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Public-Private Partnership

Critics: PPPs are a “time bomb” for public finances

The following criticisms are made most frequently of partnership contracts: ulease fees increase over time, costs explode over 20 or 50 years and are greater than those of a project carried out under public programme management, etc.
In reality, the exact opposite is true. One of the benefits of partnership contracts is that these expenses are firmly set and spread through time. As a result, they can, in full transparency, be projected, smoothed and earmarked in order to manage all the complex issues confronting public authorities.
Fee and price indexing laws are, thus, “set in concrete” by the contract for the period of the concession.
PPPs do not eliminate or defer debt, they smooth it through time.

The public authority smoothes its debt over time


Expenses are smoothed and earmarked in order to manage all the complex issues confronting public authorities.

The PPP approach must not adopted purely for debt management reasons. Factors that may influence a public authority's decision include:


Moreover, when there is a budget deficit, all public investment is financed by public debt. To compare a PPP with a facility built under a conventional approach, it would be necessary to add the cost of additional debt contracted by the public authority, which no-one does. Lastly, it is to be noted that debt arising from PPPs is consolidated in the public debt figures. PPPs are not, therefore, a means for public decision-makers to hide debt or rid themselves of the need to comply with the Maastricht criteria.