Best Practices in PPP Financing Latin America - e-Institute - World ...

Best practices in Public-Private Partnerships financing in Latin America
a team specialized in offering financial guarantees. It is
organized by sector specialists (roads, water and wastes),
and granting financial guarantees is among its activities.
• Projects where FONADIN offers its guarantees are very
risky. Consequently, there is high probability in making
effective the guarantee option.
• The type of guarantee offered by FONADIN would not
be well accepted in some banks. The type of guarantee
that is more commonly accepted is the one offered by
BANOBRAS, i.e., those covering the timely payment of
obligations.
In recent years, some States and Municipalities of Mexico
have structured their finances based on future tax collection.
Traditionally, this financial structuring consists in the Banks
granting loans, which are guaranteed with funds of the States
and Municipalities.
Brazil
One of the most distinctive aspects of the PPP scheme in
Brazil was the creation in 2005 of the “Fundo Garantidor de
Parcerias Público – Privadas” (FGP) at the federal level. The
initial amount was $3 billion and nowadays it has increased to
US$ 180 million. The fund’s objective is to ensure that private
sector payments and government subsidies involved in PPP
projects will be performed on time and as agreed. The trustee
of the fund is the Banco do Brasil, and to date the FGP has
provided a single guarantee for $ 120 million for Pontal Project
(irrigation project of 7.7 ha., 25, sponsored award).
The possible reasons for which the FGP has not had much
demand are:
• Complicated administrative and bureaucratic procedures
causing delays in the approval of payments.
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