Leasing by public authorities in Italy: creating economic value from a balance sheet illusion

Abstract

Leasing allows organizations to procure fixed assets without the need for upfront investment, and can be an attractive option for public authorities. This article describes the pattern of public sector demand for leases in Italy. While leasing is widely regarded as a model with the potential to create economic value, demand for leases is mainly driven by accounting considerations. The authors suggest that the operating lease model may, if properly structured, offer the cost-certainty benefits associated with concession-based public–private partnership (PPP) contracts, but with lower transaction and financial costs. These findings have significant implications for procurement policy in Europe, where PPPs are being promoted by the EC and the governments of many member states.

Keywords:

• Availability-based infrastructures
• Italy
• leasing
• public–private partnership (PPP)

Notes

^* The Official Journal of the Italian Republic was chosen rather than the Official Journal of the European Union because the former also contains tenders with a value below the threshold of 5 million euro.

** The European System of National and Regional Accounts (ESA95) provides harmonized and reliable statistics on the debt and deficit position of member states. Annex II on leasing was part of the first edition of ESA95, approved by the European Council on 1996 (Eurostat, 2012).

Additional information

Notes on contributors

Veronica Vecchi

Veronica Vecchi is a lecturer at Bocconi University School of Management, Milan, Italy.

Mark Hellowell

Mark Hellowell is a lecturer at the Academy of Government, University of Edinburgh, UK.