This working paper presents the results of a quantitative analysis focused on the influence of direct multilateral financial support on PPP contract cancellation. The World Bank’s Private Participation in Infrastructure (PPI) Database<sup>3</sup> defines canceled projects as those “from which the private sector has exited in one of the following ways: selling or transferring its economic interest back to the government before fulfilling the contract terms; removing all management and personnel from the concern; or ceasing operation, service provision, or construction for 15 percent or more of the license or concession period, following the revocation of the license or repudiation of the contract.” Multi-level probabilistic models and matching estimators across a large data set of PPPs are applied to examine the relationship between MLS and rates of contract cancellation. Results show that PPP projects that benefit from MLS have lower cancellation rates.

# **_Multilateral Support for Infrastructure PPPs_**

Following the definition adopted by the PPI Database, a project is considered to have multilateral support when it receives financial support including lending, equity contributions, or issuances of financial guarantee products. Upstream policy support, project preparation assistance, and other kinds of technical assistance not linked to a financial commitment on the part of the multilateral do not meet this definition of MLS, though these kinds of support are likely to play a role in the closure and successful application of infrastructure PPP.

The propensity of a PPP to receive MLS is hypothesized to be contingent on a number of project characteristics, market conditions, and strategies of multilaterals, reflecting both “donor interest” and “recipient need” models of aid flows (Basìlio, 2014). The population and level of development within a country may affect MLS lending generally, and for infrastructure PPPs specifically. Other analyses of multilateral aid suggest that multilateral financial flows are biased towards less populous countries with lower per capita GDPs (Basìlio, 2014; Neumayer, 2003).

Sector and region are also included to account for the organization of multilaterals’ lending programs, which are often segmented by sector and/or region, and whose management units may have different interests and ideas about private participation in infrastructure. Depending on experiences, practices, and beliefs adopted in the organizations and their sub-units, PPP participation may be pursued more or less actively. Moreover, since some development banks are organized to serve particular regions only (e.g., ADB, IADB, AFIDB, etc.), differences between the organizations with respect to general support of PPP may affect the likelihood of a project receiving MLS in each region. Lastly, contract type and size of investment is also proposed to affect the likelihood of MLS, since multilateral development banks

> 3. The Private Participation in Infrastructure (PPI) Project Database has data on infrastructure projects being tracked from 1990 in 139 low- and middle-income countries. The database is the leading source of PPI trends in the developing world, covering projects in the energy, telecommunications, transport, and water and sewerage sectors. Projects include management or lease contracts, concessions, Greenfield projects, and divestitures. The data are presented in a variety of ways useful to researchers, policy makers, journalists and others.

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