Private finance: what problems does it solve, and how well?

Public–private partnerships are now well established around the globe, and private finance plays a significant role in long-term infrastructure contracts. Reasons for wanting private finance in megaprojects have varied between countries and changed over time, and it will continue to attract governments who are either unable or unwilling to publicly finance major projects. The availability of private finance has seen many megaprojects delivered when they would not otherwise have gone ahead. In the same way that a private credit card can be used with an inappropriately high interest rate to purchase today what is paid for tomorrow, so too can private finance amount to little more than a megacredit card for eager governments eyeing off a desirable, immediate, infrastructure transaction. There is increasing academic evidence about how well private finance works, but the verdict is still out because the evidence is not conclusive.