The Effects of the Financial Crisison Public-Private Partnerships
IMF Working Papers, July 1, 2009
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Bibliographic details
- Published: July 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872910.001
Summary
- The paper investigates the impact of the global financial crisis on public-private partnerships (PPPs) and the circumstances under which providing support to new and existing projects is justified.
- Based on country evidence, "cost of and access to finance" are found to be the main channels of transmission of the financial crisis, affecting in particular pipeline PPP projects.
- Possible measures to help PPPs during the crisis include:
- contract extensions
- output-based subsidies
- revenue enhancements
- step-in rights
- To limit government's exposure to risk, while preserving private partner's efficiency incentives, intervention measures should:
- be consistent with the wider fiscal policy stance
- be contingent on specific circumstances
- be adequately costed and budgeted
- "Governments should be compensated for taking on additional risk."
Key Findings and Analysis
- Main transmission channels of the financial crisis to PPPs:
- cost of finance
- access to finance
- Pipeline PPP projects are particularly affected by these channels.
- Country evidence supports targeted, contingent interventions rather than blanket support.
Policy Recommendations
- Consider contract-level measures to support PPPs during crises:
- contract extensions
- output-based subsidies
- revenue enhancements
- step-in rights
- Design interventions to:
- limit government's exposure to risk
- preserve private partner efficiency incentives
- align with the wider fiscal policy stance
- be contingent on specific circumstances
- be adequately costed and budgeted
- Ensure compensation for governments that assume additional risk.
Subjects and Keywords
- Subjects: Exchange rate risk, Expenditure, Financial crises, Financial regulation and supervision, Financial statements, Market risk, Public financial management (PFM), Public investment and public-private partnerships (PPP)
- Keywords: Exchange rate risk, financial crises, Financial statements, Global, Market risk, PPP Canada, PPP consortium, PPP market, PPP program, PPP project, PPP vulnerability, PPPs, private sector, public investment, Public investment and public-private partnerships (PPP), risk realization, value-for-money, WP