Public-Private Partnerships (PPPs) refer to arrangements where the private sector supplies infrastructure assets and services that traditionally have been provided by the government. PPPs involve a wide range of social and economic infrastructure projects, but they are mainly used to build and operate hospitals, schools, prisons, roads, bridges and tunnels, light rail networks, air traffic control systems, and water an sanitarian plants.
The main purpose of this paper is to provide an overview of some of the issues raised by PPPs, with particular focus on their fiscal consequences. Following a brief discussion of country experience with PPPs in section 1, section 2 describes the main characteristics of PPPs. Section 3 covers some economic analysis that is relevant to the major issues raised by PPPs, and section 4 focuses on the institutional framework that is needed for their success. A key to success is risk transfer to the private sector, and section 5 addresses the challenges involved in assessing who bears PPP risk and the implications of limited risk transfer. Section 6 covers the important topic of fiscal accounting and reporting, and offers interim guidance while an internationally accepted accounting and reporting standard for PPPs is being developed.
Section 1 discusses the methodology and main assumptions. Section 2 presents the main results of projecting net fiscal revenues arising from tax-favoured schemes over the period 2000-2005 and examines the extent to which alternative assumptions on saving diversion affect those results. Finally, Section 3 explores a number of policy options with particular emphasis on factors potentially affecting the effectiveness of tax-favoured pension schemes in boosting private saving.