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Return of the state? An appraisal of policies to enhance access to credit for infrastructure-based PPPs


  • Mark Hellowell
  • Veronica Vecchi
  • Stefano Caselli


The global financial crisis had a major impact on the cost and availability of finance for infrastructure-based public-private partnerships (PPPs). In response, policy-makers have introduced models of 'credit-enhancement' that aim to reduce the risk faced by private investors and attract additional capital into the market. Other policies involve hybrid structures in which public capital substitutes for private finance. The emergence of capital constraints in recent years has resulted from increased sensitivity among investors to liquidity risks and capital adequacy regulations, rather than credit risks. Models of credit-enhancement therefore fail to target the source of the problem directly and distort incentive structures. Given liquid and efficient markets for government debt, the authors conclude that a policy in which the provision of public finance is combined with enhanced risk-bearing by private financiers is likely to be optimal.

Suggested Citation

  • Mark Hellowell & Veronica Vecchi & Stefano Caselli, 2015. "Return of the state? An appraisal of policies to enhance access to credit for infrastructure-based PPPs," Public Money & Management, Taylor & Francis Journals, vol. 35(1), pages 71-78, January.
  • Handle: RePEc:taf:pubmmg:v:35:y:2015:i:1:p:71-78
    DOI: 10.1080/09540962.2015.986896

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    References listed on IDEAS

    1. International Monetary Fund, 2009. "The Effects of the Financial Crisison Public-Private Partnerships," IMF Working Papers 09/144, International Monetary Fund.
    2. James Leigland & Henry Russell, 2009. "New Needs for Technical Assistance : Responding to the Effects of the Financial Crisis on Private Participation in Infrastructure," World Bank Other Operational Studies 10542, The World Bank.
    3. Timothy C Irwin, 2012. "Accounting Devices and Fiscal Illusions," IMF Staff Discussion Notes 12/02, International Monetary Fund.
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    Cited by:

    1. Veiko LEMBER & Ole Helby PETERSEN & Walter SCHERRER & Robert ÅGREN, 2019. "Understanding The Relationship Between Infrastructure Public‒Private Partnerships And Innovation," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(2), pages 371-391, June.

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