Risk Mitigation and Sovereign Guarantees for Public–Private Partnerships in Developing Economies

25 Pages Posted: 22 Feb 2019

Date Written: November 27, 2018

Abstract

Public–private partnerships (PPPs) face a range of challenges in developed economies, such as appropriate risk sharing, attracting the right sponsors, and ensuring quality of service. As a large percentage of ADB’s developing member countries are considered risky borrowers by international standards, sovereign risks play an important role in predicting the number of PPPs as well as the size of investment commitments. To catalyze PPPs in developing economies with higher risk ratings, sovereign risk mitigation is often needed. This article explores how country and sovereign risks deter private investors, solutions provided by multilateral development banks to reduce these risks, and policy implications for employing these solutions.

Keywords: public–private partnership, risk mitigation, sovereign guarantees

JEL Classification: G32, H41, H81

Suggested Citation

Jett, Alexander, Risk Mitigation and Sovereign Guarantees for Public–Private Partnerships in Developing Economies (November 27, 2018). Asian Development Bank Economics Working Paper Series No. 564 (November, 2018). Available at SSRN: https://ssrn.com/abstract=3339169 or http://dx.doi.org/10.2139/ssrn.3339169

Alexander Jett (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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