The potential of Public-Private Partnerships

When public resources are very limited, as it happens in Central American countries, association schemes between the State and the private sector become essential for developing the infrastructure that the region so badly needs.

Wednesday, November 15, 2017

A report from the Secretariat of Economic Integration (Sieca) states that "...In Central America, growing fiscal constraints faced by the countries public sectors make it increasingly difficult to achieve efforts for long-term infrastructure projects. In this context, Public-Private Partnerships (PPP) become relevant as an alternative measure of financing where private participation sector is facilitated in partnership with the government, with the aim of improving quality of services, reducing operating costs and capital, generating additional income, improving public management and minimizing budget spending.
PPPs facilitate acceleration in the provision of infrastructure, implementation of projects in less time, a reduction of costs, greater incentives for good performance in the service and a shared responsibility for the efficient management of resources. 

Experiences in Europe and Asia have made Latin America start to take interest in this type of infrastructure provision. According to data from the CEPAL (2014), in the last two decades the Latin American region received half of the PPPs destined for the developing countries.
Although for many of the projects that have been carried out in the region it is still too premature to draw concise conclusions from this model, many of them are focused on mega infrastructure projects which, in addition to requiring a considerable amount of investment, could boost the economies of the countries. 
In this way, Central America faces the challenge of propitiating the conditions to attract investment in infrastructure in general; with a view to achieving a competitive improvement in the region."

More on this topic

Public-Private Partnerships: Where Would They Work Better?

May 2019

Guatemala, El Salvador and Costa Rica are the countries in the region with the best conditions to develop Public-Private Partnerships, followed by Honduras, Nicaragua and Panama.

The 2019 Infrascope index, which evaluates 23 indicators and 78 qualitative and quantitative sub-indicators in Public-Private Partnerships (PPP) in Latin America, is prepared by The Economist Intelligence Unit and has the financial backing of the Inter-American Development Bank (IDB).

Public-Private Partnerships Not Being Leveraged

December 2017

In the four years that the law of associations between the State and private companies in El Salvador has been in effect, not a single infrastructure project has been able to materialize using this business scheme.

Although there are at least seven infrastructure projects that were initially proposed as being those with the highest priority and ideals to be developed under the public-private partnership scheme and with funding from Fomilenio II, none of them has managed to materialize. 

Public-Private Partnerships: Successes and Failures

August 2015

A publication by the CAF reviews the development of five projects implemented using the public-private partnership model for infrastructure investment in Latin America.

From the Presentation document by the Development Bank of Latin America (CAF):

In recent decades, many Latin American countries have launched public-private partnership projects for the construction, maintenance and operation of public infrastructure.

CABEI and IFC Support Infrastructure Projects in CA

March 2011

The agreement will facilitate the provision of consulting services to regional governments to develop infrastructure projects with private participation.

This agreement seeks initiatives in renewable energy and other projects related to climate change, water treatment and solid waste management, health, education and transport.

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