Tuesday 3 March 2009

Logical Economics?

I always thought that the object of Private Finance Initiatives (PFIs) were intended as a means whereby the government could fund public sector projects over a long period (20 plus years?) whilst private finance funded the actual development upfront in return for state payments over time.

The following press release from the Treasury is therefore interesting, well to me it is - in that where financial matters are concerned they are akin to a foreign language!

However, is it not ironic that we seem to have a situation whereby a scheme which is supposed to save the government money as the private partners would be funding the immediate expenses, now requires the government to bail-out said partners? Or have I got this all wrong?

As PFI funding is 'off the books' and not included in the Brown inflation computations, one wonders whether the bail-out amounts will also be 'hidden'?

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