The Fiscal Implications of Public-Private Partnerships in Honduras: Current Developments and the Road Ahead
Honduras has expanded its public-private partnership portfolio considerably since passing the PPP law in 2010, but concerns remain about their institutional and regulatory capabilities even in the wake of their new 2014 PPP law reform. Though this reform created the Fiscal Contingency Unit (FCU), a new independent unit within the Ministry of Finance with the explicit purpose of approving PPP projects and conducting oversight, the core responsibilities related to promoting, managing and monitoring PPP development still remain with the Commission for the Promotion of PPPs (Coalianza). The FCU is currently unable to function in its oversight approval and oversight capacity and has no clear mandate under which to function. Meanwhile, the government's current quantifiable firm and contingent commitments in PPP contracts account for 6.6 percent of GDP. We therefore propose a number of additional reforms to the existing frameworks to remove conflicting incentives from Coalianza and improve FCU's oversight capabilities.