term costs and risks associated with the PPPs. However, transparency could be further strengthened by publishing full information on original and renegotiated contracts. A uniform template could be developed to summarize the key provisions of contracts on the Ministry of Public Works’ website and as part of budget documentation. For additional case studies of PPPs, including a number in

International Monetary Fund
This report includes five background studies with emphasis on vulnerabilities and growth, the focus of the 2006 Article IV Consultation with Uruguay. Stocks of key financial balance sheet vulnerabilities are also discussed. With the appreciation of the peso since early 2004, the discussion on competitiveness has intensified. To assess competitiveness, the paper looks at balance of payments trends, the ratio of tradable to nontradable prices, cost and profitability measures, and real exchange rates and their alignment with purchasing power parity (PPP).
International Monetary Fund
The Manual, which is a companion document to the IMF’s Code of Good Practices on Fiscal Transparency (2007), has been revised to reflect the new Code and to provide more recent examples of good practice by individual countries. The Manual expands and explains the pillars and principles of the Code and provides richer and more in-depth coverage of each good practice. Country examples are taken from Reports on Standards and Codes (ROSCs). The Manual also includes new linkages to the Guide on Resource Revenue Transparency (2007), including reporting on contracts, quasi-fiscal activities and use of public assets.