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

_IMF Working Papers, November 15, 2017_

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## Bibliographic details
- Authors: Manabu Nose
- Published: November 15, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484328286.001

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### Overview and scope
- Author: Manabu Nose
- Publication date: November 15, 2017
- Series: IMF Working Papers, Working Paper No. 2017/243
- Pages: 32
- Volume: 2017
- Issue: 243
- DOI: https://doi.org/10.5089/9781484328286.001
- Stock No: WPIEA2017243
- ISBN: 9781484328286
- ISSN: 1018-5941
- Data coverage: analysis uses about 6,000 PPP contract-level data

### Key findings
- PPPs have increased rapidly in emerging and developing countries, creating both opportunities and fiscal challenges.
- Governments have increased commitments in guarantees and direct subsidies to promote PPPs, while contractual disputes remain high with significant costs.
- Larger government financing needs are associated with a higher probability that governments offer guarantees.
- Lower budget transparency is associated with a higher probability that governments offer guarantees.
- Lower bureaucratic efficiency is associated with a higher probability that governments offer guarantees.
- Propensity score matching results show that disputes are more common for guaranteed contracts due to:
  - adverse selection effects, and
  - contingent liability effects.
- PPP management quality and budget transparency are key determinants for a longer survival of PPPs.

### Methodology highlights
- Empirical analysis conducted on about 6,000 PPP contract-level observations.
- Propensity score matching used to assess the impact of guarantees on dispute incidence.

### Policy implications and recommendations (implied by analysis)
- Improve budget transparency to reduce the probability that governments offer guarantees and to support longer PPP survival.
- Strengthen bureaucratic efficiency to lower reliance on guarantees in PPP contracts.
- Enhance PPP management quality to increase PPP project survival and reduce disputes.
- Recognize and manage adverse selection and contingent liability risks when offering guarantees on PPPs.

*IMF Working Paper by Manabu Nose, "Enforcing Public-Private Partnership Contract: How do Fiscal Institutions Matter?", November 15, 2017.*

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_Source: https://www.imf.org/en/publications/wp/issues/2017/11/15/enforcing-public-private-partnership-contract-how-do-fiscal-institutions-matter-45353_