Managing PPPs for Budget Sustainability: The Case of PPPs in Portugal, from Problems to Solutions

Considering that Portugal is currently suffering one of the most severe financial crisis in its history, this paper examines to what extent PPPs have contributed to Portugal’s external debt problems and evaluates how Portugal’s PPP contracts can be managed in order to contribute to the necessary solution.  Although the interests of the various PPP Stakeholders are acknowledged, the focus is on the Government as the public partner, from a sovereign risk and taxpayer perspective. The paper shows how countries like Portugal with large PPP programmes but fragmented PPP institutions and   inadequate budget practices can be exposed to greater fiscal risks, leading to the accumulation of excessive PPP liabilities which later contribute to public sovereign debt problems.