Preparing PPP programs

1. Preparing PPP programs David Duarte Arancibia–dda@dipres.cl Head of Contingent Liabilities and PPPs Ministry of Finance - Chile

2. Issues to cover • Legal framework • Project selection • Fiscal support • Financial regulations • Others

3. Legal framework • Flexible • Open to competition • Private initiatives • Contract modifications • Possibility to terminate the concession • Dispute resolution system • Financial guarantees

4. Institutional Design • PPP unit outside of MoF • Permanent involvement of the MoFin the projects and programs • CBA and VfM approval independent of MoF and PPP unit • Check and Balance Framework

5. Project Selection • Cost Benefits Analysis • Value for Money • Risk allocation • Efficiency criteria, not other as accounting issues • Rational fiscal commitments • Contingent liabilities • Fiscal payments

6. Fiscal Support • Correctly designed • Specific objective • Efficient • Aggregate economic efficiency • Sustainable • Government has to be able to afford the commitments • Program has to be congruent with fiscal planning • Stocks and cash flows has to be estimated • Avoid fiscal surprises

7. Financial regulations • Taxation framework • Banks investment regulation • Pension found investments • Specialized financial institutions supervision

8. Others Issues • State of law • Culture of payments • Toll roads • Land acquisition framework • Political support • PPP seems a privatization

9. Recommendations • Correct project selection (CBA, VfM) • Realistic times • Good base studies • Specialized advisory • Permanent supervision • Transparency (contracts, agreements, fiscal commitments, etc) • Disseminate information • Contingent liabilities management • Assess risk transfer • Make sound economic decisions

10. Preparing PPP programs David Duarte Arancibia–dda@dipres.cl Head of Contingent Liabilities and PPPs Ministry of Finance - Chile