work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent. PPPs are critical to understand. PPPs can be used to avoid fiscal constraints in the short term due to their initial private sector financing, but without proper institutional controls and safeguards, this avoidance of constraints can quickly create unsustainable fiscal liabilities that will worsen the country's overall fiscal and development position. This study finds that policy-related government institutions increase the probability of countries having active PPP programs but have no effect on the level of expected expenditures on PPPs. It also finds, like previous studies, that fiscal constraints increase PPP use. The results suggest that governments understand the importance of institutional quality for PPPs, but may feel compelled to utilize their PPP units once they exist even if they do not have the institutional quality to maintain their use. This could have ramifications for the sustainability of PPP programs throughout the world.JEL codes: E62, H54, O18, O23