Government Guarantees : Allocating and Valuing Risk in Privately Financed Infrastructure Projects
Government guarantees can help persuade private investors to finance valuable new infrastructure. But because their costs are hard to estimate and usually do not show up in the government's accounts, governments can be tempted to grant too many guarantees. Drawing on a diverse range of disciplines, including finance, history, economics, and psychology, Government Guarantees : Allocating and Valuing Risk in Privately Financed Infrastructure Projects aims to help governments give guarantees only when they are justified. It reviews the history of government guarantees and identifies the cognitive and political obstacles to good decisions about guarantees. It then develops a framework for judging when governments should bear risk in an infrastructure project (seeking to make precise the oft-invoked principle that risks should be allocated to those best placed to manage them); explains how guarantees can be valued; and discusses how aspects of public-sector management can be modified to improve the likely quality of government decisions about guarantees.
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| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2007
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| Subjects: | BANKS, CAPITAL INVESTMENT, COMMERCIAL CAPITAL, CONSOLIDATION, DEBT OBLIGATIONS, EQUITY CAPITAL, EQUITY INVESTMENT, FIXED INCOME, FOREIGN CAPITAL, GRANT FUNDING, HOLDING COMPANIES, INDIVIDUAL INVESTORS, INSTITUTIONAL INVESTORS, INTERNATIONAL FINANCIAL INSTITUTIONS, INVESTMENT ARM, INVESTMENT STRATEGIES, INVESTOR CONFIDENCE, LIMITED, MICROFINANCE, MICROFINANCE INDUSTRY, MICROFINANCE INSTITUTIONS, OUTSTANDING LOANS, PARENT COMPANY, PENSION FUNDS, PORTFOLIO, PORTFOLIOS, PRIVATE CAPITAL, PRIVATE INVESTMENT, PRIVATE INVESTOR, PRIVATE INVESTORS, SOCIETY, TRANSPARENCY, |
| Online Access: | http://documents.worldbank.org/curated/en/2007/01/7538159/government-guarantees-allocating-valuing-risk-privately-financed-infrastructure-projects https://hdl.handle.net/10986/6638 |
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| Summary: | Government guarantees can help persuade
private investors to finance valuable new infrastructure.
But because their costs are hard to estimate and usually do
not show up in the government's accounts, governments
can be tempted to grant too many guarantees. Drawing on a
diverse range of disciplines, including finance, history,
economics, and psychology, Government Guarantees :
Allocating and Valuing Risk in Privately Financed
Infrastructure Projects aims to help governments give
guarantees only when they are justified. It reviews the
history of government guarantees and identifies the
cognitive and political obstacles to good decisions about
guarantees. It then develops a framework for judging when
governments should bear risk in an infrastructure project
(seeking to make precise the oft-invoked principle that
risks should be allocated to those best placed to manage
them); explains how guarantees can be valued; and discusses
how aspects of public-sector management can be modified to
improve the likely quality of government decisions about guarantees. |
|---|