9.19 If adopted, there will be natural limitations to the use of guarantee finance in PFI projects, being, among others:
• the Government will need to manage its overall exposure to each credit provider, whether it be a bank or an insurance company;
• the Government may also need to ensure that it will limit its exposure to certain types of credit provider, for example it will need to limit its exposure to insurance companies as a group;
• the Government will only wish to use this for PFI programmes that are well established, where the risk profile of the PFI project is well known; and
• it is unlikely to be attractive to use this for a large number of projects, as it is necessary to ensure the maintenance of a mixed economy in financing PFI, and the lower exposure to systemic market risk that comes with that.
9.20 If Credit Guarantee Finance is adopted for some projects, the Government will seek to use both banks and insurance companies to provide the credit guarantees, as a part of its interest in maintaining a variety of risk takers and sources of finance in PFI.