Enforcing Public-Private Partnership Contract: How do Fiscal Institutions Matter?

Author/Editor:

Manabu Nose

Publication Date:

November 15, 2017

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Public-private partnerships (PPPs) have increased rapidly in emerging and developing countries, creating both opportunities and fiscal challenges. One of the main challenges is that while governments have increased commitments in guarantees and direct subsidies to promote PPPs, contractual disputes remain high with significant costs. This paper examines how fiscal institutions affect the selection of PPP contracts and the probability of contract disputes using about 6,000 PPP contract-level data. The analysis shows that larger government financing needs, lower budget transparency and bureaucratic efficiency are associated with higher probability for governments to offer guarantees. Propensity score matching results show that disputes are more common for guaranteed contracts due to adverse selection and contingent liability effects. PPP management quality and budget transparency are found to be key determinants for a longer survival of PPPs.

Series:

Working Paper No. 17/243

Subject:

English

Publication Date:

November 15, 2017

ISBN/ISSN:

9781484328286/1018-5941

Stock No:

WPIEA2017243

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

32

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