Public-Private Partnerships with the Caribbean

Caribbean countries have significant infrastructure investment needs to improve the living standards of their citizens and the productivity of their domestic economies. Often, this investment gap is beyond a government's fiscal capacity, requiring innovative financing solutions to achieve a country's development goals. Public-Private Partnerships ("PPP's") have been used regionally as an alternative model to finance infrastructure development and promote growth in the domestic economy.

PPP's are typically structured as a long-term contractual arrangement between the government and a private sector developer, whereby the developer is responsible for financing, constructing, operating and maintaining a facility that is used by and transferred to the public sector. With this structure, the government can avoid incurring additional debt and leverage the resources and expertise of the private sector to develop public infrastructure.

The private sector is compensated for its risk and development costs by receiving revenue from the public use of the facility, receiving rental income from the government, or a combination of both. This arrangement stimulates the economy, achieves efficiencies, and creates employment opportunities based on indirect government support.

Utilities Sector PPP's are widely used in the Caribbean and Latin America to develop a wide range of projects, such as water treatment plants and power generation facilities, and within the Transportation Sector, to develop roads, airports and seaports. The flexible nature of PPP's provides governments with alternative options to develop infrastructure, contribute to economic development and improve productive capacity within their country.

While PPP's can offer significant benefits, there are also risks that the Bank must consider as part of its due diligence process. We are comfortable with PPP structures if there is a thorough feasibility study that identifies strong market demand for the project, the cost structure of the project is reasonable for all parties, the developer is financially strong and has a well-established track record, there is a long-term improvement in budgetary spending and an improvement in productive capacity within the country.

We welcome the opportunity to support Public-Private Partnerships across the Caribbean and contribute to the economic development, long-term sustainability and prosperity of the region.