Techniques for Estimating the Fiscal Costs and Risks of Long-Term Output-Based Payments
Long-term commitments to make output-based payments for infrastructure can encourage private investors to provide socially valuable services. Making good decisions about such commitments is difficult, however, unless the government understands the...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/06/6421430/techniques-estimating-fiscal-costs-risks-long-term-output-based-payments http://hdl.handle.net/10986/23690 |
| Summary: | Long-term commitments to make
output-based payments for infrastructure can encourage
private investors to provide socially valuable services.
Making good decisions about such commitments is difficult,
however, unless the government understands the fiscal costs
and risks of possible commitments. Considering voucher
schemes, shadow tolls, availability payments, and access,
connection, and consumption subsidies, this paper considers
measures of the fiscal risks of such commitments, including
the excess-payment probability and cash-flow-at-risk. Then
it illustrates techniques, based on modern finance theory,
for valuing payment commitments by taking account of the
timing of payments and their risk characteristics. Although
the paper is inevitably mathematical, it focuses on
practical applications and shows how the techniques can be
implemented in spreadsheets. |
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