Posted by Francois Michel
If experts still argue about the proper definition of Public-Private Partnerships (PPPs), their microeconomic foundations, or their possible role as an antidote to the worldwide downturn in infrastructure investment, there is one fact that garners universal agreement: PPPs are one of the most popular reforms of the last decade in public financial management. A growing number of countries show interest in following the most advanced administrations on the topic, including Australia (Partnership Victoria) and the U.K. (Private Finance Initiative). Developing countries, in particular, try to develop PPPs to address economic infrastructure bottlenecks. However, the trend is universal: a recent study of PPPs in Europe found that between 1990 and 2005, more than a thousand partnerships had been signed in the European Union alone, representing an investment of almost 200 billion euros.
These developments have triggered intense (and remarkably fruitful) academic research. Thus, although much remains to be done, the major opportunities and challenges posed by PPPs, especially the fiscal risks induced by the absence of an effective accounting framework and the crucial notion of risk sharing, were identified with enough precision by the end of 2003 to allow the IMF to issue a series of reference publications on the subject.