By Timothy C. Irwin, World Bank 2007.
Many governments want private firms to finance new infrastructure. The firms, in turn, often want the government to bear some of the risks. They might ask the government to compensate them if demand falls short of forecasts or to promise to repay their debts if they become insolvent. At the very least, they probably want the government to allow them to charge a certain price or else compensate them accordingly. This book aims to help governments respond to such requests. As well as seeking to make precise the principle that risks should be allocated to those best placed to manage them, it explains how governments can value the guarantees they are thinking of granting and how they can modify aspects of public-sector management to improve the likely quality of their decisions about guarantees.