Fiscal and Debt Assessment of PPPs
This presentation delivered to ADB staff and other event participants focused on the possible fiscal and debt impacts of public-private partnership (PPP) investment, and how these are most effectively managed. The session forms part of a program of webinars dealing with the application of the principles of Quality Infrastructure Investment (QII) to PPP transactions. When well-structured and developed as part of a country’s strategic infrastructure planning program, PPPs can assist governments to improve public services. However, these outcomes are not guaranteed. Strong governance institutions are required to manage risks and avoid unexpected costs from PPPs. For reasons including accounting treatment, asset recognition criteria and poor accountabilities for the management of contingent liabilities, PPPs may create the illusion that they fill funding gaps and even cost less than traditional public investment. They can, however, turn out to be more expensive at the project level and undermine fiscal sustainability at the portfolio level, particularly when governments are not well placed to recognize and properly provision for contingent costs and associated fiscal risks.
This training on fiscal and debt impacts of PPP investment examined these issues, specifically by:
• providing examples of typical sources of PPP fiscal risk; and
• describing best practice governance models and policy frameworks for managing PPP fiscal risks.