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

Best practices in Public-Private Partnerships financing in Latin America
Table N.8
Risk
Distribution
Risk
First Generation
Private
Public
Construction x Partial
Traffic
x
Tolls
x
Land
x
Environmental License
x
Tax
x
Exchange x x
Force Majeure (insurable)
x
Force Majeure (uninsured)
x
Financing
x
Source: Ministry of Transport and Department of National Planning.
situation, macroeconomic management became difficult,
forcing the issuance of debt instruments.
PPP contracts showed deficiencies in the risk allocation
matrix. These Contracts did not specify to what extent risk
was assumed by the public sector, which is equivalent to
saying that the State was assuming an infinite risk. Given
this situation, in 1998, Law 448 was sanctioned, and the
Contingencies Fund was created. It is an extra-budget fund
where the contingent liabilities of the Colombian Government
are entered in the accounts. The law established that the
Treasury Department had to assess such contingencies. This
law helped monitor public finance management and allowed
for processing the contingent obligations of Government
Entities. In this manner, contributing entities were committed
to include in their debt service budgets the necessary
appropriations (funds) to cover possible losses derived
from the contingent obligations under their responsibility;
Contributions are understood as budgetary executions.
Decree 423 was issued in 2008 regulating Law 448, with the
aim of improving risk allocation in Concessions, i.e., trying
- 74 -