Government subsidies shift infrastructure costs from consumers to taxpayers, study finds.
Governments in emerging markets are seeking private sector help to improve infrastructure due to budget constraints and dissatisfaction with state-run services. Private investors are hesitant to invest without government support, such as grants or guarantees, especially in new projects. Investors prefer when governments set fair prices and stick to them. However, if prices are too low, taxpayers end up subsidizing infrastructure projects through hidden guarantees, shifting costs from consumers to the public.