Public Money for Private Infrastructure: Deciding When to Offer Guarantees, Output-Based Subsidies, and Other Forms of Fiscal Support (World Bank Working Papers)

Government decisions are rarely driven solely by the dictates of cost-benefit analyses. Generating good decision making about fiscal support also requires processes for decision making that facilitate good analysis and temper the influence of self-interest. This report sets out a framework intended to help governments make better decisions about giving fiscal support for private infrastructure services and provides some tools to facilitate analysis. Several policies to enhance the collocation of information, incentives, and decisions are proposed: • Giving responsibility to people working on the objective (rather than the instrument or the infrastructure service); • Separating decision making from delivery; • Involving those responsible for costs; • Utilizing decision making forums that emphasize tradeoffs; • Routinely generating information on costs and benefits; • Requiring routine disclosure of information; • Charging for certain types of support; and • Ensuring accountability for decisions.