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Project finance in local public services: little finance and little project?


  • Chiara Bentivogli

    () (Banca d'Italia)

  • Eugenia Panicara

    () (Banca d'Italia)

  • Alfredo Tidu

    () (Banca d'Italia)


This paper analyzes the potential and the limits of project finance for the provision of local public services and compares them with alternative instruments in the light of current regulation. The main requirements for project finance, even in non “pure” forms, to justify its complex network of contracts, appear to be the presence of synergies between construction and service provision, the allocation of a substantial part of market risk to the private partner, and infrastructure that is large in scale. The available data and a survey carried out in the Emilia-Romagna region show that instruments similar to project finance are widespread in local public services. Yet the actual features of public finance in Italy seem to be far from those that would normally justify its use. The main reason for using project financing has often been to avoid an immediate and direct financial burden to the public administration or to bypass overly rigid rules in the public management of some services.

Suggested Citation

  • Chiara Bentivogli & Eugenia Panicara & Alfredo Tidu, 2008. "Project finance in local public services: little finance and little project?," Questioni di Economia e Finanza (Occasional Papers) 25, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_25_08

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    References listed on IDEAS

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    More about this item


    project finance; local public services; infrastructure; risk allocation;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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