2010年-世界发展银行全球_Indonesia_-_Financial_Support_for_Public_Private_Partnerships___Guarantee_Fund_and_World_Bank_Assistance_23页_844kb

Summary of Indonesia's Financial Support for Public Private Partnerships: Guarantee Fund and World Bank Assistance

Core Content

The document outlines Indonesia's interest in establishing a Guarantee Fund (GF) to support Public Private Partnerships (PPPs) in infrastructure development, with potential financial support from the World Bank. The goal is to improve the creditworthiness of PPP projects, attract private investment, and manage government fiscal risks more efficiently.

The GF is designed to be a government-sponsored institution that issues partial guarantees to reduce the risks faced by private investors and lenders. These guarantees cover risks such as government payment obligations, supplemental subsidies, and tariff delays. The World Bank can support the GF through advisory services and financial instruments, including contingent loans and partial credit guarantees, which can help the GF pierce the sovereign ceiling and achieve a triple-AAA credit rating.

The GF can be established in different steps, ranging from a budget allocation to a separate legal entity, depending on the level of complexity and risk management needs. The World Bank's role includes both advisory and financial support, helping to design and structure the GF, as well as providing capital to enhance its creditworthiness and liquidity.

The document also highlights the complementarities between the Guarantee Fund and the Infrastructure Fund. While the GF focuses on risk mitigation for government obligations, the Infrastructure Fund aims to finance infrastructure projects using innovative financial products. Together, they can leverage private capital and improve the attractiveness of Indonesian infrastructure projects to both domestic and international investors.

Main Points

1. Background

• Indonesia needs to mobilize private capital for infrastructure to support 6% annual economic growth.
• Public funds are limited, so the government must leverage private investment.
• A Guarantee Fund can help mitigate risks and improve creditworthiness of PPP projects.

2. Establishing a Guarantee Fund

• The GF can be established in three steps:
  • Step 1: Allocate a specific budget amount for guarantees.
  • Step 2: Create a separate account (contingent liability account).
  • Step 3: Establish a separate legal entity with the government as the sole owner.
• The GF would issue guarantees in its own name, limiting the government’s liability to the capital contributed.

3. International Experience

• Some countries like Britain and Australia do not use separate GFs due to strong credit ratings and efficient public management.
• Colombia uses special guarantee accounts to manage unexpected calls on guarantees.
• Brazil created a Guarantee Fund to address judicial delays in payments.
• The GF is a response to specific national challenges such as budgeting and legal risks.

4. Concept of a Government-Sponsored GF

• The GF is an independent financial institution.
• Its assets serve as the basis for guarantees.
• The total contingent liabilities are capped at the value of its assets.
• The GF aims to promote private investment in infrastructure by reducing perceived risks.

5. Benefits and Risks

• Benefits:
  • Simplifies governance and financial reporting.
  • Promotes efficient use of donor resources.
  • Enhances credibility of guarantees in local and international markets.
  • Reduces transaction costs for small PPP projects.
• Risks:
  • The GF may face multiple objectives and weak accountability.
  • Excessive risk-taking could lead to high fiscal costs.
  • If the GF issues guarantees with higher costs than benefits, the government could lose equity or be required to repay multilateral support.

6. Risk Management Strategy

• The GF can help the government manage contingent liabilities.
• It may focus on assessing and monitoring risks.
• The Ministry of Finance would monitor the GF and record fiscal exposure.
• The GF could be delegated some of the risk management tasks, but the government must retain direct guarantee capacity for large risks.

7. World Bank Support

• The World Bank can offer advisory services and financial support to the GF.
• Financial support includes:
  • Contingent loans to the GF to cover liquidity, solvency, and legal risks.
  • Partial credit guarantees to support government obligations.
• The GF can also use World Bank guarantees on a project-by-project basis to cover specific government breaches.

8. Fiscal and Accounting Implications

• The GF’s capital comes from the government and potentially the World Bank.
• The GF incurs operating costs, commitment fees, and guarantee payments.
• If the GF charges fees for its guarantees, it may generate revenue and reduce government subsidies.
• The fiscal implications depend on whether the GF creates new obligations or supports existing ones.

9. Next Steps

• The government needs to:
  • Decide on a risk management strategy.
  • Set a ceiling for public sector support.
  • Design and structure the Guarantee Fund.
  • Establish a backstop facility to enhance creditworthiness.
  • Obtain a credit rating for the GF.

Key Information

• The GF is a government-sponsored entity that issues partial guarantees to private investors and lenders.
• The World Bank can support the GF through contingent loans and partial credit guarantees, enhancing its creditworthiness.
• The GF helps the government manage contingent liabilities and control fiscal costs.
• The Infrastructure Fund complements the GF by financing projects and mobilizing private capital.
• The GF can be structured in three ways depending on the level of risk management required.
• The GF's credit rating can be improved with AAA-rated multilateral backing.
• The GF's financial implications depend on guarantee fees, capital structure, and government accounting practices.