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

Day 1 - FIFTH SESSION
Among the recommendations offered by Duarte are the
monitoring of macroeconomic risks and economic efficiency
criteria in public decisions. Likewise, he advised considering
the estimated, and not the expected flow of projects, and
developing PPP projects that are socially beneficial.
He also recommended disclosing all information (contracts,
agreements, commitments, etc.) and contrasting concession
costs with public financing. Finally, risk distribution should
be evaluated, good base line studies should be executed, and
an effective plan of institutional checks & balance should be
established.
Colombian experience
Luis Eduardo Arango pointed out that due to budgetary
restrictions, over the last decade, PPPs have been promoted
in Colombia (the most commonly used modality is
concession), as a mode of financing needed infrastructure
in the country. The problem was that Colombia had security
concerns, and therefore, in order to make projects feasible,
guarantees were granted. The State assumed risks in order
to mitigate uncertainty in the private sector and encourage
its participation. The guarantees were not recorded in
the framework of fiscal accounting because there was no
instrument available to do so. Consequently, the real fiscal
situation was not reflected.
In the risk matrixes of the first PPP generation, the State was
the party that assumed the highest risks; it was assuming the
construction risks, traffic risks, fee risks, land risks and force
majeure risks (See Table N. 8)
Works were executed, yet the contingent liabilities incidence
was high, which led to very strong fiscal pressures. In a crisis
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