The role of Public-Private Partnership in mitigating financing pressure for investment projects
Executive Summary:
Governments utilize Public-Private Partnerships (PPP) due to the limited fiscal space available for building infrastructure. These partnerships are resorted to as an effort to shift government activity from operating infrastructure and public services to focusing on setting policies and strategies and monitoring service providers to upgrade them.
The average annual spending on investment projects over the period (2009-2021) was (22%) of the total spending of public budgets, whereas operational spending accounted for (78%). Investment in the oil and electricity sectors rose by (10%) for oil and (2% for electricity), while the total rate of spending on the remaining vital sectors combined did not exceed (10%). The volume of this spending no longer increases with the increase in oil revenues; as a result of the increase in operating spending by (95%) in the same period, the decrease in financial allocations allocated to investment projects led to an increase in the number of suspended projects, from (37) projects in 2013 to (1452) projects at the end of (2021).
Resorting to the method of a partnership between the public and private sectors (PPP) is meant to encourage the private sector to provide infrastructure assets and services based on i, and to reduce the pressures of financing investment projects from the general budget, which depends on fluctuating oil price. The participation of the private sector also helps raise the country’s GDP and revive the industrial sector.
One of the biggest problems with PPP projects is lacking legal framework. The delay in approving laws in this area may be due to legislative authorities and political parties’ lack of knowledge of its significance, in addition to political conflicts that block the adoption of these projects, plus the spread of financial and administrative corruption in government contracts. This makes it difficult to persuade political parties to support PPP projects.
The success and development of partnership projects require the government to adopt procedures and legislative frameworks to protect the public and private sectors from potential risks.
The paper proposes several solutions necessary to develop this type of partnership in the Iraqi environment, which represents one of the projects of the economic reform program, the White Paper.
