Ministry of Economy and Finance

General Department of Public-Private Partnerships

Viability Gap Financing

Background

The Viablity Gap Financing (VGF) is the Royal Government’s subsidy provided to the Private Partner to reduce its capital expenditure, while increasing the financial viability of the project. The payment for such a subsidy shall be based on specific performance milestones after the commencement of construction and can be renewed for up to 2 (two) years after the completion of construction.

VGF can be provided to PPP projects where high capital expenditure requirements result in an un-bankable or unaffordable business case, where capital expenditure can be partially reduced without diminishing private performance incentives, and where millstones for VGF payments can be clearly defined. The implementation of the VGF is considered by the Royal Government in the medium and long-term.