This economic policy note presents thedilemma between private infrastructure and public risk. Thenote examines the fact that, increasingly, governments inmany developing countries are relying on the private sectorto provide infrastructure services, thus being forced -because of policy shortcomings - to assume risks thatprivate investors should bear. However, through theimprovement in policies, such as risk reduction andguarantee improvement, governments can avoid these risks,while attracting private infrastructure investment.Guidelines are provided for allocating risk, where twofactors are determined: 1) the degree of influence in thecontrol of such risk; and, 2) the ability to bear risk.However, since these factors may adversely react, otherfactors are considered as well, such as regulatory,quasi-commercial risks, construction cost risks, in additionto exchange and interest rates risks. The adoption ofaccrual accounting measures is suggested as a crucial stepfor the improvement in guarantee management.