Editing Public–private partnership (section)

=== Off-balance-sheet accounting ===
PPPs are often structured so that borrowing for the project does not appear on the balance sheet of the public-sector body seeking to make a capital investment. Rather, the borrowing is incurred by the private-sector vehicle implementing the project, with or without an explicit backup guarantee of the loan by the public body. On PPP projects where the cost of using the service is intended to be borne exclusively by the end-user, or through a lease billed to the government every year during the operation phase of the project, the PPP is, from the public sector's perspective, an "[[Off-balance-sheet|off-balance sheet]]" method of financing the delivery of new or refurbished public-sector assets.

This justification was particularly important during the 1990s, but has been exposed as an accounting trick designed to make the government of the day appear more [[Fiscal responsibility|fiscally responsible]], while offloading the costs of their projects to service users or future governments. In Canada, many [[Auditor general|auditors general]] have condemned this practice, and forced governments to include PPP projects "on-balance sheet".<ref name=":0" />

On PPP projects where the public sector intends to compensate the private sector through availability payments once the facility is established or renewed, the financing is, from the public sector's perspective, "on-balance sheet". According to PPP advocates, the public sector will regularly benefit from significantly deferred cash flows. This viewpoint has been contested through research that shows that a majority of PPP projects ultimately cost significantly more than traditional public ones.<ref name="Siemiatycki 2012">{{cite journal|last1=Siemiatycki|first1=Matti|last2=Farooqi|first2=Naeem|date=July 2012|title=Value for Money and Risk in Public-Private Partnerships|journal=Journal of the American Planning Association|volume=78|issue=3|pages=286–299|doi=10.1080/01944363.2012.715525|s2cid=153603588}}</ref><ref name="UN OHCHR 2018">[https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=23740&LangID=E][[Extreme poverty]]<span> and human rights*, Report of the Special Rapporteur on extreme poverty and human rights, Philip Alston, submitted in accordance with Human Rights Council resolution 35/19</span>, NYC, 26 September 2019</ref>

In the European Union, the fact that PPP debt is not recorded as debt and remains largely "off-balance-sheet" has become a major concern. Indeed, keeping the PPP project and its contingent liabilities "off balance sheet" means that the true cost of the project is hidden.<ref>{{Cite book|last=Romero|first=Maria Jose|url=http://www.eurodad.org/files/pdf/1546450-what-lies-beneath-a-critical-assessment-of-ppps-and-their-impact-on-sustainable-development-1450105297.pdf|title=What lies beneath? A critical assessment of PPPs and their impact on sustainable development|publisher=Eurodad|year=2015|pages=5}}</ref> According to the [[International Monetary Fund]], economic ownership of the asset should determine whether to record PPP-related assets and liabilities in the government's or the private corporation's balance sheet is not straightforward.<ref>{{Cite book|title=GOVERNMENT FINANCE STATISTICS MANUAL 2014|publisher=IMF|year=2014|isbn=978-1-49834-376-3|location=Washington|pages=324–327}}</ref>