In this paper, we have emphasized the need for private sector involvement in investments to ease national fiscal constraints and to enhance efficiency in the provision of key services. Incentive problems arise due to the asymmetric information concerning risks. They are exacerbated by the limited information available on projects and on the buildup of liabilities at the relevant level of government (affecting the credibility of government contracts). Standardized information such as using the IMF's GFSM standard is critical for recording and reporting liabilities on an accrual basis over the medium term. Limited information leads to the potential for renegotiation in favor of firms, with high-risk projects together with a potential for rent seeking, even though sectoral variations are likely to exist.
The lack of credible and complete time series data at the local level is a critical concern for performing a cross-country fiscal analysis, affecting the potential for enhanced long-term cross-border investments. Addressing these gaps requires not only a technical framework for data collection but also political-economy mechanisms through which local authorities might be willing to generate and share consistent information.