portfolio. Closing the infrastructure gap, while decarbonizing the electricity and power sectors and increasing their climate resilience, will require significant investments. In the aftermath of the COVID-19 crisis, fiscally constrained governments will surely aim to mobilize private financing of infrastructure through PPP arrangements. Improving the design and management of infrastructure PPPs to mitigate potential fiscal risks while ensuring financially responsible and timely implementation of infrastructure projects to address the infrastructure deficit is therefore an important agenda in the developing world.

The analysis identifies several overarching lessons from the global PPP data. Measures that reduce the financing risk of a project, such as providing support through capital grants, revenue subsidies, or in-kind transfers, can reduce the rates of early termination. Risk depends partly on the sector and size of the PPP project. PPPs in the power and seaport sectors are less likely to experience early termination than PPPs in the other infrastructure sectors analyzed. Early terminations are also more common for larger projects. Delegating PPP contracting and monitoring to state and local governments should be considered when it is institutionally and economically possible, because it reduces the probability of early termination. PPPs in countries with stronger constraints on executive power have lower probability of early termination. Macrofinancial shocks are an important cause of early termination of PPPs, highlighting the importance of macroeconomic management in enabling sustainable funding and financing of PPP projects.

Government capacity to prepare, procure, and manage PPP projects must be built to ensure that the expected efficiency gains are achieved and the fiscal risks from contingent liabilities are contained and properly managed. Good practices on preparation, procurement, and management of PPPs can help governments improve their ability to take advantage of PPPs at more acceptable levels of risks (World Bank 2018). The fiscal implications of PPPs, including their budgetary, accounting, and reporting treatment, need to be determined, and the Ministry of Finance or central budget authority needs to have the authority to approve or reject a PPP based on the long-term financial implications of the project (World Bank 2018).

Given the complexity, magnitude, and inherently long-term nature of PPP projects, the procuring authority should exercise appropriate due diligence and perform rigorous assessments to gauge the viability of infrastructure projects before deciding on PPP procurement. Sound PPP preparation starts by identifying potential infrastructure projects that could be procured as PPPs. To reduce the risk of early termination, governments need to conduct feasibility studies that assess and determine the appropriate allocation of risks and sound out the market to gauge its appetite and capacity for proposed projects.

Implementation will determine whether the project delivers the expected value for money and fiscal risks are properly managed. Modification and renegotiation of the contract should be regulated, in order to reduce the incentives of the private partner and the procuring authority to 30