Development Aspects Impressum Editors

Regulatory frameworks

The importance of the public interests involved, especially the impact on the so- cially vulnerable population, along with the need to mobilize significant economic resources in order to correct deficits and the obligation to use those resources ef- ficiently, make it essential to adopt regulatory frameworks that:

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  Anticipate sector issues and conflicts in a technical and specialized manner
  

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  Contain sufficient incentives and signals for regulating and guiding the conduct
  

of intervening parties

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  Are sufficiently sound from a legal standpoint.
  

Regional experience has shown that there are advantages to adopting a regula- tory framework on the basis of higher level laws or regulations and, in the case of private sector participation, to define this framework and organizing regulatory, control and oversight agencies prior to the privatization process itself. The experi- ence of Chile in the region gives an example of a country that has followed these guidelines.

5. Tariff policies

As a result of financing problems experienced by the sector in most Latin Ameri- can countries, gradually and increasingly there is more attention being given to tariff policies (Fernández and others, 2009). The earlier practice of basing sector development almost exclusively on financing through public funding separate from service provision has been abandoned. The current focus is based on a belief in the importance of the tariff levels for the rational use of resources and for self-financ- ing, which are essential requirements if service provision is to be efficient and sus- tainable. This does not mean that tariff revenue should be the only way to finance service delivery, but rather a means of achieving an appropriate balance between tariff resources and public sector funds, and that the latter should be allocated to investments and subsidies that maximize the social profitability of public spending.

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