Figure 1
infrastructure development. Estimates
of the public sector’s share vary from
between 70 per cent to 90 per cent,
especially in low income countries.
And PPPs seldom emerge where
needs are greatest, such as in water
and sanitation (Figure 1). They are also
concentrated in larger more dynamic
markets (such as Brazil, China, India,
Mexico, Russian Federation and Turkey)
and in telecommunications and energy
projects where finance could typically
be obtained by other means.
This means that growing use of PPPs
has not relieved state responsibilities
for investment in infrastructure
development; governments still
need to do the heavy lifting. Caution
in assessing the long-term fiscal costs
of PPPs is also warranted because
downstream contingent liabilities are
generally not quantified at the project
level. Even when things go according
to plan, government liabilities can arise
in various ways, whether from formal
commitments through contracts, or
informally, stemming from the simple fact
that governments are the providers of
last resort. And when things go wrong,
the fiscal costs can be high. Uncertainty
in PPPs’ fiscal implications is high
because judging the risks involved in
such projects is difficult due to a lack
of standardized financial reporting. For
example, this has prompted Brazil to
introduce exposure limits for state and
local governments and China to reduce
the use of PPPs (UNCTAD, 2015).
PPPs remain a useful source of
long-term financing for development,
especially given the paucity of other
resources. But it is important to
understand fully the consequences
and ramifications of their use and to be
aware of potential future costs. This will
require efforts to improve accountability
and transparency on PPPs. An important
step in this regard would be adopting
transparent accrual accounting systems
that make explicit the long-term
investments and liabilities implicit in PPP
structures. It is also necessary to improve
decision making processes with respect
to PPPs. Creating a dedicated forum for
the sharing of experiences and expertise
on PPPs may be useful, as well as building
networks of developing countries for
this purpose. Technical assistance by the
international development community can
also support efforts at the country level
to help PPPs to deliver their expected
development benefits. ■
1991 1 2 3 0
1992 9 2 4 0
1993 10 4 5 7
1994 14 9 7 1
1995 19 9 8 2
1996 27 17 16 1
1997 43 31 18 10
1998 25 43 15 2
1999 20 29 8 6
2000 23 36 8 7
2001 14 35 8 2
2002 13 27 4 2
2003 19 23 8 2
2004 13 37 6 5
2005 18 52 19 2
2006 26 58 32 3
2007 50 66 30 3
2008 55 74 26 3
2009 72 58 22 2
2010 80 71 32 2
2011 71 61 38 3
2012 74 59 58 6
2013 60 57 38 4
2014 52 53 55 4
43