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

Day 1 - FIFTH SESSION
Fifth Session:
Fiscal Risks and PPPs
Headed by
CLIVE HARRIS, Practice Manager, Public-Private
Partnerships, World Bank Institute
DAY 1
Lecturer
RUI MONTEIRO, Senior PPP Specialist, World Bank
Institute
Panel members
DAVID DUARTE, Chief of Contingent Liabilities and PPPs,
Ministry of Finance, Chile
LUIS EDUARDO ARANGO, Deputy Director, Ministry of
Finance, Colombia
Rui Monteiro pointed out that PPPs can create fiscal space
provided that selected projects be efficient. The degree of
efficiency of a project will be determined by: project selection
(cost-benefit analysis, affordability analysis and PPP model
definition), contracting (initial studies, bid preparation and bid
management), and management of contracts.
It is important to consider that with PPPs the private sector
remains contractually bound in order to ensure the contract’s
efficiency, but the public sector is also committed in the
long term. Consequently, the public administration should
be concerned with identifying fiscal risks in PPP project
preparation, the sustainability of the PPP program in the long
term, and public-private interface management (considering
that this relation can be, for example, for 25 years).
The evaluation of fiscal impact of PPP projects is essential in
order to ensure their sustainability. For example, in the case of
Portugal, millions of Euros were committed in PPPs, assuming
they would enlarge the fiscal budget. However, this did not
happen, and the financial crisis caused a scarcity of fiscal
resources, which made PPP projects unsustainable.
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