Rudolph, Heinzde la Torre, Augusto2016-01-072016-01-072015https://hdl.handle.net/10986/23595There are three stakeholders in a public-private partnership (PPP), (a) the government in office, (b) private firms (financial and non-financial) and investors (individual and institutional), and (c) final beneficiaries (taxpayers or users, present and future). The raison detre of PPPs is threefold: (i) to crowd in private firms and investors into projects that they will otherwise not undertake; (ii) to transfer to the private sector a significant part of the risks and costs that the government would otherwise fully absorb; and (iii) to ensure that the projects efficiency/quality is at least equal to that obtained if the government alone carried all costs and risks. Important (yet often ignored) implications follow. First, outsourcing (e.g., construction and maintenance) to the private sector does not by itself constitute a PPP if all risks and costs are, in one way or another, still borne by the government. Second, a PPP does not reduce total risk; it simply distributes it differently, involving private sector firms and investors. Third, the total costs borne by the final beneficiaries would be lower under a PPP (compared to a project whose costs and risks rest completely in the governments balance sheet) only if the PPP achieves efficiency gains; otherwise, what beneficiaries save in taxes they will pay in user fees, although, under a PPP, more of the costs would be assigned to direct beneficiaries/users, than to taxpayers at large. Fourth, that a PPP can provide (cash) budget relief may be a welcome corollary for the government in office but it is not a core objective of a PPP.en-USCC BY 3.0 IGOAUCTIONCONTINGENT LIABILITIESCAPITAL MARKETSFINANCIAL SERVICESHOLDINGBROKERAGELIABILITYACCOUNTINGCHECKSPUBLIC-PRIVATE PARTNERSHIPSFUND MANAGERSINTERESTINSTITUTIONAL INVESTORSLIFE INSURANCEGUARANTEESLONG-TERM FINANCESAVINGS ACCOUNTSEXCHANGEDISCOUNT RATECAPITAL BASELIQUIDITYLONG-TERM LIABILITIESFIXED ANNUITIESCAPITAL STRUCTURESREVENUESCAPITAL STRUCTUREREGULATORDEFAULT RISKBONDSLOANDISCOUNTRENEGOTIATIONSUBSIDYPRICESAVINGBENEFICIARIESGOVERNMENT GUARANTEESPENSIONCREDITORDISPUTE RESOLUTIONBUDGETCONCESSIONLONG-TERM ASSETMARKET LIQUIDITYINVESTMENT HORIZONSINSTITUTIONAL INVESTORPRIVATE CREDITORDISPUTE RESOLUTION MECHANISMSAVINGSPUBLIC-PRIVATE PARTNERSHIPCONCESSION CONTRACTCURRENCYCONTRACT RENEGOTIATIONINFRASTRUCTURE PROJECTCONTRACTSPRIVATIZATIONSOPTIONSMARKETSDEBTRETURNPUBLIC FINANCENEGOTIATIONSLIFE INSURANCE COMPANIESBREACH OF CONTRACTLOANSSECONDARY MARKET LIQUIDITYRISK SHARINGPENSION FUNDSFINANCIAL SYSTEMDUE DILIGENCESUBSIDIESFINANCETAXESCONTINGENT LIABILITYINVESTORSSYSTEMIC RISKSGOODJURISDICTIONPROCUREMENTDISCLOSURE STANDARDSSOVEREIGN RISKFUTUREGOVERNMENT GUARANTEECONFLICTS OF INTERESTCONCESSIONSBOND MARKETCONTRACTINFRASTRUCTURE BONDSBIDSBALANCE SHEETMARKETDEFAULTINFRASTRUCTURE PROJECTSLOCAL CURRENCYFINANCIAL CONTRACTSGOVERNANCERENEGOTIATIONSINFRASTRUCTURE CONCESSIONSINSURANCEECONOMIC DEVELOPMENTGOVERNMENT BONDSINTERESTSINVESTORMISSING MARKETMUTUAL FUNDINVESTMENTRATES OF RETURNBONDCOMMERCIAL BANKSCONTRACTUAL OBLIGATIONINFRASTRUCTURE BONDINFRASTRUCTURE FINANCEFINANCIAL ASSETSPRIVATE INVESTORSBIDCOORDINATION FAILURESPROFITRESOLUTION MECHANISMCONTRACT RENEGOTIATIONSSUPERVISORY AGENCYPENSION FUNDLONG-TERM INVESTORSINSURANCE COMPANIESLEVERAGEEXCHANGE RATEINSTITUTIONAL FRAMEWORKSECONDARY MARKETFINANCIAL SYSTEMSLIABILITIESLONG TERM FINANCEOUTSOURCINGFINANCIAL SERVICES INDUSTRYGUARANTEELONG-TERM ASSETSUNDERDEVELOPED FINANCIAL SYSTEMSEXCHANGE RATE REGIMESFAIR PRICEASSET MANAGERSWorking PaperWorld Bank10.1596/23595