Public Money for Private Infrastructure : Deciding When to Offer Guarantees, Output-based Subsidies, and Other Fiscal Support
When governments seek private investment in infrastructure projects, they usually find themselves asked to provide grants, guarantees, or other forms of fiscal support. Often they prefer to provide support in ways that limit immediate cash expendit...
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| Format: | Publication |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/08/2492949/public-money-private-infrastructure-deciding-offer-guarantees-output-based-subsidies-other-fiscal-support http://hdl.handle.net/10986/15117 |
| Summary: | When governments seek private investment
in infrastructure projects, they usually find themselves
asked to provide grants, guarantees, or other forms of
fiscal support. Often they prefer to provide support in ways
that limit immediate cash expenditure but sometimes generate
large costs later. Seeking to provide support without any
immediate spending of cash, for example, governments often
agree to shoulder project risks and sometimes encounter
fiscal problems later. For example, in the 1970s and 1980s
in Spain, the government was obliged to pay $2.7 billion
when the exchange-rate guarantees it had given private toll
roads were called (Gomez-Ibanez 1993). More recently, the
Indonesian government agreed to pay $260 million as a result
of its agreements, through the electricity company it owns,
to bear demand and foreign-exchange risks in private power
projects. Yet even when governments have chosen to provide
cash subsidies they have not always achieved their apparent
goals: for example, over 80 percent of the Honduran
government's "lifeline" electricity subsidies
go to customers who aren't poor (Wodon et al. 2003). In
still other cases, governments' decisions not to
provide support may have caused problems. |
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