engleski

Financing of Public Infrastructure - Going Public or Private?

Investing in public infrastructure has its very own specifics: these are projects characterized as long term projects which demand huge investments, their initial losses are extensively spread and compensated with big profits, internal rate of return is high, ... All of them bear not only construction risks, technical risks, market/economic risks but also political one. Above mentioned characteristics arise question on how to finance these projects. Classical way of financing public infrastructure projects is through budget financing. Because of shortage of sufficient means on one side and necessity of providing adequate services on the other, it was allowed for private capital to penetrate into segments where possible. In case of Croatia, the first law on foreign investments came into force in 1988 and it had given much needed push for private investments. In 1992 Law on concessions was officially voted in and it is still in force. Five years later, the first results are visible: although restraints concerning concessions still exist and they are becoming more conventional model of public financing.

public infrastructure; concessions

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