Private Infrastructure, Public Risk
This economic policy note presents the dilemma between private infrastructure and public risk. The note examines the fact that, increasingly, governments in many developing countries are relying on the private sector to provide infrastructure services, thus being forced - because of policy shortcomings - to assume risks that private investors should bear. However, through the improvement in policies, such as risk reduction and guarantee improvement, governments can avoid these risks, while attracting private infrastructure investment. Guidelines are provided for allocating risk, where two factors are determined: 1) the degree of influence in the control of such risk; and, 2) the ability to bear risk. However, since these factors may adversely react, other factors are considered as well, such as regulatory, quasi-commercial risks, construction cost risks, in addition to exchange and interest rates risks. The adoption of accrual accounting measures is suggested as a crucial step for the improvement in guarantee management.
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| Language: | English |
| Published: |
World Bank, Washington, DC
1998-11
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| Subjects: | GOVERNMENT POLICY, GOVERNMENT GUARANTEES, PRIVATE SECTOR, RISK MANAGEMENT, RISK ASSESSMENT, PROJECT FINANCE, CREDITWORTHINESS, FINANCING PROGRAMS, POLITICAL RISKS, EXCHANGE RATES, INTEREST RATES ACCRUAL ACCOUNTING, AGENTS, AIRPORTS, AUTONOMY, BORROWING, BUDGET CONSTRAINTS, CONSUMERS, CONTINGENT LIABILITIES, CONTINGENT LIABILITY, DISCLOSURE, ECONOMIC POLICIES, ECONOMICS, ENVIRONMENTAL PROBLEMS, EXCHANGE RATE, EXPENDITURES, FOREIGN BANKS, INSURANCE, INTEREST RATES, LAWS, PORTS, PRESENT VALUE, PRIVATIZATION, PUBLIC LIABILITY, RATES, REGULATORY AGENCIES, RISK TAKING, ROADS, STATE ENTERPRISES, TAX, TELECOMMUNICATIONS, TERMS OF TRADE, |
| Online Access: | http://documents.worldbank.org/curated/en/1998/11/438759/private-infrastructure-public-risk https://hdl.handle.net/10986/11521 |
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| Summary: | This economic policy note presents the
dilemma between private infrastructure and public risk. The
note examines the fact that, increasingly, governments in
many developing countries are relying on the private sector
to provide infrastructure services, thus being forced -
because of policy shortcomings - to assume risks that
private investors should bear. However, through the
improvement in policies, such as risk reduction and
guarantee improvement, governments can avoid these risks,
while attracting private infrastructure investment.
Guidelines are provided for allocating risk, where two
factors are determined: 1) the degree of influence in the
control of such risk; and, 2) the ability to bear risk.
However, since these factors may adversely react, other
factors are considered as well, such as regulatory,
quasi-commercial risks, construction cost risks, in addition
to exchange and interest rates risks. The adoption of
accrual accounting measures is suggested as a crucial step
for the improvement in guarantee management. |
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