Dealing with Contingent Liabilities

Gilberto M. Llanto

in Fiscal Policy and Management in East Asia

Published by University of Chicago Press

Published in print November 2007 | ISBN: 9780226386812
Published online February 2013 | e-ISBN: 9780226387062 | DOI:
Dealing with Contingent Liabilities

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In recognition of the significant role the private sector can play in the provision, financing, and implementation of infrastructure projects, the Philippine government has adopted specific measures to encourage private-sector participation in infrastructure. The acute budgetary constraints facing the Philippine government motivated the entry of the private sector in the provision of certain infrastructure services. The passage of Republic Act 6957 or the Build-Operate-Transfer Law in 1990, as amended by Republic Act 7718, provides the avenue for tapping private-sector expertise and resources in infrastructure. The Electric Power Industry Reform Act (EPIRA), enacted in 2002, laid down the basis for competition in power generation and supply segments of the industry. A newly created Energy Regulatory Commission was created to regulate the price of transmission and distribution of electricity. Focusing on the Philippines, this chapter looks at the fiscal risk brought by contingent liabilities arising from government guarantees given to privately driven infrastructure projects. It also examines how the Philippine government may organize a management framework for contingent liabilities.

Keywords: Philippines; contingent liabilities; private sector; competition; power generation; infrastructure; Build-Operate-Transfer; EPIRA; Energy Regulatory Commission; government guarantees

Chapter.  12075 words. 

Subjects: Business and Management

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