IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Assessing contingent liabilities in public‐private partnerships (PPPs)

  • Sfakianakis, Emmanouil

    ()

    (European Securities and Markets Authority (ESMA))

  • Laar, Mindel van de

    ()

    (UNU-MERIT / MGSoG, Maastricht University)

Registered author(s):

    Public-private partnerships (PPPs) can impose important future cost on the government, which in turn create obligations similar to public debt obligations for financing infrastructure investment. Apart from that, government guarantees, typical in PPP contracts, constitute explicit contingent liabilities. The risk that arises from such guarantees must be transparently valued to assess a country’s fiscal profile. In this study, we aim to show that the notion of a PPP as a (set of) contingent claim(s) can also be used to value the PPP public risk. Valuing contingent claims in this manner is important, as it allows us to compare more carefully different set-ups of a PPP. We introduce and analyse the different scenarios that were at the Chilean government’s disposal for executing a transport infrastructure project. Our findings reveal that, for the first years of a PPP programme, the burden on the surplus or deficit will be less in the case of the PPP compared to typical public investment. Secondly, the net contingent PPP flows constitute the real effect on the deficit and correspondingly on the public debt and weaken the government’s fiscal stance. Finally, we attribute a specific price to the PPP public risk introducing CDS valuation with and without counterparty (government) default.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.merit.unu.edu/publications/wppdf/2012/wp2012-030.pdf
    Download Restriction: no

    Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 030.

    as
    in new window

    Length:
    Date of creation: 2012
    Date of revision:
    Handle: RePEc:unm:unumer:2012030
    Contact details of provider: Postal: P.O. Box 616, 6200 MD Maastricht
    Phone: (31) (0)43 3883875
    Fax: (31) (0)43 3216518
    Web page: http://www.merit.unu.edu/

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Efraim Sadka, 2006. "Public-Private Partnerships; A Public Economics Perspective," IMF Working Papers 06/77, International Monetary Fund.
    2. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2012030. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.