WPS5905 Policy Research Working Paper 5905 Spending on Public Infrastructure A Practitioner’s Guide Cecilia Briceño-Garmendia Afua Sarkodie The World Bank Africa Region Sustainable Development Unit December 2011 Policy Research Working Paper 5905 Abstract This paper provides a methodological tool to support With the aim of being as comprehensive as possible, the the collection and preparation of standardized, methodology covers central and sub-national government comprehensive data regarding public spending on expenditures, non-budgetary vehicles (such as road infrastructure services that can be rigorously compared funds), state-owned enterprises (SOEs), and public- across countries. Infrastructure is defined to cover six private partnerships (PPPs). While the methodology sectors: irrigation, energy (primarily power), transport, focuses on collecting quantitative data on the level communication, wastewater management, and water and composition of spending, this is complemented supply. with qualitative data that provides the institutional The guide is designed to provide a much richer context. Importantly, the methodology allows for cross- and more complete measurement of infrastructure classification of infrastructure spending by purpose spending than the limited highly aggregated data (power, roads, etc) and by function (operational versus currently available through the IMF Government capital spending). Financial Statistics. Originally developed for Africa, the This guide provides practical guidance—including methodology is relevant and readily applicable to any concepts, definitions, and classifications—for each of the developing country. three stages of work, namely: (i) pre-field, (ii) field, and (iii) back office. This paper is a product of the Sustainable Development Unit, the Africa Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at cbricenogarmendi@worldbank.org. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team Spending on Public Infrastructure: A Practitioner’s Guide Cecilia Briceño-Garmendia and Afua Sarkodie Acknowledgments This paper draws on contributions from sector specialists from the Africa Infrastructure Country Diagnostic Team; notably, Vivien Foster, Nataliya Pushak, and Karlis Smits. The paper is based on data collected by numerous local consultants and benefited greatly from feedback provided by colleagues in the World Bank; notably, James Brumby, Gerardo Corrochano, Praveen Kumar, Dino Merotto, and Sudhir Shetty. Contents List of templates ............................................................................................................................................................................. v List of tables .................................................................................................................................................................................... v List of figures .................................................................................................................................................................................. v List of boxes .................................................................................................................................................................................... v List of acronyms and abbreviations ............................................................................................................................................ vi Introduction ..................................................................................................................................................................................... 7 Content 9 1 Before beginning the fieldwork ............................................................................................................................................... 13 Institutional mapping 14 Jurisdictional responsibilities in infrastructure service delivery (template 1) 15 Special funds financing infrastructure service delivery (template 2) 19 Collecting readily available relevant data 20 Private participation in infrastructure (template 3) 20 Official development assistance (ODA) in infrastructure (template 4) 21 Initial data collection: Practical concerns 22 Budgetary cycle and budget classification 22 Strategy for fieldwork 22 Mining publicly available sources 23 2 Fieldwork—Establishing a qualitative baseline ..................................................................................................................... 24 Framing qualitative fiscal information 24 Qualitative templates at the national level 24 Basic budgetary institutions, national level (template 5) 25 Budgetary cycle diagram, national level (template 6) 26 Qualitative template at the operator level 29 Governance of public operators (template 7) 30 3 Fieldwork—Establishing a quantitative baseline................................................................................................................... 33 Target institutions and documents for collection 33 Framing the scope of fiscal data 34 Fiscal data template at the national level 35 Macroeconomic parameters for normalization (template 8) 35 Relevant definitions: Functional and economic classifications 35 The functional classification of expenditures or COFOG 35 Defining infrastructure outlays using the COFOG 37 Economic classification of expenditures 38 Fiscal data templates at the government level 40 Macroeconomic parameters for budgetary context of infrastructure spending (template 9) 41 Functional and economic classification of central and local government expenditures (template 10) 41 Fiscal data templates at the operator level 48 Public operators’ financial data (template 11) 49 Practical considerations 51 4 Back-to-the-office work ............................................................................................................................................................ 53 Country reports: Survey documentation 53 iii a. General context. 53 b. Data quality and coverage. 53 c. Definitions, assumptions, and code mapping 53 d. Concluding remarks 55 Annex 2. COFOG codes capturing infrastructure cost elements ............................................................................................. 57 Annex 3. Economic classification of expenditures ................................................................................................................... 61 Annex 4. Glossary of accounting terms ..................................................................................................................................... 63 Annex 5. Correspondence between template 11 and TAFIRE .................................................................................................. 66 References..................................................................................................................................................................................... 68 iv List of templates Template 1 Jurisdictional responsibilities in infrastructure service delivery 12 Template 2 Special funds financing infrastructure service delivery 15 Template 3 Private participation in infrastructure 16 Template 4 ODA in infrastructure service delivery 18 Template 5 Basic budgetary institutions, national level 21 Template 6 Budgetary cycle diagram, national level 23 Template 7 Governance of public operators 26 Template 8 Macroeconomic parameters for normalization 30 Template 9 Macroeconomic parameters for budgetary context of infrastructure spending 35 Template 10 Functional and economic classification of government expenses (central and local) 40 Template 11 Public operators’ financial data 42 List of tables Overview table 1 Data collection matrix 3 Table 1.1 Rwanda 2006, jurisdictional responsibilities in infrastructure service delivery 14 Table 1.2 Uganda 2006, special funds in infrastructure 16 Table 1.3 Kenya 2006, private participation in infrastructure 17 Table 1.4 Sierra Leone 2007, ODA in Infrastructure 18 Table 1.5 Indicative checklist of documents and sources 19 Table 3.1 Indicative checklist of data sources and documents 29 Table 3.2 COFOG codes capturing infrastructure cost elements 32 Table 3.3 Economic classification of government expenses—current expenditures 34 Table 3.4 Economic classification of government expenses—capital expenses 35 Table 3.5 Kenya functional code mapping 37 Table 3.6 Rwanda economic code mapping 38 List of figures Figure 2.1 Turkey 2004, budgetary cycle diagram 24 List of boxes Box 1.1 On-budget versus off-budget entities 11 Box 3.1 Why use the GFSM 2001’s economic and functional classifications? 33 v List of acronyms and abbreviations AfDB African Development Bank AICD Africa Infrastructure Country Diagnosis CFAA Country Financial Accountability Assessment CG central government COFOG classification of functions of government DB development budget GDP gross domestic product GFS global financial system GFSM Government Finance Statistics Manual HR human resources IFAC International Auditing Practices Committee of the International Federation of Accountants IFRS International Financial Reporting Standards IMF International Monetary Fund INTOSAI International Organization of Supreme Audit Institutions IT information technology LCU local currency unit LG local government Ministry of Finance ministry of finance MTEF Medium-Term Expenditure Framework NEPAD New Partnership for Africa’s Development NGO nongovernmental organization ODA official development assistance OECD Organisation for Economic Co-operation and Development OHADA Organization for the Harmonization of Business Law in Africa PFM public financial management PPA Power Purchase Agreement PPP public-private partnership PRSP Poverty Reduction Strategy Paper SF special fund SOE state-owned enterprise SPI spending on public infrastructure VAT value added tax WB World Bank vi Introduction The spending on public infrastructure (SPI) exercise is a methodological tool to support the collection and preparation of standardized, comprehensive information—comparable across countries—on public spending on infrastructure services. Particular attention is paid to the level, composition, and planning and releasing mechanisms. Originally, the SPI exercise was developed to support the Africa Infrastructure Country Diagnostic (AICD) study1 in recognition of the fact that the infrastructure data in the fiscal accounts as collected by the International Monetary Fund (IMF) were scattered and incomplete. While Africa‘s infrastructure needs are widely debated, very little was known about the existing levels and composition of public expenditure on infrastructure subsectors. Such information is important in order to structure financing options to close any funding gap. Infrastructure outlays—if at all—are reported in an aggregate manner without the economic breakdown that would delineate their nature: that is, fixed capital, operations and maintenance, interest, subsidies, the compensation of employees, and so on. In addition, such outlays are not reported by function, which would allow costs to be attributed to specific infrastructure subsectors, such as irrigation, water resource management, electricity, transport, and so on. Between 2000 and 2005, the IMF Government Financial Statistics,2 under the general government section, reported infrastructure spending data for only Uganda out of the 42 Sub-Saharan African countries. These data indicated an implausibly low spending level of 0.2 percent of gross domestic product (GDP) in 2001. Since government statistics reported by the IMF focus primarily on central government accounts, they provide incomplete coverage of infrastructure expenditure, much of which is undertaken by subnational and parastatal entities. Delivery of infrastructure services relies heavily on public (or para-public) agencies outside the purview of the central government. A significant share—if not the majority—of public expenditure in infrastructure is channeled through nonfinancial public enterprises, local governments, and (other) off-budget vehicles (for example, special funds). Off-budget vehicles play an increasingly large role in mobilizing and protecting the infrastructure financing of several sectors, including roads (and rural infrastructure in general), even when part of their resources continue to be come via budget transfers. At a time when the international community is committed to substantively increasing official development assistance (ODA) to Africa—and to infrastructure sectors in particular—it is of utmost 1 The AICD study is being undertaken in coordination with the African Development Bank (AfDB), under the guidance of the New Partnership for Africa‘s Development (NEPAD), and is being funded by contributions from a number of donors and multidonor trust funds. In its first stage, the SPI exercise supported the generation of fiscal cost baselines and basic fiscal cross-country comparisons for 24 African countries: Benin, Burkina Faso, Cameroon, Cape Verde, Chad, the Democratic Republic of Congo, Côte d‘Ivoire, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, South Africa, Sudan, Uganda, Tanzania, and Zambia. The second stage focuses on the following countries: Mali, Mauritania, Angola, Guinea, Botswana, Swaziland, Zimbabwe, Central African Republic, the Republic of Congo, Gabon, Eritrea, Equatorial Guinea, Togo, Gambia, Liberia, and Sierra Leone. 2 http://www.imf.org/external/pubs/ft/gfs/. 7 importance to compare the level and quality of spending against the cost of attaining development targets. It is also critical to assess the scope for expenditure reallocation and efficiency gains, and to quantify the financing gap that can and should be targeted by donor support. These are first steps toward the more efficient and effective use of resources devoted to infrastructure, which will need to be followed by systematic monitoring. Policy makers and researchers are increasingly aware of the opportunity cost that compressing public investment in infrastructure can have on long-run growth potential. In fact, insufficient information on public infrastructure spending—and of the institutional mechanisms that underlie infrastructure service delivery—may be, in effect, preventing the efficient allocation of limited public funds across infrastructure sectors and projects. Most of the analytical methods and tools used to assess overall costs and returns on capital are not documented, making it difficult to evaluate the potential trade-offs between different cross-sector allocations. Further, to identify spending inefficiencies within a given project or institution, it is necessary to understand the economic use of funds and their links to achieved outputs. Annual spending flows, at the very least, give a sense of cost-recovery capabilities and the institutional capacity required to transform allocations not only into actual spending but into productive assets. To develop sustainable funding mechanisms, policy makers must first map out spending flows and current funding channels across the relevant institutions. This is a necessary step to evaluate the fiscal implications of a myriad of funding mechanisms that include user fees, levies, and taxes, as well as quasi-fiscal activities such as underinvestment, underpricing, and postponed maintenance. By developing a detailed and rigorous data collection methodology, the objective of the SPI exercise is to create a standardized database of public expenditure levels and performance in infrastructure, comparable across countries. With the aim of being as comprehensive as possible, the exercise covers central and subnational government expenditures, nonbudgetary vehicles (such as road funds and rural infrastructure funds), state-owned enterprises (SOEs), and public-private partnerships (PPPs) in which the asset ownership remains with the government. Although developed in the African context, the methodology is not specific to Africa but is relevant and applicable to any developing country. The purpose of this guide is to document the data collection methodology developed for and tested with the AICD, thereby making it available to a wider community of practitioners, and promoting its further application, Any data collected using this framework can legitimately be benchmarked against the existing public expenditure database developed for Sub-Saharan Africa under the AICD. When applying this methodology, several issues should be kept in mind. First, the SPI exercise focuses on the standardization of public spending across infrastructure sectors, aiming mostly at facilitating cross-sector aggregate analysis rather than providing tools for more nuanced sector-specific resource efficiency assessments. Second, despite heroic efforts by consultants in the field, some data may be missing. Even as public corporations and special funds are increasingly required to report their accounts, public records are not always comprehensive even when published. In particular, financial records for special funds financing rural infrastructure are frequently unavailable (for example, in Uganda) and SOE accounts rarely report cash flows, limiting the public knowledge of actual disbursements in capital projects. 8 Finally, emerging results from the testing of this methodology in pilot countries (Tanzania, Kenya Rwanda and Uganda) are already challenging the conventional wisdom on Africa public infrastructure spending. After adding up on-budget and nonbudgetary spending data, it is clear that most Sub-Saharan countries might, in fact, be allocating large amounts of resources to infrastructure, relative to the size of their economies. These sometimes enormous spending efforts are, however, challenged by these countries‘ own purchasing power of large-scale infrastructure, high costs, under-developed construction capacity as much as by their institutional ability to efficiently and effectively spend scarce resources. Content This guide includes concepts, definitions, and classifications with the aim of providing a comprehensive analytical framework for the measurement of infrastructure expenditures. It organizes the relevant work in three stages, namely: (i) pre-field, (ii) field, and (iii) back office. A schematic overview of the entire data collection process is provided in the table below. For the purpose of the SPI exercise, infrastructure is broadly understood as six sectors: irrigation, energy (primarily power), transport, communication, wastewater management, and water supply. Detailed definitions are provided in section 3 of this Guide. Overview table 1 Data collection matrix responsible information e templates Quantitativ Qualitative completed completed Additional to request Institution templates Sector Agent to be to be Template 1: Jurisdictional responsibilities in Template 3: Private Data available infrastructure service participation in Pre-field / online: Desktop delivery infrastructure  http://ppi.worldba nk.org Template 4: ODA in Template 2: Special funds infrastructure service  http://www.oecd. financing infrastructure delivery dac.org service delivery  Copies of Template 8: government Macroeconomic budgets for the parameters for past five years normalization  Copy of budget Template 5: Basic Template 9: cycle diagram budgetary institutions, Macroeconomic Ministry(ies) Department national level parameters for  Data for responsible for responsible budgetary context of Template 8 finance or for national infrastructure spending available at Overall planning budget Template 6: Budgetary cycle diagram, national World Bank open level Template 10: Functional data and economic http://data.worldb classification of ank.org/ government expenses (filled for the central  Copy of public government) investment programme Ministry(ies) Department Template 10: Functional  Copies of responsible for responsible and economic government n.a. local for local classification of budgets for the governments government government expenses past five years 9 responsible information e templates Quantitativ Qualitative completed completed Additional to request Institution templates Sector Agent to be to be budgets (filled for local Local governments) governments Utility(ies)  Copies of responsible for Department(s) financial Fuel and Energy electricity responsible Template 7: Governance of Template 11: Public statements/annu generation, for general public operators operators’ financial data al reports for the distribution, and management past five years transmission Template 11: Public  Copy of Energy Finance Template 7: Governance of operators’ financial data electricity tariff funds/agencies director public operators schedule Template 11: Public Finance Template 7: Governance of Road fund(s) operators’ financial data director public operators  Copies of Air transport financial Template 11: Public state-owned Finance Template 7: Governance of statements/annu operators’ financial data Transport enterprise(s) director public operators al reports for the (SOE[s]) past five years Maritime Template 11: Public Finance Template 7: Governance of transport operators’ financial data  Copies of fuel director public operators SOE(s) levy setting Template 11: Public Rail transport Finance Template 7: Governance of operators’ financial data SOE(s) Director public operators  Copies of Communic Template 11: Public financial Telecommunicat Template 7: Governance of ation Finance operators’ financial data statements/annu ions SOE(s) public operators director al reports for the past five years Ministry(ies)  Copies of Department responsible for financial responsible management wastewater statements/annu Wastewater for management al reports for the wastewater Template 7: Governance of Template 11: Public past five years Utility(ies) management public operators operators’ financial data responsible for  Water and wastewater Finance director wastewater tariff management schedules Ministry(ies)  Copies of responsible for Department financial Water supply water supply responsible statements/annu for water Template 11: Public al reports for the Template 7: Governance of supply operators’ financial data past five years Utility(ies) public operators responsible for Finance  Water and water supply director wastewater tariff schedules n.a. = Not applicable Section 1 deals with the pre-field stage. This is the planning phase, and consists of a desk review and interviews with people knowledgeable about the infrastructure sector in the country of interest. The pre- field work should draw a comprehensive picture of institutions and their role in providing infrastructure, take stock of available sources (literature and secondary data sources in general), and guide the fieldwork. Effective planning not only enables synergy between sources and interviewees in the field, but also ensuresappropriate country-specific institutional coverage for the data collection. 10 Websites of ministries (finance, planning, and sector specific), regulators, and infrastructure operators are an important source of pre-field information. These sites may in some cases provide the data needed for partial, if not full, template completion (including the quantitative templates). For the pre-field stage, the Guide sets out a game plan for initiating the activities and identifying the key documents needed for a thorough literature and secondary data review. Pre-fieldwork is not only a prerequisite for fieldwork but also provides a key output of the SPI exercise: the infrastructure institutional mapping. The Guide proposes templates to facilitate structuring this non quantitative and highly country-specific information. Section 2 concerns the fieldwork, which is the main part of the SPI exercise. It introduces the templates for data collection and provides methodological guidance, including variable definitions and contextual issues to be considered. The templates are grouped into two sets:  The qualitative baseline (section 3.1) comprises the indicative templates that support a standard description of the institutions and processes involved in resource allocation. The qualitative data collection process is divided into two distinct parts: o National level: Covers institutional questions related to planning and budgeting. o Operator level: Covers basic governance questions.  The quantitative baseline (section 3.2) comprises standardized data templates on spending flows from governments and publicly owned operators supporting infrastructure service provision. It also captures, to some extent, sources of funding (external funds, tariffs, and user fees). The quantitative baseline aims at collecting annual spending—estimated, released, and actual—for central and local governments, as well as public spending realized through off-budget entities (public corporations, special funds, and so on) whose golden share (decisive vote) remains with the public sector. The quantitative data collection process is divided into two distinct parts: o National level: Covers federal and local government allocations. o Operator level: Covers financial accounts at the operator level. Section 3 provides guidance on the back-office work of processing data, packaging, documenting results, and presenting country-specific analyses. The focus of this section is outlining the main components of a standardized country report that can be used to organize and summarize the main results of the data collection. 11 Box 0.1: Overview of data collection templates There are a total of 11 templates to be completed as follows: Pre-field  Template 1: Jurisdictional responsibilities in infrastructure service delivery  Template 2: Special funds financing infrastructure service delivery  Template 3: Private participation in infrastructure  Template 4: Official development assistance (ODA) in infrastructure service delivery Qualitative  Template 5: Basic budgetary institutions  Template 6: Budgetary cycle diagram  Template 7: Governance of public operators (one for each public enterprise and special fund) Quantitative  Template 8: Macroeconomic parameters for normalization  Template 9: Macroeconomic parameters for budgetary context of infrastructure spending  Template 10: Functional and economic classification of government expenses (separate versions will be needed for (i) central versus local government; (ii) each year of data collection; (iii) budget estimates, releases and actual; (iv) capital and recurring expenditures for countries with dual budgeting)  Template 11: Public operators’ financial data (one for each public enterprise and special fund). As a companion to this Guide, the templates are all available in Microsoft Excel format to facilitate the data collection and can be downloaded from: www.infrastructureafrica.org. Source: Author’s elaboration. 12 1 Before beginning the fieldwork The objectives of the pre-field stage are to:  Define the scope of the exercise in terms of the country-specific institutions to be analyzed;  Understand the institutional setting governing infrastructure;  Identify (primary and secondary) sources of data and information;  Answer as many qualitative (and quantitative) questions as possible based on secondary sources. The information collected in this preparatory, or pre-field, phase might in some cases be referential but in all cases will be completed and cross-checked in the course of the fieldwork, making the whole process more efficient. One important item on the pre-field agenda is a thorough literature review to determine the extent of the information and data readily available from public sources (both primary and secondary). A starting point for the literature and data review is offered by the specialized Web sites of development institutions (World Bank, African Development Bank [AfDB], Organisation for Economic Co-operation and Development [OECD], International Monetary Fund [IMF], and donors) and of relevant institutions in the country (such as the ministry of finance, statistical offices, central bank, line ministries, parastatals, monitoring units for parastatals, and so on). This search should include, but must not be limited to:  Recent sectoral analysis material and publications;  Recent fiscal analysis material such as the Country Financial Accountability Assessment (CFAA), Public Financial Management (PFM) diagnostic studies, and IMF‘s Recent Economic Developments;  Organizational charts, annual reports, budget statements, budget speeches, budget laws, Poverty Reduction Strategy Papers (PRSPs), and the Medium-Term Expenditure Framework (MTEF);  Budget books;  Tariff schedule publications and their indexation;  Financial accounts of infrastructure operators and funds;  Annual reports of infrastructure operators and funds. The pre-fieldwork should be organized so as to:  Produce a blueprint of the institutions involved in infrastructure provision.  Mine existing readily and publicly available data.  Account for country-specific circumstances (and concerns) in order to achieve better results. 13 Institutional mapping The purpose of institutional mapping is to provide a schematic description of institutions involved in infrastructure provision, policy making, regulatory functions, and their funding. The infrastructure institutional mapping is divided into two templates:  Template 1. Jurisdictional responsibilities in infrastructure service delivery: An outline of infrastructure service delivery as mandated to different providers (central government, state- owned enterprises [SOEs], and local governments), listed by name and country, with an indication of whether their funding is on- or off-budget.  Template 2. Special funds financing infrastructure: An overview of special funds—(specifying if they are extrabudgetary funds)—used to finance infrastructure. For each identified fund, the overview includes the name of the administrating agency, the source of funding, as well as the objectives of the fund. Institutional mapping should be done once per country, but be revised and validated periodically, since the universe of operators is always evolving (as operators cease to operate, change names, new comers can enter the market, divestitures can occur) Indicative sources of information for the institutional mapping exercise are as follows:  Sectoral policy documents and reports available from the World Bank, African Development Bank, Organisation for Economic Co-operation and Development, the U.K. Department for International Development, and other donor and university Web sites.  Acts/laws governing institutions, their roles and responsibilities, including the decentralization of infrastructure services.  National government Web sites, in particular those of relevant line ministries.  Acts/laws governing each special fund.  Fund-specific Web sites.  Interviews with experts. The qualitative documentation of institutions and their sphere of action is the first and arguably the most important step in the successful completion of the exercise. Provision of infrastructure is fragmented and increasingly decentralized. Consequently, data and information sources are varied and fragmented as well. The data will only make sense if institutional, legal, and procedural information is well understood, particularly since the aggregation and generation of spending indicators require careful processing to avoid double counting while guaranteeing comprehensive (representative) coverage. Splitting expenditures across sectors is an enormous challenge if feasible at all (as in the case of multisector water and power utilities or hydropower investments that involve power and irrigation investments). Infrastructure institutional mapping also helps in defining the scope and depth of the spending on public infrastructure (SPI) application. It is increasingly common that a myriad institutions and subnational governments provide infrastructure and channel public funds. One hundred percent spending coverage might be not only impossible but also impractical. Establishing the scope and depth of the SPI 14 application should be based primarily on covering key institutions and services, and based on desired accuracy and available resources. It might be appropriate to focus on the two to three largest subnational governments (to the extent that they are involved in infrastructure service delivery), and the three largest operators for highly decentralized services (as is common for water). The institutional mapping should be done using templates 1 and 2. Both templates are collected at the national level. Jurisdictional responsibilities in infrastructure service delivery (template 1) Template 1 lists all the entities that provide, fund, or regulate infrastructure services. These are organized by their main fund source (off-budget or on-budget), jurisdiction (national, subnational), and function vis-à-vis infrastructure service provision (formulation of policy, regulation, construction, maintenance, and operation). The list should include operators—SOEs, private-public operators, and governmental agencies—as well as subnational bodies with responsibility for delivering infrastructure services. A correctly filled template will make it easy to see the fragmentation and possible overlap and duplication of responsibilities across SOEs, central government (CG), local government (LG), and the agencies and departments within them. The template should be filled with the names of the institutions responsible for a given infrastructure activity and should specify whether the institution is on- or off-budget (Box 1.1). Box 1.1 On-budget versus off-budget entities On-budget entities are those whose spending patterns and allocations follow the regular budget processes of planning, programming, allocation, approval, monitoring, and auditing (when applicable). Generally, their financing comes predominantly from taxes or revenues recorded in the public budget. These agencies are under the authority of central, federal, and/or local governments. Examples of on-budget agencies are the national directorates or departments within line ministries. Off-budget entities make their spending decisions following their own planning processes, even if fully or partially funded through a governmental budget transfer. Off-budget entities commonly have their own financing sources. Traditional funding sources for off-budget vehicles are user charges, tariffs, levies, special revenues of state corporations, donor grants, and so on. State-owned enterprises and operators with public-private capital are examples of entities within this category. So are the so-called special budgetary funds that get most of their resources from user levies and fees. Off-budget vehicles are critical for infrastructure services delivery but tend to be overlooked when spending is being tracked. But their spending patterns and operational (in)efficiencies might have fiscal implications (that is, contingent liabilities and quasi-fiscal costs), mainly due to the central government‘s role as their main (or even sole) stakeholder and lender of last resort. Source: Auhtors’ elaboration. In cases where policy responsibilities are shared or ambiguously allocated among institutions, all relevant institutions should be listed. A case in point is the road subsector, where responsibilities are frequently allocated across two or more ministries, subnational governments, and off-budget vehicles (for example, road funds and agencies). Similarly, responsibilities in the water sector are spread among many players, jurisdictions, and on- and off-budget vehicles. In both cases, spending on construction, maintenance, and/or the operation of assets is spread across many stakeholders and is difficult to track. Meanwhile, policy and regulatory oversight is frequently delegated to only one institution. 15 For the purposes of template 1 PPPs generally fall in the off-budget category; their ownership structure and the existence of any golden-share might require qualifications, to be inserted in the comments section. Policy formulation includes the setting of the legal framework as well as the framework for sector/subsector policy planning, and, in the case of on-budget entities, programming as well. Template 1 Jurisdictional responsibilities in infrastructure service delivery Activity Agency responsible at Agency responsible at Comments Sectors national level subnational level On-budget Off- On- Off-budget budget budget Formulation of irrigation policy Regulation of irrigation sector Irrigation Construction of irrigation systems Maintenance/rehabilitation of irrigation systems Operation of assets and service provision Other (please specify) Formulation of energy policy Regulation of energy sector Construction of energy infrastructure (for example, hydropower plants and so on) Maintenance/rehabilitation of energy infrastructure Energy Generation of electricity Transmission of electricity Distribution of electricity Operation of assets and service provision Other (please specify) Formulation of aviation policy Regulation of aviation sector Transport—Air Construction of aviation infrastructure (for example, airports) Maintenance/rehabilitation of aviation infrastructure Air transportation Airports operation Other (please specify) Formulation of maritime policy Regulation of maritime sector Transport—Maritime Construction of maritime infrastructure (for example, ports) Maintenance/rehabilitation of maritime infrastructure (for example, ports) Maritime transportation Ports operation Other (please specify) Formulation of rail policy Regulation of rail sector Transport—Rail Construction of rail infrastructure Maintenance/rehabilitation of rail infrastructure Rail transportation Railway operation Other (please specify) 16 Activity Agency responsible at Agency responsible at Comments Sectors national level subnational level On-budget Off- On- Off-budget budget budget Formulation of road policy Regulation of road sector Construction of intercity roads Maintenance of intercity roads Transport—Roads Construction of urban (intracity) roads Maintenance of urban (intracity) roads Construction of village/rural roads Maintenance of village/rural roads Building and operating passenger/freight terminals Public transportation Other (please specify) Formulation of communication policy Regulation of communications sector Construction of communications infrastructure Communications Maintenance of communications infrastructure Management of international gateway Provision of fixed-telephony services Provision of cellular telephone services Provision of postal services Other (please specify) Formulation of water policy Regulation of water sector Urban water supply and treatment Water supply Rural water supply and treatment Construction of water sector infrastructure Maintenance of water sector infrastructure Operation of assets and service provision Other (please specify) Formulation of wastewater policy Regulation of wastewater sector Wastewater Urban wastewater disposal/treatment management Rural wastewater disposal/treatment Construction of wastewater infrastructure Maintenance of wastewater infrastructure Operation of assets and service provision Other (please specify) 1.1 17 Following the general guidelines, if a particular infrastructure function is not applicable to the country or information is not available, the given cell should be filled with ―nav‖ (or —) or ―nap‖ (or n.a. or n/a), respectively. A cell should not be left empty. Table 1.1 provides some examples of how the mapping of jurisdictional responsibilities looked in the case of Rwanda (2006).3 The interpretation and fine-tuning of template 1 is country specific, and the comments column should be used to document exactly what the particular situation is in each country for each activity. Table 1.1 Rwanda 2006, jurisdictional responsibilities in infrastructure service delivery Sectors Activity Agency responsible at national On budget / Agency responsible at On budget / Comments level Off budget sub-national level Off budget Energy & Fuel Formulation of energy policy Ministry of Infrastructure On-budget n/a Regulation of energy sector Rwanda Utilities Regulatory Agency Off-budget n/a Construction of energy infrastructure (e.g. hydro power plants etc.) Maintenance/Rehabilitaiton of Ministry of Infrastructure On-budget energy infrastructure Generation of electricity Electrogaz Off-budget Electrogaz Off-budget Transmission of electricity Electrogaz Off-budget Electrogaz Off-budget Distribution of electricity Electrogaz Off-budget Electrogaz Off-budget Other (please specify) Discovery and promotion of national On-budget n/a Department within the gas - UPEGAZ Ministry of Lands (On- Budget) Roads Formulation of road policy Ministry of Infrastructure On-budget n/a Regulation of road sector Ministry of Infrastructure On-budget Construction of inter-city roads Ministry of Infrastructure On-budget Maintenance of inter-city roads Ministry of Infrastructure On-budget Construction of urban (intra-city) Road Maintenance Fund Off-budget roads Maintenance of urban (intra-city) Road Maintenance Fund Off-budget roads Construction and maintenance of n/a District authorities, On-budget District authorities can village/rural roads Common Development apply to the CDF for Fund (CDF) financing for basic road/path construction at the local level Building and operating Office National de Transport en Off-budget passenger/freight terminals Commun Public transportation Office National de Transport en Off-budget Other (please specify) Commun Water Supply Formulation of water policy Ministry of Lands, Environment, On-budget n/a Forestry, Water and Mines Regulation of water sector Rwanda Utilities Regulatory Agency Off-budget n/a Urban water supply and treatment Electrogaz Off-budget n/a Rural water supply and treatment District authorities On-budget Construction and maintenance of Ministry of Lands, Environment, On-budget District authorities, On-budget District authorities can water sector infrastructure Forestry, Water and Mines Common Development apply to the Common Fund Development Fund for financing for borehole projects etc at the local level Other (please specify) Source: World Bank 2006a. 3 The format of the template has since been amended . 18 Special funds financing infrastructure service delivery (template 2) Template 2 aims to list special funds channeled to infrastructure. All the special funds listed in template 2 should have already appeared in template 1. But this second template is necessary to capture some of the institutional nuances that surround these sometimes controversial funds. The term special funds (SFs) includes funds that, even if partially or fully funded by the government budget, have managerial autonomy. SFs may be subject to different systems of cash management, control, and reporting than the budget itself; be set up under separate legislation; tap into commodity aid and levies; and earmark revenues for specific purposes. SFs are very common for roads and rural infrastructure services, and to support special-tariff regimes. Template 2 captures qualitative information that helps characterize and interpret data from institutional arrangements in political and socially sensitive areas. Topics of interest, for the purposes of accurate interpretation, include:  Administrating authorities, which may include government representatives, independent boards, and/or third-party administrators.  Funding sources, including user fees, budgetary transfers, and donor contributions.  Fund objectives, which vary depending on the country‘s political economy, and range from supporting rural infrastructure to implementing emergency infrastructure interventions to supporting maintenance. Template 2 Special funds financing infrastructure service delivery Fund Administering Funding sources Objectives authority Table 1.2 lists Uganda‘s SFs in infrastructure as of 2006. In the case of Uganda, all active SFs are extrabudgetary in the sense that they are governed by their own planning and spending rules and mandates. 19 Table 1.2 Uganda 2006, special funds in infrastructure Fund Administrating Funding sources Objectives authority Rural Electrification Fund Rural 5% levy of transmission bulk Capital subsidies to private rural Electrification purchases by generation generation companies; tariff subsidies Agency companies; World Bank; to rural distribution companies. government Credit Support Facility World Bank, government Refinancing facility for long-term private lenders to rural electrification projects; partial risk guarantees. Tariff Stabilisation Fund UECL Tariff levy on cost of generation Smoothing of electricity tariff increase (transmission until Bujugali comes on stream. company) Rural Communications Fund Uganda 1% levy on gross revenue from Support for rural communication; Communications telecommunications and postal provision of at least one public Commission services providers (universal telephone per 5,000 people at the service levy) subcounty level; ensure Internet access at every district headquarters. Source: World Bank 2006b. Collecting readily available relevant data Private participation in infrastructure (template 3) Indicative levels and trends of private participation in infrastructure according to various private participation modalities and arrangements can be gleaned from the World Bank‘s private participation in infrastructure database (http://ppi.worldbank.org/). One template should be completed for each country. Template 4 contains a list of transactions in infrastructure services involving private participation. The source is the World Bank database on private participation in infrastructure (PPI), available online. The PPI database is undoubtedly the most consistent and comprehensive cross-country documentation of private transactions in infrastructure sector in developing countries. When analyzing the results of the exercise, the PPI data provide perspective on the relative importance of the public sector vis-à-vis the potential and current activities of the private sector. This is a great example of how tapping secondary sources in the pre-field stage leverages the SPI exercise. Template 3 Private participation in infrastructure Name of Modality Sector Subsector Contract Investment year Value of project (concession, BOT, period or financial investment management closure year commitment contract, and so on) (US$ million) BOT=Build Owned and Transfer 20 By way of example, table 1.3 lists the transactions in the private sector in Kenya since the early 1990s. The data include the private sector‘s commitments4 to the energy, water, and transport sectors, as well as specific cash transactions in the case of telecommunications. Table 1.3 Kenya 2006, private participation in infrastructure Name of Project Modality Sector Sub-Sector Contract Investment Value of (concession, BOT, Status period year or investment management contract, etc) financial commitment (US$ closure year million) Energy sector Iberafrica Power Ltd. Greenfield project Operational Energy Electricity 7 1996 64 Mombasa Barge-Mounted Power Project Greenfield project Concluded Energy Electricity 7 1996 20 Kipevu II Greenfield project Operational Energy Electricity 20 1999 85 Ormat Olkaria III Geothermal Power Plant (phase 1) Greenfield project Operational Energy Electricity 20 1999 54 Telecom sector Safaricom Greenfield project Operational Telecom Telecom 15 1999 68 2000 68 2001 68 2002 68 2003 68 2004 157 2005 171 Celtel Kenya Greenfield project Operational Telecom Telecom 15 1999 40 2000 40 2001 40 2002 40 2003 40 2004 300 2005 250 Econet Kenya Limited Greenfield project Construction Telecom Telecom 15 2004 75 Transport sector Mombasa Container Terminal Management and lease contract Canceled Transport Seaports 2 1996 - Jomo Kenyatta Airport Cargo Terminal Greenfield project Operational Transport Airports N/A 1998 21.4 Mombasa Grain Terminal Greenfield project Operational Transport Seaports 8 1998 32.0 Kenya-Uganda Railways Concession Operational Transport Railroads 25 2006 322.0 BOT=Build Owned and Transfer Source: World Bank (2006c) Official development assistance (ODA) in infrastructure (template 4) Indicative levels and trends of ODA in infrastructure according to various private participation modalities and arrangements can be obtained from the online database of the OECD‘s Credit Reporting System (http://www.oecd.org/statistics/). One template should be completed for each country. Template 4 sets up an indicative listing of levels and trends of ODA in infrastructure as a percentage of GDP. The OECD Credit Reporting Database is a comprehensive information source for the completion of this template. 4 With the exception of the telecommunications sector, the PPI database records commitments as opposed to actual disbursements. The difference between commitments and disbursements is often substantial. For instance, in multiyear projects the initial commitment to an investment is an aggregate, while disbursements correspond to annual flows. 21 Template 4 ODA in infrastructure service delivery US$ millions t-4 t-3 t-2 t-1 t Total infrastructure 140: I.4. Water supply and sanitation 210: II.1. Transport and storage 220: II.2. Communications 230: II.3. Energy Table 1.4 provides another example of how to leverage the SPI exercise using secondary sources. In this case, the table shows data from the OECD Credit Reporting Database for Sierra Leone. Table 1.4 Sierra Leone 2007, ODA in Infrastructure US$ millions 2002 2003 2004 2005 2006 2007 Total infrastructure 2.79190057 66.48603636 39.50414176 94.27007312 3.33610499 55.43493961 140: I.4. Water supply and sanitation 0.97405642 8.82893883 18.16274457 5.58331844 10.6412804 11.78243788 210: II.1. Transport and storage 0.16644811 66.45760378 0 56.27007312 2.94492878 27.37850787 220: II.2. Communications 0.67516879 0 0.56316173 0 0.03401264 0.02792133 230: II.3. Energy 1.95028367 0.02843258 38.94098003 38 0.35716357 28.02851041 Source: http://www.oecd.dac.org. Initial data collection: Practical concerns SPI data need to be collected from central ministries (finance and economic planning) as well as from key line ministries, autonomous agencies, parastatals and, in a few occasions, nongovernmental organizations (NGOs). The involvement of key official and technical personnel is therefore critical in order to accurately identify sources and resources, and to validate inputs. As part of the data collection effort it is also essential to plan ahead and factor in a given country‘s budget and administrative cycles. Budgetary cycle and budget classification Establishing the budgetary cycle of the given country is a prerequisite to identifying the time periods that may be particularly inconvenient for data collection activities, to tailor the fieldwork timetable accordingly, and to get a sense of when budget data will become available (even before being published). Likewise, knowing the budget coding system used by the government is essential. In particular, the country may or may not have adopted the IMF‘s Government Finance Statistics Manual 2001 (GFSM 2001)5 for reporting budgetary accounts. If the country does not use the GFSM 2001 for its reporting, a code-mapping exercise will be necessary (to be discussed in more detail in the next section). Strategy for fieldwork Institutional mapping is followed by establishing the scope of the data collection in terms of the institutions and sectors covered, as well as the level of detail and disaggregation. This is where the complexity of comprehensive spending data collection is matched to the desired accuracy. Resource 5 http://www.imf.org/external/pubs/ft/gfs/manual/. 22 availability and focus are best defined before initiating the fieldwork. This is yet another reason why good infrastructure mapping is so important. The institutional mapping should be matched with a comprehensive list of key country-specific officials, specialists, and locations, at the same time as identifying institutional repositories of data and central coordinating agencies that might constitute single data sources for a sector or a set of data. For instance, in some countries one option might be the auditor general‘s office (which compiles SOE financial accounts) while in others it might be the bureau of statistics (a good source of financial data). In a nutshell, the interview plan prepared before the fieldwork commences should be as complete as possible and provide an exhaustive list of (i) institutions and contacts, (ii) existing secondary sources of data, and (iii) referential documents that should be collected in the preparatory work (table 1.5). Table 1.5 Indicative checklist of documents and sources Key documents Source Purpose Central government budgets (including budget, Ministry of Finance, the Central Data collection: release and actual) and budget speech Planning Unit Quantitative templates 8, 9, and 10 Local government budgets (either consolidated total Central Planning Unit or Data collection: or three largest authorities) local governments Quantitative templates 7 and 10 Annual reports of SOEs and special budgetary Ministry of Finance, Central Planning Data collection: funds financial accounts (income statement, balance Unit, SOEs, line ministry(ies), and/or Quantitative template 11 sheet, cash flow statement) special fund administration Relevant acts or laws relating to public financial Ministry of Finance Country report: management Qualitative templates 5 and 6 Country Financial Accountability Assessment WB Data collection: (CFAA) Qualitative templates 5 and 6 Fiscal transparency—Report on Observation of IMF Data collection: Standards and Codes Qualitative templates 5 and 6 Recent economic developments IMF Country report Medium-Term Expenditure Framework document Ministry of Finance and/or Central Quantitative templates 8 and 9 Planning Unit Qualitative template 6 Source: Authors’Elaboration Note: Ministry of Finance = Ministry of Finance; IMF = International Monetary Fund; WB = World Bank; SOEs = state-owned enterprises. Mining publicly available sources As many quantitative template (using readily available public sources) should be completed during the pre-field stage as possible. Governments and enterprises are increasingly transparent, meaning that more national budget books, as well as annual reports and financial accounts for SOEs, are being made public and are increasingly available on-line. Filling in the quantitative templates with as much data as possible before the fieldwork stage allows more focus on validation and the research needed to fill any data gaps. For this reason, it is highly recommended. 23 2 Fieldwork—Establishing a qualitative baseline Framing qualitative fiscal information Setting the qualitative baseline consists of documenting basic public expending processes related to infrastructure. The qualitative baseline component is divided into a number of parts.  National level, which covers budgetary institutions and processes. These institutional variables are collected at the national level following templates 5 and 6. The best sources for this information are ministries of finance, ministries of planning, and the budget offices of the parliament.  Operator level, which covers information pertaining to the governance quality of public providers (for example, parastatals, SOEs, PPPs). These institutional variables are collected at the operator level, following template 7. The best source for this information is the sector regulatory entity or—second best—the public operator itself, be it a corporation or a special fund. Qualitative templates at the national level The purpose of qualitative templates at the national level (templates 5 and 6) is to provide a schematic and, where possible, a categorical description of the institutional process and general regulatory characteristics guiding the planning, programming, and budgeting of infrastructure services.  Template 5. Basic budgetary institutions. One questionnaire per country.  Template 6. Budget cycle. A stylized scheme of the budgeting process. One questionnaire per country. Sources of information for completing the templates include:  Budget circulars/acts/laws.  Literature reviews.  World Bank Country Financial Accountability Assessments or similar public financial management diagnostics recently completed.  Interviews with officials from the ministry of finance, line ministries, ministry of planning, regulators, state-owned enterprises, special funds, local governments, and any other infrastructure providers—senior-level meetings, for example, with the permanent secretary /secretary-general of finance (or equivalent) or director of budget to obtain reliable responses. 24  Users should use their own knowledge of the Public Financial Management processes in the country to make a preliminary version of the sheet. World Bank economic counterparts will also be useful in confirming responses. The following definitions and clarifications may be useful when completing these templates. Unitary versus dual budgets A unitary budget is a straightforward concept; using this system, a country prepares one and only one document characterizing all annual spending by functional and economic categories. Many countries, however, operate under a dual budget system, in which the budget is split in two, usually prepared and managed by separate entities within the government. Dual budget systems generally comprise (i) a recurrent budget (RB) and (ii) a development budget (DB). For many African countries DBs were convenient mechanisms in the first two decades of independence, as government responsibilities gradually expanded beyond the provision of law and order. DBs largely focused on public capital investment projects such as power supply, public housing, roads and bridges, schools and universities, and hospital and clinics, although even these included recurring activities such as malaria eradication and crop research. Outside donors were willing to finance such expansion, and separate budgets facilitated the coordination of aid. Unlike RBs, DBs covered individual projects, allowing donors to closely monitor the projects being financed and also to identify future projects. Donors therefore preferred the dual budget system. The size of a DB was determined by the availability of aid, at the margin an add-on exercise. In recent years, the composition of DBs has gradually changed due to the growing inability of domestic budgets to shoulder recurrent costs and by the increasing ―ring-fencing‖ of donor-aided projects. Recurrent expenditures go into the DB because they are aid financed, not because they are capital investments, which blurs the distinction between capital and recurrent expenditure. Nowadays, projects frequently contain three types of expenditures: (i) new investment, (ii) rehabilitation of poorly maintained past investments (often aid financed), and (iii) recurrent funding.6 Basic budgetary institutions, national level (template 5) This includes factors that define and characterize the overall strategic framework of the budget process. 6 Excerpts from World Bank (1999: 53). 25 Template 5 Basic budgetary institutions, national level Variable Definition Units Medium Term Expenditure Framework (MTEF) Fiscal: MTEF 1=yes, 0=no process MTEF Fiscal: MTEF-Budget MTEF an integral part of the budgetary process 1=yes, 0=no Fiscal: MTEF-Time MTEF’s time horizon INTEGER Fiscal: Recent MTEF Date of the most recent MTEF YEAR Unitary budget, for example, investment and recurrent Fiscal-Unitary Budget 1=yes, 0=no spending are integrated in a unique budget bill Fiscal: Development Budget Separate budget for investments 1=yes, 0=no Fiscal: Development Budget Agency coordinating preparation of development 0=Min Finance, 1=Min Planning, Coordination budget 2=Other Fiscal: External Budget Separate budget for externally funded budgets 1=yes, 0=no Fiscal: External Budget Agency coordinating preparation of externally funded 0=Min Finance, 1=Min Planning, Coordination budgets 2=Other Budget Fiscal: Recurrent Budget Separate budget for recurrent spending 1=yes, 0=no Fiscal: Recurrent Budget Agency coordinating preparation of recurrent 0=Min Finance, 1=Min Planning, Coordination spending 2=Other Fiscal: Sequence Budget Budget framework paper prepared prior to budget 1=yes, 0=no Ceiling preparation to guide sectoral budget proposals Fiscal: Individual Strategic Sector ministries prepare individual strategic 1=yes, 0=no Budgets expenditure plans (or their equivalent) There is a project investment portfolio or an Fiscal: Investment Portfolio equivalent repository of bankable projects specific for 1=yes, 0=no individual sectors Budgetary cycle diagram, national level (template 6) The budget cycle diagram provides a chronological scheme of the government budget cycle, including approvals. In the case of a dual budget system, the separate decision paths for the recurrent and development budgets should be well understood. If easily available, the decision path for SOEs and parastatals should also be understood and documented. This is the main objective of template 6. Where possible a budget cycle should be obtained directly from the ministry of finance or other reliable source (for example, Public Financial Management [PFM] diagnostic studies). If not available from the ministry or other source, the budgetary cycle diagram can be developed jointly with the ministry of finance (or planning) using template 6 as a framework. Template 6 identifies and organizes the following activities in the correct chronological order, and identifies the agency responsible for each:  Budget circular drafting  Budget circular approval  Budget call  Current budget guide distribution 26  Investment budget criteria distribution  Current budget proposal  Current budget negotiations  Investment budget proposal  Aggregated budget allocations  Budget allocation endorsements  Annual program/investment financing decrees  Budget approval  Budget law Template 6 Budgetary cycle diagram, national level Number Comments of First or second activity of Budget If other, describe Responsible Month months the month activity here agency in cycle First activity of the month January Second activity of the month First activity of the month February Second activity of the month First activity of the month March Second activity of the month First activity of the month April Second activity of the month First activity of the month May Second activity of the month First activity of the month June Second activity of the month First activity of the month July Second activity of the month First activity of the month August Second activity of the month First activity of the month September Second activity of the month First activity of the month October Second activity of the month First activity of the month November Second activity of the month First activity of the month December Second activity of the month Template 6 should (i) include the actual names of local institutions, (ii) distinguish between different types of budgets (recurrent and development budgets, if existent), and (iii) include a flow diagram, with 27 boxes to represent activities and the responsible institutions. The structure of the process is country specific, and the number of boxes varies per country. If the Medium Term Expenditure Framework (MTEF) is sufficiently developed so as to be considered an integral part of the budgetary process (as in South Africa and Uganda, for example), the budgetary cycle diagram should be extended to include the calendar and responsibilities for MTEF preparation prior to the issuing of the budget circular. The budgetary cycle diagram should be guided by the indicative example provided in figure 2.1, describing the budgetary cycle in Turkey as of 2005. 28 Figure 2.1 Turkey 2004, budgetary cycle diagram Turkey - Public Financial Programming Current CG Budget Investment Budget Consolidated and Annexed Budget Agencies State Economic Enterprises May MoF, Treasury and SPO --> Budget Circular Drafting (I) June High Planning Council (Council of Ministers) --> Budget Circular Approval (II) Prime Minister --> Budget Call (III) MoF SPO --> Current Budget Guide Distribution --> Investment Preparation Criteria Distribution (IV) July Central Government Agencies SEEs (V) --> Current Budget Proposal --> Investment Budget Proposal --> Annual Programs Preparation August Treasury MoF and CG Agencies SPO and CG Agencies --> Current Budget Negotiations --> Investment Budget Negotiations --> Internal technical revision of SEEs (VI) annual programs September Treasury, SEEs, High Audit Board, MoF, Treasury and SPO --> Aggregate Budget Allocations Line Ministries, PA (VII) --> SEE Targets' Actualization October Treasury, SEEs and SPO High Planning Council (Council of Ministers) --> Budget Allocation Endorsement --> Transfers revision (VIII) --> Borrowing requirement estimation Prime Minister and Council of Ministers --> Annual Program/Investment Financing Decree Inception (IX) November Treasury Turkish Grand National Assembly --> Budget Approval --> Principles and Procedures for annual (X) program implementation by SEEs December President --> Budget Law (XI) January SPO --> List of Investment Projects as an Annex to the Annual Program Decree (XII) Source: World Bank (2005) Qualitative template at the operator level The purpose of the qualitative template at the operator level is to provide a schematic evaluation of the incentives and regulatory framework determining the ―‗commercial‘‖ behavior of the providers financed by public funds. 29 The template should be completed for each public operator (whether an SOE, parastatal, special fund, or PPP/utility), so as to cover each of the institutions for which quantitative data will be collected. Where one enterprise covers more than one subsector (for example, electricity and water supply), the template should be completed for each subsector, if possible. Sources of information include interviews with officials (ministry of finance, line ministries, regulators) and with providers (state-owned enterprises, parastatals, special funds). This guide covers only institutional development indicators classified as governance variables collected at the utility or operator level following institutional data template 7. Template 7 has to be filled for each operator for each of the infrastructure sectors covered (template 1). When filling template 7, the column for comments should not be overlooked. Even when a clear answer such as ―yes‖ or ―no‖ can be provided, any areas of doubt or ambiguity should always be recorded in the comments column. And in the case of the option ―Other,‖ the comments column needs to be filled in with any necessary explanations and the name of the operator/institution. Governance of public operators (template 7) There are 33 governance variables that are laid out in the institutional data template 7, which has been adapted from Vagliasindi (2009). The data are organized along five dimensions: autonomy, transparency, accountability, tools, and universal service obligations. Governance variables refer to the implementation of (i) measures inside a given enterprise (such as strengthening shareholder voice and supervision, board and management autonomy, and mechanisms for accounting and disclosure) and (ii) measures aimed at improving the external environment in which the enterprise operates (including outsourcing to the private sector and introducing discipline in a competitive labor and capital market). Governance variables should be collected both from sector regulators and from the central government entity (line ministry), against which data from the given SOE can be verified. 30 Template 7 Governance of public operators Series code Variable Definition Units Percentage of the utility owned by central or Percent Governance: Ownership local governments Governance: Ownership Percentage of the utility owned by local or Percent Ownership and shareholder quality Private foreign private sector Governance: Ownership Percentage of the utility owned by central or Percent Employees local governments 0=Uncorporatized state-owned enterprise, 1=corporatized state- Governance: Legal Status Legal status of the company owned enterprise, 2=limited liability share-owned company, 3=other Governance: Rate of Whether the enterprise is required to earn a 1=yes, 0=no Return specific rate of return Whether the enterprise is required to pay 1=yes, 0=no Governance: Dividends dividends Whether manager is at liberty of hiring 1=yes, 0=no Governance: Hiring workers if needed Whether manager is at liberty of laying off 1=yes, 0=no Governance: Laying off workers if needed Managerial and board autonomy Whether manager is at liberty of setting 1=yes, 0=no Governance: Salaries salaries Whether manager is at liberty of setting 1=yes, 0=no Governance: Production production levels Whether manager is at liberty of setting 1=yes, 0=no Governance: Sales whom to sell Governance: Size of Board Number of members on the board of directors INTEGER Governance: Board 0= only government, Instance that selects board members Selection 1=shareholders Number of members on the board of directors INTEGER Governance: Independent that are drawn from independent private Directors sector organizations Whether annual reports on enterprise 1=yes, 0=no Governance: Publication financial performance are available to the Annual Report Ownership and shareholder quality public Whether the firm follows the International 1=yes, 0=no Governance: IFRS Financial Reporting Standards (IFRS) 0=none, 1=operational audit, Governance: External 2=financial and operational Type of audit of the firm audits audit, 3=external audit, 4=independent audit Governance: Audit 1=yes, 0=no Whether the audit results are made public Publication Governance: Whether the states remunerates 1=yes, 0=no Noncommercial noncommercial activity to the company Whether there are any management or 1=yes, 0=no Governance: Performance performance contracts made between the Performance monitoring Contracts enterprise and the responsible government authority Whether the enterprise has performance- 1=yes, 0=no Governance: Performance based incentive systems in which payments 31 Series code Variable Definition Units Contracts with Incentives and promotion of managers are determined by their performance Governance: Penalties for Whether there are penalties for poor 1=yes, 0=no Poor Performance performance of managers Whether there is a periodic formal monitoring 1=yes, 0=no Governance: Monitoring of managerial performance Whether there is a performance monitoring 1=yes, 0=no Governance: Third-party by an independent entity (private sector Monitoring auditor) Governance: Billing and Whether the enterprise contracts out billing 1=yes, 0=no Collection and bill collection Governance: Meter Whether the enterprise contracts out meter 1=yes, 0=no Outsourcing Reading reading Governance: Human Whether the enterprise contracts out human 1=yes, 0=no Resources (HR) resources Governance: Information Whether the enterprise contracts out 1=yes, 0=no Technology (IT) information technology services 0=public service guidelines, 1= Governance: Restriction to Framework guiding restrictions to dismiss corporate law, 2=performance Dismiss Employees employees contracts Labor market discipline 0=comparable to public sector Whether the enterprise’s wages are salaries, 1=comparable to Governance: Wages comparable to those in the private and public private sector salaries, sector 2=somewhere in between public and private salaries 0=comparable to public sector Whether the enterprise’s benefits are benefits, 1=comparable to Governance: Benefits comparable to those in the private and public private sector benefits, sector 2=somewhere in between public and private benefits Whether the enterprise is exempt from any 1=yes, 0=no Governance: No Capital market discipline form of taxation (for example, value added Exemption from Taxation tax, VAT) 0=below market rate, 1=equal to Governance: Access to Whether the enterprise has access to debt at market rate, 2= above the Debt preferential rates market rate Governance: State Whether the enterprise holds guarantees by 1=yes, 0=no Guarantees the state Source: Adapted from Vagliasindi (2009). 32 3 Fieldwork—Establishing a quantitative baseline Target institutions and documents for collection This chapter identifies and defines documents that are to be collected in support of setting the baseline. Spending data are among the most complex infrastructure data to be collected. The standardized collection of spending data requires the potentially elaborate recoding of national budgets, which are country specific and vary in complexity. It also demands the careful reclassification of financial information of nonfinancial public institutions‘ as to guarantee the comparability and consistency of spending categories across operators, sectors, and countries. Norms and levels of transparency vary by country. In some countries making budget documents and financial accounts available to the general public is the exception rather than the norm. This is why the first step (and challenge) in setting the fiscal baseline is to have access and collect budget and financial account documents. To decide which institutions are the best sources of such documents, see the updated institutional map presented in template 1. Fiscal data documents are generally collected from central ministries (finance and economic planning) as well as from key line infrastructure ministries, autonomous agencies, parastatals, and NGOs. The involvement of key official and technical personnel is therefore critical to the document collection process. There are essentially five types of documents to collect:  Approved budgets. These are final budget books that have been authorized by parliament in the form of budget laws. They often consist of both original estimates and supplementary budgets.  Actual budgets. These are reports of funds that have actually been spent. When budget books are available, the actual execution of budget estimates for the previous year is reported in the same documents.  Annual reports/financial accounts. These are documents published or made available internally by SOEs or special funds as they report their annual performance at the end of each fiscal year.  Audited budgets and annual reports. These are the final actual budgets and annual reports, prepared after auditing. They may not be made available across all countries or to all entities within a country. A document is considered audited when it has been revised and approved in accord with a comprehensive set of audit policies and standards. Such standards should follow best international practice, such as the auditing standards published by the International Organization of Supreme Audit Institutions (INTOSAI) and the International Standards on Auditing prepared by the International Auditing Practices Committee of the International Federation of Accountants (IFAC). 33  Medium-term expenditure framework (MTEF) document. The MTEF document is a framework for integrating fiscal policy and budgeting over the medium term by linking a system of aggregate fiscal forecasting to a disciplined process for the maintenance of detailed medium-term ministerial budget estimates that reflect current government policies. Forward estimates of expenditures become the basis of budget negotiations in the years following the budget, and these estimates are reconciled with final outcomes in fiscal outcome reports. Table 3.1 provides a tentative list of the national and international institutions from which to gather fiscal documents. Table 3.1 Indicative checklist of data sources and documents Source Key documents Ministry of Finance or equivalent, Central government budgets (including approved budget, release and the Central Planning Unit or equivalent actual) and budget speech. Central Planning Units or local governments Local government budgets (either consolidated total or three largest authorities). Ministry of Finance, Central Planning Units, SOEs, regulators, office Annual reports of SOEs and special budgetary funds. of the comptroller, and/or line ministries Financial accounts (income statement, balance sheet, cash flow statement). Ministry of Finance, Central Planning Units, SOEs, and/or line List of ongoing investment projects in infrastructure (current). ministries Ministry of Finance and/or Central Planning Units Medium-Term Expenditure Framework (MTEF) document. Ministry of Finance Relevant acts or laws relating to public financial management. World Bank Country Financial Accountability Assessment (CFAA). International Monetary Fund Fiscal transparency—Report on Observation of Standards and Codes. International Monetary Fund Recent economic developments. Source:Authors’elaboration. Note: Ministry of Finance = Ministry of Finance; SOEs = state-owned enterprises. Framing the scope of fiscal data The data collection process for the fiscal component is divided into a number of parts:  National level. There are two templates that support the collection of fiscal-related data at the national level. Quantitative variables related to the overall budget and basic macroeconomic indicators are collected following template 8. Template 9 should be filled in for the central government only. The best sources for this information are the ministry of finance, ministry of planning, and the budget offices of the parliament.  Government level. Budgetary flows are collected for the central government and local governments separately following fiscal data template 10. This template should be filled in separately for the different stages of the budget (estimates, releases, and actual expenditures) and, in the case of dual budgets, for each budget (development and recurrent). For example, in the case of Uganda‘s central government, which uses a dual budget, this template should be used six times for each year of data collected: development budget estimates, development budget releases, development budget actuals, recurrent budget estimates, recurrent budget releases, and recurrent 34 budget actuals. The best sources for this information are the ministries of planning and finance, the parliament, and published budget laws.  Operator level. Financial variables are collected from SOEs, public corporations, or parastatals, and special funds, following fiscal data template 11. The best source for this information is the public operator itself, be it a corporation or a special fund. Fiscal data template at the national level Macroeconomic parameters for normalization (template 8) Template 8 is used to guide data collection at the national level. Template 8 collects basic macroeconomic data for normalization (for example, GDP, exchange rates), most of which are available through internationally validated secondary sources (the World Bank and IMF Web sites, for example). The template should be completed for the same years for which data for templates 10 and 11 have been collected (that is, the most recent five years). Template 8 Macroeconomic parameters for normalization Policy Series code Variable Definition Unit code LCU per year Noninfrastruc XXXXXXX Gross domestic product ture (NIN) XXXXXXX Average exchange rate LCU per year XXXXXXX Population LCU per year Source: Authors’ elaboration. Note: LCU = local currency units. Relevant definitions: Functional and economic classifications The following definitions and clarifications may be useful when completing all the templates related to fiscal data (see templates 9 and 10). The functional classification of expenditures or COFOG Using the GFSM 2001 as the starting point for this exercise provides a methodological platform that is well used and known across countries and has substantive advantages. The use of the GFSM 2001 functional classification allows for examining expenditure trends over time, regardless of country-specific institutional arrangements or restructuring. Another advantage is the unambiguous definition of the sectoral scope. The functional classification of expenditures, also known as the classification of functions of government (COFOG), is a detailed classification of the functions, or socioeconomic objectives, that 35 general government units aim to achieve through various kinds of outlays. It is one of four classifications referred to as classifications of expenditure according to purpose.7 The COFOG classifies government outlays by functions of general interest and amenable to a wide variety of analytic applications. Statistics on health, education, social protection, and environmental protection, for example, may be used to study the effectiveness of government programs in those areas. The classification codes of the COFOG are somewhat different from the structure of other global financial system (GFS) classification codes. The functions are classified using a three-level scheme.8  There are 10 first-level, or two-digit categories, referred to as divisions. Examples are health (Division 07) and social protection (Division 10).  Within each division, there are several groups, or three-digit categories, such as hospital services (073) and sickness and disability (101).  Within each group, there are one or more classes, or four-digit categories, such as nursing and convalescent home services (0734) and disability (1012). All outlays for a particular function are collected in one category of the COFOG, regardless of how the outlays are implemented. That is, cash transfer payments designed to be used for a particular function, the purchase of goods and services from a market producer that are transferred to households for the same function, the production of goods and services by a general government unit, or the acquisition of an asset for that same function are all in the same category. The economic classification of the expense—that is, whether an outlay is used for rehabilitation of existing assets or payment of salaries, or so on—will be given by an additional attribute in the budget item coding (see below). The COFOG allows trends in government outlays of various kinds and purposes to be examined over time. Conventional government accounts are not usually suitable for this purpose because they reflect the organizational structures of governments. Not only may time series be distorted by organizational changes, but at a specific time some organizations may be responsible for more than one function, and responsibility for one function may be divided among several organizations. For example, if a government establishes a new department that brings together some of the functions previously administered by several departments or at several levels of government, it will not usually be possible to use conventional government accounts to compare outlays for these purposes over time. The COFOG is also used to make international comparisons of the extent to which governments are involved in economic and social functions. Just as the COFOG avoids the problems of organizational changes in a single government, it also avoids the problems of organizational differences across countries. For example, in one country all functions connected with water supply may be undertaken by a single 7 This section includes excerpts from chapter 6 of the Government Finance Statistics Manual 2001 (GFSM 2001) by the International Monetary Fund (IMF). The COFOG was produced by the Organisation for Economic Co-operation and Development (OECD) and was published together with the three other classifications in the United Nations‘ Classifications of Expenditure according to Purpose (New York, 2000). Original material of the GFSM 2001 regarding the COFOG is adapted from that publication. 8 All three classification levels and detailed descriptions of the contents of each class are reproduced in annex 1 as discussed in chapter 6 of the GFSM 2001. 36 government agency, while in another country they may be distributed among departments dealing with the environment, housing, and industrial development. The items classified should, in principle, be individual transactions. Each purchase of goods and services, wage payment, transfer, or other outlay should be assigned a COFOG code according to the function that the transaction serves. If administrative outlays overlap two or more classes, an attempt should be made to apportion outlays among the classes concerned. If this approach is not feasible, the total should be allocated to that class that accounts for the largest share of the total outlay. Defining infrastructure outlays using the COFOG The definition of infrastructure sectors for this exercise is limited to infrastructure services supporting economic activities plus the services included in the water and sanitation Millennium Development Goals. Table 3.2 lists the COFOG classes that correspond to that definition. Definitions are provided only for the lowest functional category (for example, the 4-digit class) being used for data collection. Note that the only infrastructure subsector that is not unambiguously captured by the COFOG code is irrigation. Irrigation expenditures are defined in this guide as the combination of two cost elements: (i) Expenditures in irrigation systems (a share of class 70421 Agriculture), and (ii) multipurpose development projects (70474). Table 3.2 COFOG codes capturing infrastructure cost elements Code Division/group/class GFSM 2001 definition 704 Economic affairs 7042 Agriculture, forestry, fishing, and hunting Irrigation systems (a share out Administration, construction, maintenance, and/ or operation of flood control, irrigation and of class 70421 Agriculture) drainage systems, including grants, loans, or subsidies for such works. 7047 Other industries 70474 Multipurpose development Administration, construction, maintenance, and/ or multipurpose development projects typically projects consisting of integrated facilities for generation of power, flood control, irrigation, navigation, and recreation. 7043 Fuel and energy 70434 Other fuels Administration, construction, maintenance, and/ or operation of affairs and services involving fuels such as alcohol, wood and wood waste bagasse, and other noncommercial fuels. 70435 Electricity Administration, construction, maintenance, and/ or operation of traditional sources of electricity such as thermal or hydro supplies and newer sources such as wind or solar heat. 70436 Nonelectric energy Administration, construction, maintenance, and/ or operation of nonelectric energy affairs and services, which chiefly concern the production, distribution, and utilization of heat in the form of steam, hot water, or hot air; Includes: geothermal resources; nonelectric energy produced by wind or solar heat. 7045 Transport 70451 Road transport Administration of affairs and services concerning operation, use, construction, and maintenance of road transport systems and facilities (roads, bridges, tunnels, parking facilities, bus terminals, 37 Code Division/group/class GFSM 2001 definition and so on). 70452 Water transport Administration of affairs and services concerning operation, use, construction, and maintenance of inland, coastal, and ocean water transport systems and facilities (harbors, docks, navigation aids and equipment, canals, bridges, tunnels, channels, breakwaters, piers, wharves, terminals, and so on), as well as of water transport facilities. 70453 Railway transport Administration of affairs and services concerning operation, use, construction, and maintenance of railway transport systems and facilities (railway roadbeds, terminals, tunnels, bridges, embankments, cuttings, and so on). 70454 Air transport Administration of affairs and services concerning operation, use, construction, and maintenance of air transport systems and facilities (airports, runways, terminals, hangars, navigation aids and equipment, air control amenities, and so on). 7046 Communication 70460 Communication Administration of affairs and services concerning construction, extension, improvement, operation, and maintenance of communication systems (postal, telephone, telegraph, wireless, and satellite communication systems). 705 Environmental protection 7052 Wastewater management 70520 Wastewater management Administration, supervision, inspection, operation, or support of sewage systems and wastewater treatment. 706 Housing and community amenities 7063 Water supply 70630 Water supply Administration of water supply affairs; supervision and regulation of all facets of potable water supply including water purity, price, and quantity controls. Source: Adapted from IMF (2001). Note: See annex 2 for a more detailed description of the content of each category. Economic classification of expenditures The economic classification provides the desirable breakdown of outlays in order to differentiate the nature of expenditures (tables 3.3 and 3.4). 38 Table 3.3 Economic classification of government expenditures—current expenditures Category/subcategory Definitions Consists of all compensation of government employees including social contributions by Compensation of employees employers. Includes payments in cash or in kind. Social contributions paid by deduction from employees’ wages and salaries are also included in this category. Use of goods and services (maintenance) Routine and periodic spending to keep an asset in functioning order. Other use of goods and services All other expenditure on goods and services. Consumption of fixed capital is the decline in the value of the stock of fixed assets during the accounting period as a result of physical deterioration, normal obsolescence, and normal Consumption of fixed capital accidental damage. Consumption of fixed capital related to fixed assets used in own account capital formation is excluded from this category and included as part of the value of the asset produced. It is always a noncash expense. Subsidies are current transfers that government units pay to enterprises, either on the basis of the levels of their production activities or on the basis of the quantities or values of the goods or Subsidies to public corporations services that they produce, sell, or import. Included are transfers to public corporations that are intended to compensate for operating losses. Subsidies are current transfers that government units pay to enterprises, either on the basis of the levels of their production activities or on the basis of the quantities or values of the goods or Subsidies to private enterprises services that they produce, sell, or import. Included are transfers to private enterprises that are intended to compensate for operating losses. This category captures transfers of conditional grants for financing current spending to lower Grants and transfers levels of local government. Source: Adapted from IMF (2001) Note: See annex 3 for a more detailed description of the content of each category. In terms of the benefits of monitoring infrastructure spending, the GFSM 2001 economic classification (COFOG) allows—at the very least—for a rough distinction between current expenditures and capital expenditures. This distinction, even if basic, is extremely important when analyzing infrastructure costs and planning infrastructure needs. The systematic lack of reporting of the capital/maintenance split may well be a cover used by governments when not properly spending and/or allocating resources on needed maintenance requirements. It is also critical to try to capture external financing that can be traced to specific activities. In this regard, two additional categories have been added to the capital expenditure categories so as to single out infrastructure capital spending that has been financed through the budget using external funding. The GFSM 2001‘s economic classification, when cross-referenced with the functional classification, becomes an enormously powerful tool. Nevertheless, the GFSM 2001 has drawbacks in recording expenditures at the microeconomic levels needed for sector level analysis and decision making by sector specialists. In particular, the IMF economic classification does not provide a definition of rehabilitation, although a country might have its own. If the country does not have a definition, the user should flag this and be guided by the following principles in deciding whether an expenditure item should be classified as rehabilitation. Line ministries could also help identify rehabilitation activities by applying these principles: 39  Look at the description of the budget line to see whether words such as rehabilitation or refurbishment appear.  Look for expenditures that relate to major repair and restoration of degraded existing assets to their original condition without resulting in any upgrading or expansion of capacity.  Look for large maintenance activities that span more than a one-year duration. Also, the IMF economic classification does not provide a definition of maintenance, nor does it provide a breakdown good enough to tailor an accurate derived estimation. Given this structural constraint on the reporting format and therefore the way the data are collected, a proxy for maintenance— as good as any other—is to use the category ―use of goods and services,‖ which essentially comprises all current expenditures, excluding wages and salaries, transfers, depreciation, and subsidies. Despite this drawback, using the GFSM 2001 facilitates the sustainability of the exercise and cross-country comparison. It is likely that consumption of fixed capital will be difficult to allocate by function, especially if only aggregated figures for total government capital stock and consumption of fixed capital are compiled. In these circumstances, approximations will have to be used. One possibility may be to distribute consumption of fixed capital according to the assets acquired. Thus, the COFOG statistics should be cross-classified at least with total expense and acquisition of nonfinancial assets. Table 3.4 Economic classification of government expenditures—capital expenditures Category/subcategory Definitions Buildings, structures, Explicit spending flows allocated to capital investment during the period recorded. Includes flows into new machinery, and equipment assets and rehabilitation of existing ones. Of which rehabilitation If the government do not classify rehabilitation expenditures, it will be useful to state the approximate amount used for rehabilitation. This could be done by estimating capital expenditures on new fixed assets and then deducting those from total capital expenditures. Alternatively, the split between new and rehabilitation expenditures can be allocated on a project-by-project basis. Of which external-funded External funding that enters the budget with no earmarking but that can be traced to infrastructure sectors. capital—budget support Of which external-funded External funding earmarked for specific projects. capital—earmarked projects Other fixed assets Other fixed assets consist of cultivated assets and intangible fixed assets. Other capital expenditure Includes capital expenditures not elsewhere classified, for example, capital tax and compensation for damages caused by natural disasters. Capital transfers This category captures transfers of conditional grants for capital financing to lower levels of local government. Source: Adapted from IMF(2001). Note: See annex 4 for a more detailed description of the content of each category. Fiscal data templates at the government level Templates 9 and 10 are used to guide data collection at the government level. Template 9 collects data variables that would provide the overall budget context of infrastructure budgetary overlays in other 40 sectors. Template 10 collects all the data related to spending on public infrastructure by any level of government (central or local). This template with all its occurrences is the core of the SPI exercise. Macroeconomic parameters for budgetary context of infrastructure spending (template 9) The data for template 9 should be gathered from the government. It must be kept in mind that even if the definitions used by a government are different from the standardized definitions suggested in this manual, a proxy for infrastructure spending based on institutions that provide services (rather than infrastructure services provided by infrastructure and non-infrastructure specialized institutions) can always be found. This back-of-the-envelope estimation will guide the user in positioning infrastructure within the overall fiscal framework. Template 9. Macroeconomic parameters for budgetary context of infrastructure spending Policy Series Variable Definition Unit code code Total budget LCU per year Noninfrastructure Infrastructure LCU per year (NIN) Education LCU per year Health LCU per year Other sectors LCU per year Source:Authors’elaboration. Note: LCU = local currency units. Functional and economic classification of central and local government expenditures (template 10) Template 10 is probably the single most relevant output of the SPI exercise. Its purpose is to provide, for all relevant sectors (4-digit categories or classes—see below for definitions), expenditures according to the GFSM 2001 functional and economic classification. It should be filled in for the central government to cover the most recent 5 years of available data for:  Budget estimates  Budget releases  Actual expenditures (audited expenditures if available) Thus, ideally, 15 occurrences of this template (estimates, releases, and actuals for 5 years) should be completed for central government expenditures. The collection of separate data on estimates, releases and actuals allows for the subsequent calculation of various budget execution ratios and provides a much richer understanding of expenditure patterns and processes. However, in some cases it may not always be possible to do so. Template 10 should also be completed for local governments following the same approach: budget estimates, releases, and actuals for the most recent 5 years of data available. Depending on the country, local government data may be available in an aggregate form provided by the central government. Where this is not the case, the data collection exercise should aim to cover the most important local authorities in spending terms, collecting data individually from each local authority and then aggregating it into a first order estimate of local government expenditure. 41 The main aim of the SPI exercise is a cross-classification of expenditures in which, for each infrastructure function or subsector (e.g. power generation), expenditures can be disentangled by their economic use (e.g. operations or investment). Standardized infrastructure expenditure data that are comparable across countries permit tracking over time while benchmarking trends and levels of infrastructure government outlays. Template 10 consolidates the core of the budgetary data of the SPI exercise and follows definitions and classification of expenditures as presented in sections 2 and 3, largely based on the GFSM 2001. Reporting of spending is done using a cash-based approach.9 Filling template 10 is a labor-intensive process that involves three steps (i) code mapping the budget, (ii) extraction of budget lines from budget documents, and (iii) actual consolidation of data in template 10. Code mapping the budget Reporting infrastructure expenditures using standardized functional and economic classifications involves a remapping of the country-specific budget classification to the GFSM 2001 format. Code mapping has two components: functional code mapping and economic code mapping. In no other phase of the infrastructure data collection process do the data collector and the relevant technical personnel need to work so closely together as during the code mapping. The Ministry of Finance is usually the most relevant partner for the code-mapping exercise. Functional code mapping. The prevalent functional coding system needs to be identified as a starting point. Provided the country uses the GFSM 2001, the government expenditure data can be used directly; however, a functional code mapping exercise should be undertaken when the country is not utilizing GFSM 2001 (for example, when the country utilizes GFS86, United Nations 93, or any other system) or for reported years that precede the GFMS 2001 reporting. By way of example, table 3.5 presents the functional code mapping for Kenya, in which ―votes‖ of the Kenyan budget system were mapped to the GFSM 2001‘s COFOG. 9 In the GFSM 2001 framework, transactions should be recorded on an accrual basis (flows are recorded at the time economic value is created, transformed, exchanged, transferred, or extinguished) in contrast to a cash basis (flows are recorded when the money is received, which means that nonmonetary transaction might not be fully integrated in the accounting system). It suffices for this work to use the GFSM 2001 reporting. Even for countries that have adopted the GFMS 2001, the GFMS 2001 framework should be used exclusively from the transaction reporting rather than the transaction recording viewpoint. 42 Table 3.5 Kenya functional code mapping GFS Description: Vote Sub vote Head Description Code (COFOG) Recurrent Ministry of Public Works and R13 Budget Roads R13 130 381 Provincial Administration Services 70451 Road transport R13 130 382 District Administration Services 70451 Road transport R13 130 419 Supplies Branch 70451 Road transport R13 133 505 Mechanical and Transport Department 70451 Road transport R13 133 506 Material Branch 70451 Road transport R13 136 384 Major Roads 70451 Road transport R13 136 392 Headquarters Roads Department 70451 Road transport R13 136 393 Road Works Inspectorate 70451 Road transport R13 136 482 Provincial/District Administration and Technical Services 70451 Road transport R13 136 483 Extra-ordinary Road Maintenance 70451 Road transport Development Ministry of Public Works and D13 Budget Roads D13 133 505 Mechanical and Transport Department 70451 Road transport D13 133 506 Material Branch 70451 Road transport D13 136 Roads D13 136 384 Major Roads 70451 Road transport D13 136 385 Other Roads 70451 Road transport D13 136 488 Extra-ordinary Road Maintenance 70451 Road transport D13 136 489 Miscellaneous (RA.RP and G.B.c) 70451 Road transport Recurrent R14 Ministry of Transport Budget General Administration and R14 140 Planning R14 140 572 Shipping and Maritime Affairs Department 70452 Water transport R14 140 574 Aircraft Accident Investigation 70454 Air transport Information Communication R14 141 Technology Services R14 141 613 Information Communication Technology Services 70460 Communication R14 144 Railways R14 144 457 Kenya Railways Corporation 70453 Railway transport R14 148 Road Transport R14 148 475 Transport Licensing and Registration 70451 Road transport Development D14 Ministry of Transport Budget General Administration and D14 140 Planning D14 140 572 Shipping and Maritime Affairs Department 70452 Water transport D14 144 Railways D14 144 457 Kenya Railways Corporation 70453 Railway transport Source: World Bank (2006) Economic code mapping. There are numerous ways of generating budget lines and/or recording expenditures according to their use. When filling in fiscal data template 10, the data collector needs to group (and in some cases delineate) spending categories so as to map them to the GFSM 2001 economic categories. By way of example, table 3.6 presents an economic code mapping for Rwanda in which 43 French terminology and classification used in Rwanda‘s budget lines are mapped to the GFSM 2001 economic classification (based on the 2004 budget). Table 3.6 Rwanda economic code mapping Expenditures breakdown Rwanda budget line item Which includes: (economic classification) Personnels statutaires Wages and salaries Traitements et Salaires Personnels contractuels Indemnités Cotisations de l’état aux pensions de retraite et de Social contributions Contributions sociales prévoyance Contributions de l’état aux soins de sante Loyers et charges locatives Documentation générale et officielle Frais de poste et télécommunications Use of goods and services Autres dépenses de biens et de services Rémunération de tiers Frais divers Dépenses d’interventions diverses reparties Autres dépenses d’intervention non reparties Frais de transport Other current expenditure Frais de deplacement et de mission Frais de mission officielle Capital expenditure: buildings, Petits matériel et fourniture de bureau structures, equipment, and Achat de biens consommables Consommations d’eau et d’énergie machinery Immeubles … rehabilitation Entretien et reparations Véhicules et autre matériel de transport Matériel et outillage techniques Source: World Bank (2007). During the functional and economic reclassification of expenditures, the principle of item indivisibility applies—that is, a spending item cannot be split across multiple categories. In all cases the item should be reclassified in the category that best captures the nature of the item, and the criteria used when performing this code mapping properly documented. Extraction of budget lines from budget documents The second step is to identify, in the budget book, the functional codes pertaining infrastructure, as per the definition of infrastructure and the code mapping prepared in previous steps, and list them in a spreadsheet that includes in an adjacent the economic nature of each expenditure as in the budget books. This spreadsheet should not include functions from the budget that are not relevant to infrastructure e.g. Affaires étrangères, Services concernant le sport, Enseignement Sécondaire etc. In the working spreadsheet the user should have only the infrastructure related functions and the corresponding data and figures under each. 44 Table 3.7 Example of infrastructure functional codes with matching economic nature Functional Functional Classification Economic Economic classification Code (as defined in the Guide) Code (as presented in Government budget) 0432 Petrol and natural gas 463110 Subsidies to public organizations 0432 Petrol and natural gas 463113 Personnel 0432 Petrol and natural gas 463114 Electricity and telephone 0432 Petrol and natural gas 523410 Investment expenditures 0432 Petrol and natural gas 721120 Research and studies 0434 Electricity 261100 Personnel 0434 Electricity 362110 Expenditure on materials for operation 0434 Electricity 362140 Fuel 0434 Electricity 362220 Vehicle maintenance 0434 Electricity 362620 Postal charges ... Should include all infrastructure functions The resulting spreadsheet contains only the expenditure under the relevant infrastructure functions. When sorting this spreadsheet by the IMF economic classification and adding all data with the same IMF economic classification for a given sector, the user will obtain the respective entry of template 10. For instance, assuming Table 3.8 list of the recorded expenditures for electricity for a fictional country, the row ―70435 – Electricity‖ will have in the column ‗employee compensation‘ 300 LCU, in the column ‗Use of goods and services – maintenance‘ 1250 LCU and in the column Use of goods and services – other‘‘ 2515 LCU. 45 Table 3.8 Example of spending by economic nature Functional Data Classification Economic classification (LCU) Functional (as defined in the Economic (as presented in IMF economic Code Guide) Code Government budget) classification 0434 Electricity 261100 Personnel Employee compensation 300 Expenditure on materials for Use of goods and services - 200 0434 Electricity 362110 operation maintenance Use of goods and services - 1000 0434 Electricity 362212 Maintenance of IT equipment maintenance Use of goods and services - 50 0434 Electricity 362220 Vehicle maintenance maintenance Use of goods and services - 1500 0434 Electricity 362140 Fuel other Use of goods and services - 15 0434 Electricity 362620 Postal charges other Use of goods and services - 1000 0434 Electricity 362820 Transport charges other … To include all economic classifications Consolidating data in template 10 After the relevant budget lines have been extracted, all functional codes mapped to the relevant COFOG categories are added and input into the corresponding cell of template 10. It is then necessary to calculate the totals for each economic classification (by function), by simple addition taking care of the units of the data, and input them into the corresponding cell of template 10. As discussed, this template should include each year‘s budget estimates, budget releases, and actual expenditures (audited expenditures) when available. If data collection covers 5 years, this implies that template 10 will need to be filled 15 times. In countries with a dual budget system, template 10 needs to also be filled in separately for each budget type (which doubles the occurrences of template 10 from 15 to 30 for a 5-year data collection period). This makes the data generation process easier and more transparent. It also allows the classification of expenditures to be assessed. In other words, quantify the amount of current expenditures included in the DB as well as the capital expenditures included in the RB (see section 3). 46 Template 10 Functional and economic classification of government expenditures Use of GFS Government function … external goods and Subsidies Capital expenditure (local currency) funding Grants and transfers (current) Compensation of employees services Consumption of fixed capital Other current expenditure machinery, and equipment Other capital expenditures Earmarked for projects To public corporations levels of governments To private enterprises expenditures to lower Buildings, structures, Transfers of capital Other fixed assets … rehabilitation Budget support Total Maintenance Other Code Name 704 Economic affairs Agriculture, forestry, 7042 fishing, and hunting 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (irrigation only) Irrigation (amount specific to irrigation 0 systems from 70421) 7047 Other industries 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Multipurpose 70474 0 development projects 7043 Fuel and energy 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70434 Other fuels 0 70435 Electricity 0 70436 Nonelectric energy 0 7045 Transport 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70451 Road transport 0 70452 Water transport 0 70453 Railway transport 0 70454 Air transport 0 7046 Communication 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70460 Communication 0 Environmental 705 protection Wastewater 7052 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 management Wastewater 70520 0 management Housing and 706 community amenities 7063 Water supply 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 70630 Water supply 0 Total productive infrastructure 0 0 0 0 0 0 0 0 0 0 0 0 0 Local governments Public spending flows also need to be collected for local governments so as to get a full picture of overall public spending flows. But depending on the degree of decentralization and the level of central monitoring of local government expenditures, it might be necessary to provide information for a few—not all—local authorities. 47 One major challenge is avoiding the double counting of conditional transfers (very likely captured in central government accounts). Transfers to local governments should be netted from central government accounts, and the use of funds recoded as part of the local government data, where the use of resources will be clearly specified. As mentioned, template 10 should also be filled with local government fiscal data. Identification of relevant local government authorities (for example, provinces, districts, and/or municipalities) and their role in providing infrastructure services should be done in the pre-field stage. Based on this work, the user should have a good sense of whether there is a centralized repository of local government accounts and if they are reported using a common structure. There two possible options for collection local governments data:  When there is standardized data reporting to a central unit:  If local governments use the same budget coding structure as the central government, the user will use the code mapping carried on from the central government to input the data in template 10. But the double counting of conditional transfers (very likely captured in central government accounts) should be avoided by netting out transfers.  If local governments use different budget coding from the central government and make expenditures in the relevant infrastructure sectors, the user will have to carry out a new recoding exercise before filling in template 10.  When there is no standardized data reporting to a central unit:  If aggregate figures for local government are available but without a further economic or functional breakdown, the user should report local government accounts on template 10. As in the above case, the user should avoid double counting. The user should determine whether it can be assumed that most local government spending goes to the relevant productive infrastructure sectors.  If aggregate figures are not available, the user should select a few of the most relevant/largest local government entities, depending on desired accuracy and resource availability. Only when this has been decided will the user proceed to produce template 10 for the selected entities. Fiscal data templates at the operator level Fiscal data template 11 consists of three parts: the income statement, the cash flow statement, and the balance sheet. It is also very helpful for economic analysis to collect a copy of the complete tariff schedule in application for each power and water utility. Fiscal data template 11 should be prepared for each public operator and/or special fund with clear responsibilities in the delivery (or funding) of activities within the 4-digit COFOG sector categories: irrigation, electricity, transport, communication, wastewater management, and water supply. In the case that one enterprise covers more than one subsector, for example, electricity and water supply, template 11 (as well as the 48 preceding template 7) should be completed for each subsector where possible, ideally attributing costs and revenues to each sector. All figures in the income statement, cash flow, and balance sheet should be entered as positive figures unless there is a loss. Public operators’ financial data (template 11) Template 11 provides raw financial data from SOEs, public corporations or parastatals, regulatory bodies, or special funds. Henceforth, they are named ―public operators.‖ It should be completed for public operators include SOEs, parastatals, regulatory bodies, and special funds, which have separate accounts. For each public operator, templates should be generated for the five most recent accounting years. Where one enterprise covers more than one subsector, for example, electricity and water supply, template 11 should be completed for each subsector, if possible. Data should be extracted from audited and/or published accounts from the sources identified in the pre-field stage. These are likely to include: (i) the central unit monitoring public corporations, if it exists; (ii) the national audit institution (auditor general, court of audit, or equivalent); (iii) the Web site of the previous institutions and/or of each of the public operators; and (iv) each of the public operators directly. Note that it is very likely that the most recent accounts are available only from the public operators themselves. Given the variety in the forms of reporting and the use of accounting concepts, a glossary of accounting terms is provided in annex 4. Template 11. Public operators’ financial data Policy Series Variable Unit t-4 t-3 t-2 t-1 t code code Revenues from sales Local currency Total employee compensation Local currency Purchase of goods and services directly used in production Local currency Of which fuel Local currency Of which power purchase agreement (PPA) fees (if Local applicable) currency Other purchase of goods and services (that is, those not Local included in line 3 above ) currency Income Statement Rent Local currency Depreciation and amortization Local currency Misc. taxes/fees (property and so on) Local currency Other operating expenditures Local currency Income (loss) from operations Local currency Income (loss) from operations as reported by enterprise Local currency Interest paid Local currency (Of which, foreign) Local currency 49 Policy Series Variable Unit t-4 t-3 t-2 t-1 t code code Interest earned Local currency Direct foreign grants Local currency Transfers/subsidies from government Local currency Revenue from irregular activities Local currency Of which, fixed assets’ selling price Local currency Other nonoperating revenue Local currency Irregular activities expenditures Local currency Of which, book value of fixed assets sold Local currency Other nonoperating expenditures Local currency Profit (loss) before tax Local currency Corporate income tax Local currency (Of which tax exemptions) Local currency Net income, as reported by enterprise Local currency Local Net cash from operating activities currency Local Net cash flow from investing activities currency Local Capitalized rehabilitation costs (increase in the period) currency Local Purchase of intangible assets currency Local Purchase of property, plant, and equipment currency Statement of Cash Flows Local (Of which replacement of property, plant, and equipment) currency Local Sales of property, plant, and equipment, if any currency Local Purchase of financial investing assets currency Local Net cash flow from financing activities currency Local Dividends paid currency (… to government) Local currency Local Investment grants received currency Local New loans currency Current assets Local currency Noncurrent assets Local currency Balance Sheet Gross value of capitalized rehabilitation costs Local currency Depreciation and amortization accumulated on deferred Local rehabilitation costs currency Gross value of property, plant, and equipment Local currency Depreciation and amortization accumulated on property, Local plant, and equipment currency 50 Policy Series Variable Unit t-4 t-3 t-2 t-1 t code code Total assets Local currency Current liabilities Local currency (Of which foreign) Local currency Long-term liabilities Local currency (Of which foreign) Local currency Equity and reserves Local currency Retained earnings (retained deficit) for the period Local currency Total liabilities and equity Local currency Note: In the Excel template, the three rows below the income statement are verification lines. These figures are automatically calculated from the various items in the income statement to ensure consistency between the data entered and data calculated. Practical considerations The initial meeting in the fieldwork stage will set the pace for the rest of the data collection process. Thus it is highly advisable that during this meeting, likely to be with relevant authorities of the Ministry of Finance or its equivalent, the scope of the data collection and the potential uses of data are discussed. The relevance of these uses are key to gaining access to necessary institutions, officials, and data. It is strongly recommended that a champion or main institutional counterpart—who can help in identifying key sources and facilitating meetings and follow-up with key technical counterparts—be chosen. Follow-up meetings should aim not only at obtaining data and documents but should also be used to verify information and to close gaps in interpretation. In fact, when working with imperfect data and recoding, the need to make assumptions in attributing expenditures to uses is almost unavoidable, and, therefore, the opinions of and discussions with local technical counterparts are essential. The final report should properly document these assumptions as well as the actual discussions, when relevant. Balance between the qualitative and the quantitative baseline During the data collection process, data for the quantitative baseline should be prioritized while ensuring that the qualitative questions are answered with careful attention. Getting the qualitative information right is essential for efficient and accurate completion of this work, as well as to interpret and validate data in back-office analyses. Constructing the qualitative baseline should not, however, absorb more resources and time than necessary. The essence of the exercise is the quantitative baseline. As a general rule, qualitative templates should be completed prior to quantitative templates, using opportunities during quantitative data collection to validate responses. The pre-field stage, from this perspective, is key for success. Matching collected data and information against existing publications and discussions with colleagues (both macroeconomists and sector specialists) before, during, and after the fieldwork enhances the quality of the results greatly. 51 Requirements for technical data collection Units of measurement. It is important to note that all financial values should be reported in local currency units (LCUs) for the year to which the data correspond. When obtaining any quantitative data, figures should always be entered in local currency units and the multiplier used (if any) should be specified; noting – for example, figures that are presented in units of 000s or 000,000s. No attempt should be made to convert values into U.S. dollars or to correct for inflation. These adjustments should be made at a later stage and in a manner consistent across all countries that are being analyzed. All physical values should be recorded in metric units. Deviations from this practice should be clearly indicated in the comments column. Excel sheets. Excel versions of the templates exist as a companion to this Guide and can be downloaded directly from www.infrastructureafrica.org. In Excel, data can be entered into only the yellow cells. A comments/clarifications column is provided in the Excel templates to ensure that the data can be are easily interpreted by a reader. Careful note should be made of any calculations made. Time series. Ideally, the data should be collected for a period of at least five years up to and including the most recent year available. When data for some of these years are not available, they should be collected for as many years as possible within this period, even if it means that the time series is not continuous. Greatest efforts should be devoted to obtaining the most recent years. Documenting and collecting data sources. It is essential that all technical data collected have a reference to a data source. Preferably, a copy of each document used as a source should be collected with a reference to the data which were extracted from it and the page number where the data are located. When the documents are too large to be collected, the cover page(s) and individual pages from which data were extracted may be copied. 52 4 Back-to-the-office work Country reports: Survey documentation The qualitative, quantitative, and performance indicator templates described above should invariably be accompanied by a brief country report that documents each of the following issues. a. General context. In this section the user will provide a brief description of the country‘s economic context, highlighting recent economic and/or political milestones that might help facilitate the interpretation of the data. b. Data quality and coverage. In this section the user will provide a list of significant gaps in the data, for example, years for which expenditure figures are unavailable should be reported, and reasons given for these gaps. The report should also include a brief assessment by the user, outlining his or her understanding of the quality and coverage of the official figures presented in the quantitative templates. This does not require undertaking an audit of the figures or carrying out a review of government systems, but merely recording any useful information that may have been acquired during the course of completing the quantitative templates. Any indications of potential underreporting of donor-financed expenditures, either in budgeted or in actual figures, will be of particular interest and must be reported. It will be equally important to report on significant changes in the quality and coverage of data over the five-year reporting period, which may have implications for comparability. These could be due to ongoing reforms in public financial management that lead to more comprehensive budget coverage or better reporting of budget execution—for example, better budgeting and/or reporting of donor-financed expenditures. Deteriorations in budgetary systems are also possible. Where figures for actual expenditure have not been externally audited by independent national audit institutions, this should be indicated. c. Definitions, assumptions, and code mapping c.1 Country-specific definitions It is also important to document the country-specific definitions used in the economic classification, especially where these differ from those set out in the International Monetary Fund‘s (IMF‘s) Government Finance Statistics Manual 2001 (GFSM 2001). Specifically, the report should clarify the following issues regarding capital, maintenance, and rehabilitation expenditure: 53  What definitions are used by the country to classify government expenditures as capital? Are there forms of spending that could be classified as capital expenditures that are not considered as such, for example, rehabilitation?  Is there a definition for rehabilitation expenditure, and is rehabilitation distinguished from other capital spending? (Provide sector nuances as necessary.)  What is the definition of maintenance spending, and are there forms of spending that could be considered as maintenance that are not classified as such—for example, periodic maintenance? What are the criteria for splitting operating expenditures from maintenance expenditures? The report should indicate whether the country has a dual budget system (that is, separate recurrent and development budgets) or a unitary budget (as is more common in francophone countries). The basis for recording ―released‖ expenditure figures in template 10 should be indicated, that is, whether the figures represent supplementary budgets, allocations made by the ministry of finance (Ministry of Finance), or a combination of the two. c.2 Assumptions It is also important to record all key assumptions10 made in compiling the quantitative templates. Where—in the absence of a centralized information source—a sample of sub-national governments or SOEs has been selected, the basis for making the selection should be reported. The selection should generally be made on the basis of the relative importance of the organization‘s spending. Any deviations from this principle should be indicated and explained. Sometimes it may not be possible to directly map a country‘s functional and economic classifications to the GFSM 2001. In these situations is best to not split expenditures, but instead to allocate the expenditure to the most important function or economic item. Any assumptions of this kind should be carefully documented. Differences in financial reporting for SOEs between countries following different accounting traditions (for example, Anglophone and Francophone Africa) is frequently an issue, specifically in relation to the income statement. These differences should be noted, and any assumptions made in presenting the data in the template stated. Interest payments are not always recorded in the budget at the sector level. Where these are known, any assumptions used by the Ministry of Finance in allocating interest payments to sectors should be stated. c.3 Code mapping In this section the user will record whether GFSM 2001 expenditure classifications have been adopted by a given country. 10 Assumptions of minor significance (measured by the scale of expenditure involved) can be reported as comments on the soft copies of relevant templates. 54 Not all countries will have adopted the GFSM 2001 functional classification, COFOG, and necessitating a code-mapping exercise as described earlier in the Guide. The basis for this code-mapping exercise should be fully described in the country report. The best way to do this is through a tabular presentation (as shown for Kenya in table 3.5 and for Rwanda in table 3.6). An assessment of the practical problems that officials face in presenting data from the government‘s existing budget presentation, aligned with the GFSM 2001 reporting framework, should consider whether these problems arise from poor data capture (on the part of the Ministry of Finance, for example), from weak accounting systems, or simply from weak data reporting through the budget structure. Pre-field templates. In the report embed11 the Excel files containing the pre-field templates:  Template 1. Jurisdictional responsibilities in infrastructure service delivery  Template 2. Special funds financing infrastructure service delivery  Template 3. Private participation in infrastructure  Template 4. ODA in infrastructure service delivery Qualitative field templates. In the report embed the Excel files containing the qualitative templates:  Template 5. Basic budgetary institutions, national level  Template 6. Budgetary cycle diagram, national level  Template 7. Governance of public operators Quantitative field templates. In the report embed the Excel files containing the quantitative templates:  Template 8. Macroeconomic parameters for normalization  Template 9. Macroeconomic parameters for budgetary context of infrastructure spending  Template 10. Functional and economic classification of government expenditures (central and local)  Template 11. Public operators‘ financial data d. Concluding remarks The report should provide concluding remarks on the data collection process, emerging messages and other country-specific issues that might be of interest, as next steps for the country in terms of data generation, institutional transparency, etc. 11 To embed an Excel file into a Word file: Insert  Object  Select ―Create from File‖ tab  (click on ―display as icon‖ option)  Browse your file  Select the file to embed by pressing ―Insert‖ select ―Change Icon‖  Type the name of the file as specified in the Guide in the box ―Caption‖  click ―OK‖  click ―OK.‖ 55 Annex 1. Classification of expense by government function Source: Adapted from IMF (2001) Note: The prefix ―7‖ has been added to align the classification of functions of government (COFOG) codes with other global financial system (GFS) classification codes. 56 Annex 2. COFOG codes capturing infrastructure cost elements Division/group/ GFSM 2001 definition Code class 704 Economic affairs 7042 Agriculture, forestry, fishing, and hunting Irrigation systems (a Construction or operation of flood control, irrigation and drainage systems, including grants, loans, or share out of class subsidies for such works; 70421 Agriculture) Excludes: multipurpose development projects (70474). 7047 Other industries 70474 Multipurpose Multipurpose development projects typically consist of integrated facilities for generation of power, development flood control, irrigation, navigation, and recreation. projects Administration of affairs and services concerning construction, extension, improvement, operation, and maintenance of multipurpose projects. Production and dissemination of general information, technical documentation, and statistics on multipurpose development project affairs and services. Grants, loans, or subsidies to support the construction, operation, maintenance, or upgrading of multipurpose development projects. Excludes: projects with one main function and other functions that are secondary (classified according to main function). 7043 Fuel and energy 70431 Coal and other solid This class covers coal of all grades, lignite, and peat irrespective of the method used in their mineral fuels extraction or beneficiation and the conversion of these fuels to other forms such as coke or gas. Administration of solid mineral fuel affairs and services; conservation, discovery, development, and rationalized exploitation of solid mineral fuel resources; supervision and regulation of the extraction, processing, distribution, and use of solid mineral fuels. Production and dissemination of general information, technical documentation, and statistics on solid mineral fuel affairs and services. Grants, loans, or subsidies to support the solid mineral fuel industry and the coke, briquette, or manufactured gas industries. Excludes: solid mineral fuel transportation affairs (classified to the appropriate class of group 7045). 70432 Petroleum and This class covers natural gas, liquefied petroleum gases and refinery gases, oil from wells, or other. natural gas Sources such as shale or tar sands and the distribution of town gas regardless of its composition. Administration of petroleum and natural gas affairs and services; conservation, discovery, development, and rationalized exploitation of petroleum and natural gas resources; supervision and regulation of the extraction, processing, distribution, and use of petroleum and natural gas. Production and dissemination of general information, technical documentation, and statistics on petroleum and natural gas affairs and services. Grants, loans, or subsidies to support the petroleum extraction industry and the industry refining crude petroleum and related liquid and gaseous products. Excludes: petroleum or gas transportation affairs (classified to the appropriate class of group 7045). 70433 Nuclear fuel Administration of nuclear fuel affairs and services; conservation, discovery, development, and rationalized exploitation of nuclear material resources; supervision and regulation of the extraction and processing of nuclear fuel materials and of the manufacture, distribution, and use of nuclear fuel 57 Division/group/ GFSM 2001 definition Code class elements. Production and dissemination of general information, technical documentation, and statistics on nuclear fuel affairs and services. Grants, loans, or subsidies to support the nuclear materials mining industry and the industries processing such materials. Excludes: nuclear fuel transportation affairs (classified to the appropriate class of group 7045); disposal of radioactive wastes (70510). 70434 Other fuels Administration of affairs and services involving fuels such as alcohol, wood and wood wastes bagasse, and other noncommercial fuels. Production and dissemination of general information, technical documentation, and statistics on availability, production, and utilization of such fuels. Grants, loans, or subsidies to promote the use of such fuels for the production of energy. Excludes: forest management (70422); wind and solar heat (70435) or (70436); geothermal resources (70436). 70435 Electricity This class covers both traditional sources of electricity such as thermal or hydro supplies and newer sources such as wind or solar heat. Administration of electricity affairs and services; conservation, development, and rationalized exploitation of electricity supplies; supervision and regulation of the generation, transmission, and distribution of electricity. Construction or operation of non-enterprise-type electricity supply systems. Production and dissemination of general information, technical documentation, and statistics on electricity affairs and services. Grants, loans, or subsidies to support the electricity supply industry, including such outlays for the construction of dams and other works designed chiefly to provide electricity. Excludes: nonelectric energy produced by wind or solar heat (70436). 70436 Nonelectric energy Administration of nonelectric energy affairs and services, which chiefly concern the production, distribution, and utilization of heat in the form of steam, hot water, or hot air. Construction or operation of non-enterprise-type systems supplying nonelectric energy. Production and dissemination of general information, technical documentation, and statistics on availability, production, and utilization of nonelectric energy. Grants, loans, or subsidies to promote the use of nonelectric energy. Includes: geothermal resources; nonelectric energy produced by wind or solar heat. 7045 Transport 70451 Road transport Administration of affairs and services concerning operation, use, construction, and maintenance of road transport systems and facilities (roads, bridges, tunnels, parking facilities, bus terminals, and so on); Supervision and regulation of road users (vehicle and driver licensing; vehicle safety inspection; size and load specifications for passenger and freight road transport; regulation of hours of work of bus, coach, and lorry drivers, and so on), of road transport system operations (granting of franchises, approval of freight tariffs and passenger fares and of hours and frequency of service, and so on), and of road construction and maintenance. Construction or operation of non-enterprise-type road transport systems and facilities. Production and dissemination of general information, technical documentation, and statistics on road transport system operations and on road construction activities. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of road transport systems and facilities. Includes: highways, urban roads, streets, bicycle paths, and footpaths. 58 Division/group/ GFSM 2001 definition Code class Excludes: road traffic control (70310); grants, loans, and subsidies to road vehicle manufacturers (70442); street cleaning (70510); construction of noise embankments, hedges, and other antinoise facilities including the resurfacing of sections of urban highways with noise-reducing surfaces (70530); street lighting (70640). 70452 Water transport Administration of affairs and services concerning operation, use, construction, and maintenance of inland, coastal, and ocean water transport systems and facilities (harbors, docks, navigation aids and equipment, canals, bridges, tunnels, channels, breakwaters, piers, wharves, terminals, and so on). Supervision and regulation of water transport users (registration, licensing, and inspection of vessels and crews; regulations concerning passenger safety and freight security; and so on) of water transport system. Operations (granting of franchises, approval of freight tariffs and passenger fares and of hours and frequency of service, and so on) and water transport facility construction and maintenance. Construction or operation of non-enterprise-type water transport systems and facilities (such as ferries). Production and dissemination of general information, technical documentation, and statistics on water transport system operations and on water transport facility construction activities. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of water transport systems and facilities. Includes: radio and satellite navigation aids; emergency rescue and towing services. Excludes: grants, loans, and subsidies to shipbuilders (70442). 70453 Railway transport Administration of affairs and services concerning operation, use, construction, or maintenance of railway transport systems and facilities (railway roadbeds, terminals, tunnels, bridges, embankments, cuttings, and so on). Supervision and regulation of railway construction and maintenance. Construction or operation of non-enterprise-type railway transport systems and facilities. Includes: long-line and interurban railway transport systems, urban rapid transit railway transport systems, and street railway transport systems; acquisition and maintenance of rolling stock. Excludes: grants, loans, and subsidies to rolling stock manufacturers (70442); construction of noise embankments, hedges, and other antinoise facilities including the resurfacing of sections of railways with noise-reducing surfaces (70530). 70454 Air transport Administration of affairs and services concerning operation, use, construction, and maintenance of air transport systems and facilities (airports, runways, terminals, hangars, navigation aids and equipment, air control amenities, and so on). Supervision and regulation of air transport users (registration, licensing, and inspection of aircraft, pilots, crews, and ground crews; regulations concerning passenger safety, investigation of air transport accidents; and so on), of air transport system operations (allocation of routes, approval of freight tariffs and passenger fares and of frequency and levels of service, and so on), and of air transport facility construction and maintenance. Construction or operation of non-enterprise-type public air transport services and facilities. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of air transport systems and facilities. Includes: radio and satellite navigation aids; emergency rescue services; scheduled and nonscheduled freight and passenger services; regulation and control of flying by private individuals. Excludes: grants, loans, and subsidies to aircraft manufacturers (70442). 70455 Pipeline and other Administration of affairs and services concerning operation, use, construction, and maintenance of transport pipeline and other transport systems (funiculars, cable cars, chairlifts, and so on). Supervision and regulation of users of pipeline and other transport systems (registration, licensing, inspection of equipment, operator skills, and training; safety standards; and so on), of pipeline and other transport systems operations (granting of franchises, setting tariffs, frequency and levels of 59 Division/group/ GFSM 2001 definition Code class service, and so on), and of pipeline and other transport systems construction and maintenance. Construction or operation of non-enterprise-type pipeline and other transport systems. Production and dissemination of general information, technical documentation, and statistics on the operation and construction of pipeline and other transport systems. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of pipeline and other transport systems. 7046 Communication 70460 Communication Administration of affairs and services concerning construction, extension, improvement, operation, and maintenance of communication systems (postal, telephone, telegraph, wireless, and satellite communication systems). Regulation of communication system operations (granting of franchises, assignment of frequencies, specification of markets to be served and tariffs to be charged, and so on). Production and dissemination of general information, technical documentation, and statistics on communication affairs and services. Grants, loans, or subsidies to support the construction, operation, maintenance, or upgrading of communication systems. Excludes: Radio and satellite navigation aids for water transport (70452) and air transport (70454); radio and television broadcasting systems (70830). Environmental 705 protection 7052 Wastewater management 70520 Wastewater Administration, supervision, inspection, operation, or support of sewage systems and wastewater management treatment. Sewage system operation includes management and construction of the system of collectors, pipelines, conduits, and pumps to evacuate any wastewater (rainwater, domestic, and other available wastewater) from the points of generation to either a sewage treatment plant or to a point where wastewater is discharged to surface water. Wastewater treatment includes any mechanical, biological, or advanced processes to render wastewater fit to meet applicable environment standards or other quality norms. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of such systems. 706 Housing and community amenities 7063 Water supply 70630 Water supply Administration of water supply affairs; assessment of future needs and determination of availability in terms of such assessment; supervision and regulation of all facets of potable water supply including water purity, price, and quantity controls. Construction or operation of non-enterprise-type of water supply systems. Production and dissemination of general information, technical documentation, and statistics on water supply affairs and services. Grants, loans, or subsidies to support the operation, construction, maintenance, or upgrading of water supply systems. Excludes: irrigation systems (70421); multipurpose projects (70474); collection and treatment of wastewater (70520). Source: Adapted from IMF (2001). 60 Annex 3. Economic classification of expenditures Table A3.1 Economic classification of government expenditures—Current expenditures Definitions (from IMF) Category/Subcategory Consists of all compensation of government employees including social contributions (212) by employers. It includes payments in cash or in kind. Social contributions paid by deduction from employees’ wages and salaries are included in this category. Wages and salaries also exclude social benefits paid by employers in the form of children’s, spouse’s, family, education, or other allowances in respect of dependents; payments made at full or reduced wage or salary Compensation of rates to workers absent from work because of illness, accidental injury, or maternity leave; and severance employees payments to workers, or their survivors, who lose their jobs because of redundancy, incapacity, or accidental death. These social benefits are included in employer social benefits. Social contributions are payments, actual or imputed, made by general government units to social insurance schemes to obtain entitlement to social benefits for their employees, including pensions and other retirement benefits. Routine and periodic spending to keep the value of the asset and its Maintenance Use of goods and services functioning. Other All other expenditure on goods and services. Consumption of fixed capital [GFS] is the decline in the value of the stock of fixed assets during the accounting period as a result of physical deterioration, normal obsolescence, and normal accidental damage. Consumption of fixed capital related to fixed assets used in own account capital formation is excluded from Consumption of fixed this category and included as part of the value of the asset produced. It is always a noncash expense. capital Note for the user: Consumption of fixed capital is a forward-looking measure because its value is based on future events rather than past events. Countries might not report this figure for their public assets because they do not keep valuation of asset stock. Hence, it will be expected to be blanks in all entries. Creating an inventory of assets is not part of the task. To public Subsidies are current transfers that government units pay to enterprises either on the basis of the levels of corporations their production activities or on the basis of the quantities or values of the goods or services that they produce, sell, or import. Included are transfers to public corporations that are intended to compensate for Subsidies operating losses. To private Subsidies are current transfers that government units pay to enterprises either on the basis of the levels of enterprises their production activities or on the basis of the quantities or values of the goods or services that they produce, sell, or import. Included are transfers to private enterprises that are intended to compensate for operating losses. Grants are noncompulsory transfers, in cash or in kind, paid to foreign governments. Grants are noncompulsory transfers, in cash or in kind, paid to an international organization. Grants are noncompulsory Grants and transfers transfers, in cash or in kind, paid to other general government units. These include transfers to local (current) governments as conditional grants for current expenditures. Grants are noncompulsory transfers, in cash or in kind, paid to resident nongovernment units. Other expenditures includes all expense transactions not elsewhere classified. Transactions recorded here include property expenditures, interest; taxes, fines, and penalties imposed by one government on another; Other current expenditure current transfers to nonprofit institutions serving households; capital transfers other than capital grants; social benefits; and nonlife insurance premiums and claims. Source: This appendix is an abstract of the Government Financial Statistics Manual 2001 (GFSM 2001)—for full text check http://www.imf.org/external/pubs/ft/gfs/manual/. 61 Table A3.2 Economic classification of government expenditures—Capital expenditures Category/Subcategory Definitions (from IMF) Buildings, structures, Explicit spending flows allocated to capital investment during the period recorded. Includes flows machinery, and equipment into new assets and rehabilitation of existing ones. Buildings and structures consist of dwellings, nonresidential buildings, and other structures. Other structures consist of all structures other than buildings. Included are the following: highways, streets, roads, bridges, tunnels, railways, subways, runways, sewers, waterways, harbors, dams, other waterworks, communication lines, power lines, and pipelines. Machinery and equipment include transport equipment and other machinery and equipment. Transport equipment includes motor vehicles, trailers, ships, railway locomotives and rolling stock, aircraft, motorcycles, and bicycles. Other machinery and equipment consists of machinery and equipment other than transport equipment. Of which rehabilitation If the government expenditures report rehabilitation expenditures separately, the proportion of total capital expenditures which are rehabilitation should be reported here. If the government do not classify rehabilitation expenditures, it will be useful to state the approximate amount used for rehabilitation. It could be done by estimating capital expenditures on new fixed assets and then deducting that from total capital expenditures. Alternatively the split between new and rehabilitation expenditures can be allocated on a project-by-project basis by allocating a specific project to either new investments or rehabilitation based on where the bulk of the expenditure lies. Other fixed assets Other fixed assets consist of cultivated assets and intangible fixed assets. Intangible fixed assets include mineral exploration, which is undertaken to discover new deposits of petroleum, natural gas, and other subsoil assets that may be exploited commercially. Other capital expenditure Includes capital expenditures not elsewhere classified, for example, capital tax and compensation for damages caused by natural disasters. Transfers of capital expenditures to lower levels of This category captures transfers of conditional grants to lower levels of local government. governments Budget Of which External funding that enters the budget with no earmarking. support external Earmarked for funding External funding earmarked for specific projects. projects Source: Authors’’ elaboration. 62 Annex 4. Glossary of accounting terms Variable Definition The total revenue the public corporation has received from the sales of the services produced. Revenues from sales In the case of special funds revenues may include levies, sector-specific taxes, and so on. Total employee compensation Total wages and social contributions paid to the workers (and so on) for delivering the services. Purchase of goods and services directly used in The corporation’s purchase of goods and services necessary to produce the services delivered. production … fuel Expenditures by the public corporation on the purchase of electricity, oil, or other fuel inputs. … power purchase agreement (PPA) fees (if Expenditures on power purchase agreements (PPAs). applicable) Other purchase of goods and services (that is, those The corporation’s purchase of goods and services other than those necessary to produce the not included in line 3 above ) services delivered. Rent The rent paid to the owner of assets enabling the public corporation to produce the services. The amount of depreciation and amortization that the public corporation has deducted for the year. Depreciation and amortization are the terms used for the systematic allocation of the Depreciation and amortization capitalized cost of an asset to income over its useful life. Strictly speaking, depreciation represents the allocation of the cost of tangible fixed assets; amortization refers to the cost of intangible assets. Miscellaneous taxes/fees (property, and so on) Various taxes (though not profit taxes), which the public corporation has to pay. Other expenditures which the public corporation has incurred and which are not captured Other operating expenditures above, if any. Income or loss from operations calculated as a difference between operational revenues and Income (loss) from operations operational expenditures. Income (loss) from operations as reported by Income or loss from operations as reported in the financial statement. enterprise Interest paid Interest (on both domestic and foreign debt) which the public corporation has to pay on its debt. … foreign The interest that the public corporation has received during the year on either its financial Interest earned investments or its cash balance. Foreign grants, which the public corporation have received but which have not been posted on Direct foreign grants the central government budget or local government budgets. The subsidies which the public corporation has received from the local or general government Transfers/subsidies from government for supporting service delivery. Revenue from irregular activities Revenue produced by activities that are not part of the regular company operations. … fixed assets’ selling price Revenue received from the sale of property, plant, and equipment, if any. Other nonoperating revenue, which the public corporation has earned but which is not included Other nonoperating revenue above. Irregular activities expenditures Expenditures incurred because of activities that are not part of the regular company operations. … book value of fixed assets sold Book value of property, plant, and equipment sold, if any. Other nonoperating expenditures, which the public corporation has incurred but which are not Other nonoperating expenditures included above. The profit or loss before income tax, calculated as difference between total revenues and total Profit (loss) before tax expenditures. Corporate income tax The corporate income tax or profit tax. … tax exemptions Income tax exemptions, if any. The net profit or net earnings (profit after tax) of the public corporation for the accounting Net income, as reported by enterprise period, as reported in the financial statement. Net cash from operating activities The net amount of cash provided from operating activities. Operating activities include the company’s day-to-day activities that create revenues, such as selling inventory and providing 63 Variable Definition services. Cash inflows result from cash sales and from collection of accounts receivable. Examples include cash receipts from the provision of services and other revenue. Cash outflows result from cash payments for inventory, salaries, taxes, and other operating-related expenditures and from paying accounts payable. The net amount of cash provided from investing activities. Investing activities include purchase and selling of investments. Investments include property, plant ,and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in equity and Net cash flow from investing activities debt (bonds and loans) issued by other companies. Cash flows in the investing category include cash receipts from the sale of nontrading securities; property, plant, and equipment; intangibles; or other long-term assets. Cash outflows include cash payments for the purchase of these assets. These are costs depreciated over the lifetime of the rehabilitated asset instead of being Capitalized rehabilitation costs (increase in the period) expensed immediately. As an outflow, this item must be entered with a positive sign into the statement of cash flows template. Cash payments for the purchase of intangible assets. Intangible assets are not physical in nature. They include corporate intellectual property (patents, trademarks, copyrights, business Purchase of intangible assets methodologies), goodwill, and brand recognition. In the case of utilities and telecom service providers, intangible assets also include billing data, contextual information and analytics, credit history, and social networking interests. Cash outflows for purchase of tangible assets (that is, property, plant, and equipment). As an Purchase of property, plant, and equipment outflow, this item must be entered with a positive sign into the statement of cash flows template. Cash outflows used for replacement of existing tangible assets (subset of the entry above), if … replacement of property, plant, and equipment available. As an outflow, this item must be entered with a positive sign into the statement of cash flows template. Cash inflows from the sale of property, plant, and equipment. As an inflow, this item must be Sales of property, plant, and equipment, if any entered with a negative sign into the statement of cash flows template. Cash payments for the purchase of long-term and short-term investments in the equity and Purchase of financial investing assets debt (bonds and loans) issued by other companies. The net amount of cash provided from financing activities. Financing activities include obtaining or repaying capital, such as equity and long-term debt. The two primary sources of capital are Net cash flow from financing activities shareholders and creditors. Cash inflows in this category include cash receipts from issuing stock or bonds and cash receipts from borrowing. Cash outflows include cash payments to repurchase stock, to pay dividends, and to repay bonds and other borrowings. Cash paid in dividends to the company shareholders. Could be inflow or outflow, depending on Dividends paid whether dividends were paid or retained. … to government Dividends paid to government. Includes resources obtained to finance new investments: grants from government, foreign Investment grants received grants, foreign and domestic loans, and issuance of new shares and bonds. As an inflow, this item must be entered with a negative sign into the statement of cash flows template. New loans New loans received. The current assets of a public corporation. Current assets are the cash deposits, trade Current assets receivables, inventories, accounts receivable, and so on. Noncurrent assets The fixed and other assets that the public corporation has acquired at cost price. Gross value of capitalized rehabilitation costs Capitalized or deferred rehabilitation costs. Depreciation and amortization accumulated on The accumulated depreciation on capitalized rehabilitation costs. deferred rehabilitation costs Gross value of property, plant, and equipment Gross value of property, plant, and equipment (that is, before any depreciation expenditure) Depreciation and amortization accumulated on The accumulated depreciation on property, plant, and equipment. property, plant, and equipment Total assets Sum of current and noncurrent assets. The public corporation’s current liabilities, which is the sum of the accounts payable, deferred Current liabilities taxation, and so on. This specifies if any of the public corporation’s current liabilities are to be paid to entities … foreign abroad. Long-term liabilities The public corporation’s long-term liabilities, that is, the long-term debt of the public 64 Variable Definition corporation. … foreign The portion of long-term debt which is foreign debt. Equity and reserves The public corporation’s equity and reserves. Retained earnings (retained deficit) for the period Cumulative earnings retained in the company. Total liabilities and equity Sum of liabilities and equity Source:Auhtors’elaboraiton. 65 Annex 5. Correspondence between template 11 and TAFIRE Sixteen African countries belonging to the Organization for the Harmonization of Business Law in Africa (OHADA) use the statement of sources and application of funds (tafire) instead of the statement of cash flows: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, the Republic of Congo, Côte d‘Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, and Togo, with the Democratic Republic of Congo joining soon. The template, capturing cash flow entries, is designed to facilitate data collection from TAFIRE. Item Category French equivalent or comment Income statement 1 Revenues from sales Chiffre d’affaires 2 Total employee compensation Charges du personnel. 3 Purchase of goods and services directly used in Achats de matières premières et fournitures liées (+/- Variation de stocks) + production Autres achats (+/- Variation de stocks) + Achats de marchandises (+/- Variation de stock) 3a … fuel 3b … power purchase agreement (PPA) fees (if applicable) 4 Other purchase of goods and services (that is, those Transports + Services extérieurs not included in line 3 above ) 5 Rent 6 Depreciation and amortization Dotations aux amortissements et aux provisions (exploitation) 7 Miscellaneous taxes/fees (property and so on) Impôts et taxes + Autres charges 8 Other operating expenditures If any. 9 Income (loss) from operations Total des produits exploitation – total des charges d’exploitation 9a Income (loss) from operations as reported by Resultat d’explotation enterprise 10 Interest paid Total des charges financieres 10a … foreign 11 Interest earned Total des produits financiers 12 Direct foreign grants 13 Transfers/subsidies from government Subventions d’exploitation 14 Revenue from irregular activities Produits HAO or produits hors activités ordinaires 14a … fixed assets’ selling price Prix de cession des immobilisations 15 Other nonoperating revenue Production immobilisée + Autre produits + Reprises de provisions + Transferts de charges 16 Irregular activities expenditures Total des charges HAO 16a … book value of fixed assets sold Valeurs comptables des cessions des immobilisations 17 Other nonoperating expenditures If any 18 Profit (loss) before tax Total des produits annuels – total des charges annuels 19 Corporate income tax Impôt sur les bénéfices (ou TSS) 19a … tax exemptions 20 Net income, as reported by enterprise Resultat net de l’exercice Statement of cash flows Excédent de trésorerie d’exploitation (for consistency, should be negative if 21 Net cash from operating activities there is cash surplus, and positive in case of cash shortage) In TAFIRE, it is investissement total, which is the difference between 22 Net cash flow from investing activities applications and resources (or emplois and ressources) 22a Capitalized rehabilitation costs (increase in the TAFIRE specific: Charges immobilisées (augmentation dans l’exercice) 66 Item Category French equivalent or comment period) 22b Purchase of intangible assets Acquisitions incorporelles. If using TAFIRE, this is the Emplois the section. 22c Purchase of property, plant, and equipment Acquisitions corporelles. If using TAFIRE, this is the Emplois section. (Of which replacement of property, plant, and 22d If available. Not applicable to TAFIRE. equipment) Cessions d’immobilisations corporelles. IF using TAFIRE, this is the 22e Sales of property, plant, and equipment, if any Ressources section. Should be negative for consitency sake. 22f Purchase of financial investing assets Acquisitions financiers. IF using TAFIRE, this is the Emplois section. Ressources nettes de financement. Entry should be positive if Emplois are 23 Net cash flow from financing activities greater than Ressources, and vice versa. 23a Dividends paid Dividends. 23b (Of which, to government) If available Subventions d’investissement (Ressources section, therefore should be 23c Investment grants received negative for consistency) 23d New loans Emprunts (2) (Ressources section, therefore should be negative for consistency) Balance sheet 24 Current assets Total actif circulant (NET) + Total tresorerie-actif 25 Noncurrent assets Total actif immobilise (NET) 25a Gross value of capitalized rehabilitation costs Charges a repartir 25b Depreciation and amortization accumulated on Dotations amortissements + provisions on Frais d’établissement et charges deferred rehabilitation costs à repartir 25c Gross value of property, plant, and equipment BRUT Terrains + Bâtiments + Installations, Agencements + Matériel + Matériel de transport + Immobilisations concedées. 25d Depreciation and amortization accumulated on Dotations amortissements + provisions on immobilisations corporelles property, plant, and equipment 26 Total assets 27 Current liabilities Total passif circulant + total tresorerie-passif 27a (Of which foreign) 28 Long-term liabilities Total dettes financieres 28a (Of which foreign) 29 Equity and reserves Total capitaux propres 30 Retained earnings (retained deficit) for the period Report à nouveau 31 Total liabilities and equity Source: Authors’ elaboration. 67 References International Monetary Fund (IMF). 2001. ―Government Finance Statistics Manual 2001.‖ http://www.imf.org/external/pubs/ft/gfs/manual/. World Bank, 2005. “Turkey Infrastructure Public Expenditure Review‖, unpublished mimeo ———. 2006a. ―FCIPA Rwanda Country Report.‖ Washington, DC: World Bank. ———. 2006b. ―Uganda Country Economic Memorandum.‖ Washington, DC: World Bank. ———. 2006c. ―Fiscal Cost of Infrastructure Provision: Creating a Baseline for Kenya.‖ Background paper for the FY07 Country Economic Memorandum. ———. 2007. ―Fiscal Cost of Infrastructure Provision: Creating a Baseline for Rwanda.‖ Africa Infrastructure Country Diagnostic. 68 About AICD and its country reports This study is a product of the Africa Infrastructure Country Diagnostic (AICD), a project designed to expand the world‘s knowledge of physical infrastructure in Africa. AICD provides a baseline against which future improvements in infrastructure services can be measured, making it possible to monitor the results achieved from donor support. It also offers a solid empirical foundation for prioritizing investments and designing policy reforms in Africa‘s infrastructure sectors. The AICD is based on an unprecedented effort to collect detailed economic and technical data on African infrastructure. The project has produced a series of original reports on public expenditure, spending needs, and sector performance in each of the main infrastructure sectors, including energy, information and communication technologies, irrigation, transport, and water and sanitation. Africa’s Infrastructure— A Time for Transformation, published by the World Bank and the Agence Française de Développement in November 2009, synthesized the most significant findings of those reports. The focus of the AICD country reports is on benchmarking sector performance and quantifying the main financing and efficiency gaps at the country level. These reports are particularly relevant to national policy makers and development partners working on specific countries. The AICD was commissioned by the Infrastructure Consortium for Africa following the 2005 G8 (Group of Eight) summit at Gleneagles, Scotland, which flagged the importance of scaling up donor finance for infrastructure in support of Africa‘s development. The AICD‘s first phase focused on 24 countries that together account for 85 percent of the gross domestic product, population, and infrastructure aid flows of Sub-Saharan Africa. The countries are: Benin, Burkina Faso, Cape Verde, Cameroon, Chad, Côte d'Ivoire, the Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, South Africa, Sudan, Tanzania, Uganda, and Zambia. Under a second phase of the project, coverage was expanded to include as many of the remaining African countries as possible. Consistent with the genesis of the project, the main focus is on the 48 countries south of the Sahara that face the most severe infrastructure challenges. Some components of the study also cover North African countries so as to provide a broader point of reference. Unless otherwise stated, therefore, the term ―Africa‖ is used throughout this report as a shorthand for ―Sub-Saharan Africa.‖ 69 The World Bank has implemented the AICD with the guidance of a steering committee that represents the African Union, the New Partnership for Africa‘s Development (NEPAD), Africa‘s regional economic communities, the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), and major infrastructure donors. Financing for the AICD is provided by a multidonor trust fund to which the main contributors are the United Kingdom‘s Department for International Development (DFID), the Public Private Infrastructure Advisory Facility (PPIAF), Agence Française de Développement (AFD), the European Commission, and Germany‘s Entwicklungsbank (KfW). A group of distinguished peer reviewers from policy-making and academic circles in Africa and beyond reviewed all of the major outputs of the study to ensure the technical quality of the work. The Sub-Saharan Africa Transport Policy Program and the Water and Sanitation Program provided technical support on data collection and analysis pertaining to their respective sectors. The data underlying the AICD‘s reports, as well as the reports themselves, are available to the public through an interactive Web site, www.infrastructureafrica.org, that allows users to download customized data reports and perform various simulations. Many AICD outputs will appear in the World Bank‘s Policy Research Working Papers series. Inquiries concerning the availability of data sets should be directed to the volume editors at the World Bank in Washington, DC. 70