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Philippines: Management of Contingent Liabilities Arising from Public-Private Partnership Projects

Publication | December 2016
Philippines: Management of Contingent Liabilities Arising from Public-Private Partnership Projects

Given the rapid growth of the public–private partnership (PPP) program, the Philippine government has initiated reforms to strengthen the framework for managing contingent liabilities arising from PPP projects.

With a rapidly expanding PPP project portfolio and based on past lessons learned, the government needs to improve management of contingent liabilities arising from the PPP contracts.

This study shows that major directions requiring further effort include

• better pricing of government guarantees;
• adoption of methodology for quantification of contingent liabilities, setting prudential limits on PPP contingent liabilities;
• development of procedures for payment of materialized contingent liabilities from the national budget’s unprogrammed fund; and
• in the medium term, setting up a contingent liabilities fund financed through budget appropriations and contributions of project sponsors.

Contents 

  • Abstract
  • Introduction
  • Review of Past Experiences with Public–Private Partnership Contingent Liabilities
  • Current Institutional Framework for Public–Private Partnership Contingent Liabilities
  • Objectives of Contingent Liability Management Policy
  • Determining Contingent Liabilities at the Project Level
  • Determining the Appropriate Quantum of Contingent Liabilities at Aggregate Level
  • Project Development and Contingent Liability Approval Process
  • Funding of Contingent Liabilities
  • Contingent Liabilities Disclosure and Accounting Issues
  • Recommendations to Improve Contingent Liability Management in the Philippines