Selected Issues Papers

Public-Private Partnerships (PPPs) utilize private sector expertise, risk sharing, management, and financing to improve public investment. However, these benefits also carry risks. Project level risks include poor selection, optimism bias, off-budget financing, and contract renegotiation. Countries can manage these risks by integrating PPPs into the public investment plan, testing assumptions via scenario analysis, and evaluating risks during the selection process. Macroeconomic risks can arise if PPPs perform poorly or accumulate too rapidly. These risks can be addressed by implementing an annual cap on new projects or a cap on the PPP stock. Having a robust system to monitor PPPs improves implementation and guards losses from contingent liabilities.