Methods and Alternatives of Financing Transport Infrastructure Development in Central Eastern Europe



Methods and Alternatives of Financing Transport Infrastructure Development in Central Eastern Europe

Authors

MURANYI M, Ministry of Transport, Hungary

Description

In a period of general lack of budgetary sources and substantial indebtedness and where the demand for public utility spending (such as on the improvement of road conditions or additional roads in the transport system) is higher than the resources special

Abstract

In a period of general lack of budgetary sources and substantial indebtedness and where the demand for public utility spending (such as on the improvement of road conditions or additional roads in the transport system) is higher than the resources specially budgeted and made available for such purposes, the government has to decide whether to implement or postpone the development(s) required for a reasonably balanced market, understanding that in case of deferred implementation the public and social benefits will be deferred as long as the required project finance is not raised. In case the development may not be postponed any further, then either the methods of allocation of the public sources must be reconsidered without changing the total available amount or the total amount of public resources available in a period must be increased by raising private funds as additional finance for co-financing public services.

The total amount of available public resources includes the loans raised by public organisations. If the necessary additional finance is raised by borrowing there is no need to revise the existing tax system or the tax rates to any considerable extent. But the mobilisation of additional private funds to supplement the public resources depends on the level of legal assurance offered to the private. The finn political commitment of the governments to establish the necessary environment for the participation of private investors, developing a sound legislative background and substantial financial contributions from the governments are equal conditions precedent to implement the development programs in the transport sector in the Central Eastern European countries.

Publisher

Association for European Transport