The Hungarian government will renegotiate, and ultimately, phase out public private partnership (PPP) projects that are accounted outside the general government budget, but still raise state debt in a hidden way, National Development Ministry State Secretary Sára Nemes Hegman said on Thursday.
The government has not yet completed a review of PPP projects, she said.
Early April the National Economy Ministry estimated that a government decision to buy out some PPPs in 2011 would cost 0.7% of GDP this year — cutting the surplus stemming from a transfer of private pension fund assets to the state by a similar amount.
The government, with the help of independent appraisers, is revaluating the projects and will renegotiate them to put an end to the disproportionately high risk-taking of the state, characteristic of such schemes, Hegman said.
The government should buy out the private partners in a realistic and business-like manner after which the contracts should be eliminated, she added.
The development ministry earlier said obligations on these projects over their total run will cost the state about HUF 3,000 billion adding that their replacement or restructuring would save the state HUF 400 billion over the long term.
In terms of money spent, the largest PPP projects are the M5 and M6 motorway developments, which combined represent about two-thirds of all projects. By number, educational investments make up 54% of the total.
54 educational institutions, 34 sports facilities, four sections of motorway, two prisons, the Palace of Arts in Budapest and the Collegium Hungaricum in Berlin have been built as part of PPP projects.
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