Public-Private Partnership in Latin America: A Guide for Regional and Local Governments

PPPs are complex, long-duration contractual structures with higher transaction and financing costs than conventional procedures. Furthermore, governments that decide to use this type of tool must be trained properly [in their structuring, use and execution]. This need for training can be even more recurrent in regional or local governments, where sometimes, the design of the allocation of resources is insufficient for managing this type of contract and do not have sufficient guarantees to ensure that projects can be sustained.With the aim of improving the technical capacities of regional and local governments, which generally have less resources than national governments, CAF—Development Bank of Latin America—drafted this technical guide with the objective of proposing some basic concepts for a better understanding about what a PPP is and what it is not, like how to evaluate the use of the PPP model with respect to other possible formulas and how to tackle the structuring process of a typical contract. This analysis was carried out with urban projects in mind, generally with a high social component, where the economic return without public funds is not always viable.