Infrastructure endowment, financial constraints and willingness to engage in PPPs: The case of Poland

ABSTRACT

Public-private partnership (PPP) is widely considered to be a solution to overcoming a public infrastructure gap while providing value for money. A growing body of empirical research papers suggests that value for money is not the only reason for a government setting up PPPs. This paper presents a detailed analysis of why local municipalities in Poland have chosen the PPP route to develop public infrastructure.

IMPACT

Government’s investment opportunities are often restricted by debt limits. That is why a PPP can be an attractive solution. Municipalities in Poland seem to opt for PPPs to keep their debt figures low. There is a risk that they are choosing the PPP route for the wrong reasons. Therefore we suggest that legislation is needed that requires greater financial transparency of PPP projects. This could help verify whether PPPs are being compiled according to EUROSTAT rules and to assess if PPP really is the best available option in terms of value for money.

KEYWORDS:

• Budget constraints
• infrastructure
• Poland
• public-private partnership (PPP)

Acknowledgements

The authors would like to thank PMM’s anonymous referees for their useful comments, which allowed to increase the value of our paper. This work was supported by the Ministry of Science and Higher Education of the Republic of Poland under Grant 058/WE-KEN/01/2016/S/6058; Ministry of Science and Cracow University of Economics under Grant 138/WE-KEN/03/2015/M/5138.