Key Discussion Themes

Financing of Public Goods and Public-Private Partnership

Financing of public goods requires a robust decision-making process in which government needs to decide whether or not to directly finance public goods. The issue leads to the critical question of commercial governance in which an efficient public participation may lead to efficient local public goods provision. Effective community involvement in the financial decision-making process may help effectively cope with unsuccessful and incomplete contracting of public goods. Effective public participation in financing public goods may also lead to private provision of public goods alongside promoting PPP mode of financing public goods.

This technical session has accordingly been designed on the basis of a broad storyline entitled ‘financing of public goods and PPP’. The purpose of this session is to align the multiple issues faced during the financial decision-making process raising the critical question of financial and commercial governance. Accordingly, three focus areas have been conceived: (1) financing public goods, (2) debt financing of public sector projects, and (3) managing large infrastructure projects through PPP – Lessons for Pakistan.

The first speaker will be discussing financing public goods emphasizing the role of effective governance and community engagement. The second will highlight the three main issues which need attention; (i) the governments may use public sector projects as a stimulus for enhancing economic growth, (ii) ‘tightened credit markets are posing an obstacle to raising debt finance for infrastructure delivery models – public or private – that depend on high levels of up-front capital repaid over the long term through user fees or general taxation’, (iii) ‘government balance sheets are constrained, making it more difficult to fund infrastructure projects’. These three dimensions need a critical analysis in the context of the Punjab province so that a strong policy mechanism could be evolved for financing public sector projects. The third speaker will be highlighting the importance of large infrastructure projects which require careful planning and management so that the costs and completion times are not escalated. The projects also need a robust scrutiny through which large projects’ benefits are projected in a rational manner. There are several competing forces on economic, technological, political and aesthetic fronts requiring necessary policy corrections before expecting economic growth from them. For this purpose public-private partnership mode can be effectively employed through greater community engagement in financing of large infrastructure projects in the Punjab province. The lessons learnt from other case studies of the world can also be effectively employed in the Punjab province.

The session chair will finally concludeand discuss a broader framework in which the growth strategy for Punjab will be evaluated alongside identifying the associated constraining factors and way forward for policy interventions.