Budgeting and Reporting for Public-Private Partnerships

Katja Funke, Timothy Irwin (timothyirwin@hotmail.com) and Isabel Rial
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Katja Funke: International Monetary Fund
Isabel Rial: International Monetary Fund

No 2013/7, International Transport Forum Discussion Papers from OECD Publishing

Abstract: Public-private partnerships (PPPs) can appeal to governments because they offer a new way of providing public services that is possibly more efficient than traditional public finance. But they can also appeal to governments because they allow new investments to be undertaken without any immediate increase in reported government spending or debt. This second motive for using PPPs rests largely on an illusion, because in the absence of efficiency gains (which are probably small relative to the total cost of the project), PPPs and publicly financed projects have a similar long-run effect on public finances. In some PPPs, the government defers payment, but ultimately must still pay the full cost of the project. In others, it concedes the right to collect user fees, and thus loses revenue it would have collected if the project had been financed traditionally.

Date: 2013-04-01
New Economics Papers: this item is included in nep-ppm and nep-pub
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