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Research on the Debt Features of PPP Fiscal Expenditure Responsibilities: A Perspective of Governments‘ Reasonable Sharing of Debt Risk

【Authors】
JIA Kang, WU Bingbing
【WorkUnit】
Chinese Academy of Fiscal Sciences,100142.
【Abstract】

The Public-Private Partnership (PPP) model is one of the important initiatives during China‘s innovative development. Proper analysis of the debt features of PPP fiscal expenditure responsibilities is critical to improving PPP policies and practice and promoting high-quality PPP development. From the perspective of the governments‘ reasonable sharing of debt risk, this paper puts fiscal expenditure responsibilities of various PPP behaviors with different levels of compliance within the analysis framework to realize the following goals. The first is to distinguish right from wrong with a holistic view of PPP policies, regulations, practice and the applicability of laws and to build PPP fiscal expenditure responsibilities’ government debt risk matrix. The second is to identify the root causes as to why PPP could bring out implicit debt, and why some PPP policies are controversial and ineffective. The third is to provide suggestions for the healthy development of PPP. This paper attempts to make clear distinctions between fiscal expenditure responsibilities of PPP projects and implicit debt. Unregulated behaviors, such as improper transfer of market risks, promise of fixed market returns to social capital and the loss of performance appraisal constraints, could create implicit debt risks. The paper points out several solutions: A reasonable definition of fiscal expenditure responsibilities should be given and an open, transparent management system for its debt features should be established; higher-level PPP regulations should be introduced to govern behaviors and the PPP fiscal management system should be innovated to prevent risks and promote development; and PPP performance management should be optimized to achieve a win-win situation and co-governance.
 

JEL:E62, H42, H63

【KeyWords】
PPP Projects, Fiscal Expenditure Responsibilities, Local Government’s Debt, Risk Control