TY - JOUR
T1 - The impact of public–private partnerships on public accounts
T2 - the Portuguese roads sector
AU - Viana, Luís Cracel
AU - Sarmento, Joaquim Miranda
AU - Moreira, José António
AU - Alves, Paulo
N1 - Funding Information:
In the case of the user fees compensation scheme, no predetermined payment is made by the public sector grantor, due to the fact that the PPP contract is funded by the tolls collected by the operator (the “concessionaire”). Nevertheless, some payments must be made by the public sector, which are related to contract contingencies and renegotiations. Due to the lack of regular public sector payments based on availability, asset usage or a combination of both, this type of contracts is classified as a “concession” for national accounts purposes and fall under the grant of a right to the operator model (Eurostat, 2019 ).
Funding Information:
In March 2011, due to the sovereign debt crisis, Portugal asked for financial support from the . The Portuguese Government assumed in exchange for it the implementation of several policies and reforms to promote economic growth and the sustainability of public policies (European Commision, 2011 ). When it comes to PPPs, the diagnosis made at the time of the intervention was as follows (European Commission, 2011, p . 10): 5 Troika Troika
Publisher Copyright:
© 2020 John Wiley & Sons Ltd
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2021/8
Y1 - 2021/8
N2 - The accounting and reporting of public—private partnerships (PPPs) is a matter of extensive debate and is associated with a compelling incentive to follow the PPP route for the construction of public infrastructures, rather than traditional public procurement, even if the PPP route is not affordable and fails to achieve value for money in comparison to traditional public procurement. The aim of this study is to empirically evaluate the so-called hidden debt hypothesis. Using a novel dataset for the Portuguese roads sector, we studied the annual reports of the operators since the adoption of International Financial Reporting Interpretations Committee (IFRIC) 12 from 2010 up until 2017. Our results show a lack of transparency in the reporting of PPPs in public accounts, as well as a material difference between our simulation of the impact of (International Public Sector Accounting Standards) IPSAS 32 in public accounts, and also the impact resulting from the application of the European System of Accounts, according to which official debt figures are calculated. The paper also presents evidence of the effects of the financial bailout on PPPs accounting. Overall, the results show that public debt is understated from 1.96% of gross domestic product (GDP) in 2010 (3,519 million euros), to 3.99% of GDP in 2014 (6,907 million euros) and an average of 11,027 million euros of fixed assets for the period 2010–2017 are not reported in the Portuguese State Accounts. The results highlight the need for a closer alignment between national accounts and accrual accounting based on IPSAS standards.
AB - The accounting and reporting of public—private partnerships (PPPs) is a matter of extensive debate and is associated with a compelling incentive to follow the PPP route for the construction of public infrastructures, rather than traditional public procurement, even if the PPP route is not affordable and fails to achieve value for money in comparison to traditional public procurement. The aim of this study is to empirically evaluate the so-called hidden debt hypothesis. Using a novel dataset for the Portuguese roads sector, we studied the annual reports of the operators since the adoption of International Financial Reporting Interpretations Committee (IFRIC) 12 from 2010 up until 2017. Our results show a lack of transparency in the reporting of PPPs in public accounts, as well as a material difference between our simulation of the impact of (International Public Sector Accounting Standards) IPSAS 32 in public accounts, and also the impact resulting from the application of the European System of Accounts, according to which official debt figures are calculated. The paper also presents evidence of the effects of the financial bailout on PPPs accounting. Overall, the results show that public debt is understated from 1.96% of gross domestic product (GDP) in 2010 (3,519 million euros), to 3.99% of GDP in 2014 (6,907 million euros) and an average of 11,027 million euros of fixed assets for the period 2010–2017 are not reported in the Portuguese State Accounts. The results highlight the need for a closer alignment between national accounts and accrual accounting based on IPSAS standards.
KW - Hidden debt hypothesis
KW - National accounts
KW - Public choice theory
KW - Public–private partnerships accounting
KW - Transparency
UR - http://www.scopus.com/inward/record.url?scp=85096820961&partnerID=8YFLogxK
U2 - 10.1111/faam.12275
DO - 10.1111/faam.12275
M3 - Article
AN - SCOPUS:85096820961
VL - 37
SP - 279
EP - 302
JO - Financial Accountability and Management
JF - Financial Accountability and Management
SN - 0267-4424
IS - 3
ER -