Public-Private Partnerships in the Context of the European System of Accounts (ESA95)

Bernardino  Benito; Francisco  Bastida; María-Dolores  Guillamón

doi:10.4236/ojacct.2012.11001

Bernardino Benito^*, Francisco Bastida, María-Dolores Guillamón

Abstract: This paper makes an analysis of the European System of Accounts (ESA95) financial treatment of Public-Private Partnerships (PPP). PPP are complex operations that allow incumbents to create infrastructures while hiding debt, with an eye on the next elections. However, the sad part of the story is that PPP are more expensive than traditional contracts in the long run. We think that PPP are not always the best solution. Governments should allocate the risk to the party that is the “least cost avoider”, i.e., the party best suited to control and/or bear the risk. Without this approach, the public sector runs the risk of using PPP with the aim to achieve inadequate goals, for example to achieve a short-term improvement of public accounts, and at the same time, worsening the long-term financial picture.

Keywords: Public-Private Partnerships; Esa95; Government Debt; Government Deficit

Cite this paper: B. Benito, F. Bastida and M. Guillamón, "Public-Private Partnerships in the Context of the European System of Accounts (ESA95)," Open Journal of Accounting, Vol. 1 No. 1, 2012, pp. 1-10. doi: 10.4236/ojacct.2012.11001.

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