Mastering the Risky Business of Public-Private Partnerships in Infrastructure

Author/Editor:

Manal Fouad ; Chishiro Matsumoto ; Rui Monteiro ; Isabel Rial ; Ozlem Aydin Sakrak

Publication Date:

May 10, 2021

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Investment in infrastructure can be a driving force of the economic recovery in the aftermath of the COVID-19 pandemic in the context of shrinking fiscal space. Public-private partnerships (PPP) bring a promise of efficiency when carefully designed and managed, to avoid creating unnecessary fiscal risks. But fiscal illusions prevent an understanding the sources of fiscal risks, which arise in all infrastructure projects, and that in PPPs present specific characteristics that need to be addressed. PPP contracts are also affected by implicit fiscal risks when they are poorly designed, particularly when a government signs a PPP contract for a project with no financial sustainability. This paper reviews the advantages and inconveniences of PPPs, discusses the fiscal illusions affecting them, identifies a diversity of fiscal risks, and presents the essentials of PPP fiscal risk management.

Series:

Departmental Paper No 2021/010

Subject:

Frequency:

occasional

English

Publication Date:

May 10, 2021

ISBN/ISSN:

9781513576565/2616-5333

Stock No:

MRBPPPIEA

Pages:

61

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