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

Manabu Nose

No 2017/243, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; adverse selection; capital stock; Public-private partnerships; public investment management; fiscal risk; propensity score matching; dispute risk; PPP contract; drive government decision; PIM quality index; government involvement; government financing; dispute case; management quality; indebted government; PPP investment; provision of guarantee; PPP project; Public investment and public-private partnerships (PPP); Budget planning and preparation; Fiscal risks; Contingent liabilities; Asia and Pacific (search for similar items in EconPapers)
Pages: 32
Date: 2017-11-15
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=45353 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2017/243

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().