The Effects of the Financial Crisis on Public-Private Partnerships
International Monetary Fund Paper No. 09-144
25 Pages Posted: 19 Sep 2009
Date Written: September 18, 2009
The paper investigates the impact of the global financial crisis on public-private partnerships (PPP's) and the circumstances under which providing support to new and existing projects is justified. Based on country evidence, cost of and access to finance are found to be the main channels of transmission of the financial crisis, affecting in particular pipeline PPP projects. Possible measures to help PPP's during the crisis include contract extensions, output-based subsidies, revenue enhancements and step-in rights. To limit government's exposure to risk, while preserving private partner's efficiency incentives, intervention measures should be consistent with the wider fiscal policy stance, be contingent on specific circumstances, and be adequately costed and budgeted. Governments should be compensated for taking on additional risk.
Keywords: Credit risk, Cross country analysis,Financial crisis, Financial risk, Fiscal policy, Private sector, Public enterprises, Public investment, Public sector, Risk management
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