Leasing by public authorities in Italy: creating economic value from a balance sheet illusion

Leasing allows organizations to procure fixed assets without the need for upfront investment, and can be an attractive option for public authorities. This article describes the pattern of public sector demand for leases in Italy. While leasing is widely regarded as a model with the potential to create economic value, demand for leases is mainly driven by accounting considerations. The authors suggest that the operating lease model may, if properly structured, offer the cost-certainty benefits associated with concession-based public–private partnership (PPP) contracts, but with lower transaction and financial costs. These findings have significant implications for procurement policy in Europe, where PPPs are being promoted by the EC and the governments of many member states.