Are public private partnership liabilities hidden debts? A globalcomparison

Having been initiated in the beginning of the 90s in the UK, the "Public-Private Partnership" (PPP) model was believed to have many favorable aspects and to have more efficient application and evaluation. Following the UK, a majority of the European countries tended to this funding model. It started to attract great attention in developing countries as of the 2000s. Although they were approached positively and had a wide range of application, PPPs were found to lead to certain issues in years and, therefore, attracted criticisms. During the years when this funding system first expanded, PPPs provided advantages in meeting the Masstricht criteria, a parameter for financial performance measurement of the member countries of the European Union, since such investments were not regarded as a government debt stock. Besides, it was believed that PPP funding system was advantageous as regards to various matters such as the establishment of a competitive economy for the private sector had better commanding skills and the risks were not left to public. Nevertheless, debt was out of the control of the public and the public debt attained quite high numbers in the meanwhile. There were also accountability issues since PPP projects required long durations for construction. Therefore, the International Accounting Standards Board brought new standards in order that PPP assets and liabilities are visible and transparent in the statements of states. In this regard, IPSAS 32 clarifies the accounting of the assets and liabilities in service concession agreements. These standards were initially shaped according to risk and income approaches while they were revised according to needs and audit approach prevailed in the following periods. This research examines how the World and Turkey shares the assets and liabilities of PPPs with the public. As the creators of the PPP funding system, the UK and the Commonwealth of Nations apply accrual based accounting and set an example for the transparent presentation of PPP assets and liabilities in the state statement. Though not in state statements, other developed countries can also ensure transparency in various ways while sharing the liabilities of PPPs with the public. On the other hand, developing countries are more sensitive in this matter. Although Turkey, a country among the latter group, is fast to adopt to international regulations, it experiences problems in the sharing of PPP liabilities with the public.