Risk distribution and balance sheet treatment are important aspects of any PPP structure. Understanding the underlying issues, and their consequences, is of great concern to procuring authorities. EPEC issued a report in 2010 on the Eurostat Treatment of Public-Private Partnerships1 to explain the context of these issues. The report clarifies the meaning and purposes of the accounting and statistical treatment of PPPs and the Eurostat rules dealing with the impact of PPPs on government deficits and debt (the "Eurostat treatment"). It also analyses Eurostat rules for government support measures for PPPs. Finally, the report examines recent trends in the accounting treatment of PPPs and describes how these changes may affect, in practice, the process for determining the Eurostat treatment of PPPs in the future.
To build on this initial analysis, EPEC has now prepared in this document practical guidance on the statistical treatment of PPPs in national accounts based on the Eurostat rules. The guidance relates to the balance sheet treatment of both PPPs and concessions. The differences in treatment of these two forms of contracts are explained in section 1.2.
This document is in two parts:
- a short legal background; and
- a checklist of issues designed to help determine the possible statistical treatment of a project (the "Checklist").
This document is intended to give practical advice on the impact on government deficits and debt of the risk distribution between government and the PPP partner. However, PPP project structures vary greatly and need to be considered "case by case" for their balance sheet assessment. More importantly, the analysis of an individual characteristic of a PPP contract can not provide a definitive conclusion regarding the statistical recording of the transaction. The structure of any given PPP operation must be considered as a whole to determine whether statistical classification should be on or off the government's balance sheet. The Checklist provides a practical tool for such comprehensive assessment.
This document reflects the Eurostat rules contained in the Manual on Government Deficit and Debt - Implementation of ESA95 (2010 edition), published on 29 October 20102. Eurostat staff has provided comments on this document that are gratefully acknowledged. Nevertheless, the Checklist serves only to provide indicative statistical classification guidance for PPP projects.
Final decisions on statistical classification remain with national statistical authorities and, ultimately, with Eurostat. National statistical authorities should always be consulted when the balance sheet treatment of a project is likely to be a determining factor in the procurement decision of a public authority. This is particularly important where PPP projects contain structures for which no specific Eurostat guidance exists in the manual referred to above.
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1 See http://www.eib.org/epec/resources/epec-eurostat-statistical-treatment-of-ppps.pdf
2 See the "Manuals" section of the Eurostat website at http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/introduction