The Government will need to decide how to fund risk liabilities associated with PPP as they arise. It may simply be able to find space in its budget from time to time for the relevant amount, or may have other sources of funding. Another useful mechanism is an undertaking by a bank or development financial institution that will provide credit to the Government in the event the contingent liability crystallizes.
Several countries have established schemes that reduce Government payment risk, creating a fund able to support guarantee payment obligations as they come due, from accumulated budgetary transfers, fees or taxes collected. Canada, Sweden and the Netherlands have such funds (though not specific to PPP). The expected pay-outs under these contingent liabilities are deducted from the annual budgetary allocation for the relevant line ministries, and are set aside for use in the event the contingent liability crystallizes.37
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37 Ibid.