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How to Control the Fiscal Costs of Public-Private Partnerships
Author:
Mr. Timothy C Irwin
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Samah Mazraani null

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Mr. Sandeep Saxena
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Series:
IMF How To Notes
Volume/Issue:
Volume 2018: Issue 004
Language:
English
Publication Date:
16 Oct 2018
DOI:
https://doi.org/10.5089/9781484380925.061
ISBN:
9781484380925
ISSN:
2522-7912
Pages:
14
Keywords:
FADHTN; HTN; PPP; cost; balance sheet; investment; firm; PPP company; PPP contract; PPP law; PPP program; PPP portfolio; Public investment and public-private partnerships (PPP); Public investment spending; PPP Fiscal Risk Assessment Model (PFRAM); Accounting standards; Contingent liabilities; Africa; Global
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF How To Notes
IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund