The financing of public infrastructure as a form of long-term public debt

Abstract

Traditionally, states have primarily relied on tax revenues to finance their activities. However, public debt has increasingly become a common alternative for raising resources. This shift has raised concerns about the ethical implications of leaving future generations burdened with debt. Many countries have implemented fiscal rules to control public debt, often incorporating them into constitutional frameworks. While public borrowing regulations typically focus on loans and bonds, there is a gap in oversight regarding infrastructure financing agreements. These agreements, often structured as public-private partnerships (PPPs), involve long-term financial commitments, including fiscal concessions, extended payment obligations, and public asset exploitation rights. Despite not being traditional debt instruments, these contracts generate financial liabilities that impact future budgets. This paper argues that infrastructure financing should be recognized as a form of public debt and subject to similar fiscal constraints to prevent excessive long-term state commitments.