Brazil's Challenge

Oct 4, 2004

Brazil needs to invest more than $200 billion in infrastructure. The federal and state governments hope to achieve this through Public-Private Partnerships.

Will PPPs become Brazil's blueprint for infrastructure finance?

Brazilian officials recognize that the current level of private-sector investment must be increased substantially if the country's infrastructure needs are to be met. To that end, the federal and state governments are in the final stages of establishing a legal and contractual framework for Public-Private Partnership (PPP) schemes.

Since the inception of the UK's PPP (and the related Private Finance Initiative) in 1992, more than 600 projects have been executed. The UK system, a global benchmark, identifies three issues that must be addressed if the Brazilian program is to be successful. First, objectives of the private sector must be aligned with the priorities of the federal and state governments. Further, private-sector investors must be ensured an appropriate risk transfer to achieve value for money, within a financeable structure. And finally, the scheme must make certain that private sector skills, expertise and...

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