Public Investment Review
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Publication
Analysis of Pacific National Funds Investment Strategies and Results: Regional Comparative Study
(World Bank, Washington, DC, 2021-11-08)At the 2019 Finance and Economic Ministers Meeting (FEMM), policy makers called for improved transparency of the Pacific trust funds’ management practices and investment results as a way to foster its improved management going forward. FEMM tasked the World Bank to undertake the study. Whereas significant progress has been made in establishing international best practices for sovereign or large public funds or both, trust funds in the Pacific are unique in making direct application of those practices challenging. Furthermore, the comparative analysis of the management practices and relevant performance metrics of Pacific trust funds are still lacking. FEMM’s objective for disclosing comparative analysis of Pacific funds investment results is to further stimulate collaborative discussion on how to continue to strengthen Pacific funds’ management and to inform the design and implementation of relevant reforms. In response to the FEMM request, this note will address the current vacuum of comparable information about Pacific funds’ investment management practices building on: (a) the World Bank engagements with the funds over the past five years; and (b) relevant information provided by those funds specifically for this analysis. This comparative study is meant to inform policy and decisionmakers governing the funds on the effect of their investment governance decisions on performance of the funds over the medium to long term. -
Publication
Assessing Public Investment Management Functions and Institutional Arrangements for State-Owned Enterprises: A Diagnostic Framework
(World Bank, Washington, DC, 2021-07-20)This paper provides a diagnostic framework (DF) for helping governments conceptualize and develop desirable functions and institutional arrangements for public investments managed by state-owned enterprises (SOEs). The DF also extends its coverage to not-for-profit, quasi-independent government entities. Determining the appropriate approach to managing SOE public investments requires a measured reconciliation of multiple trade-offs. In certain cases, when SOEs make profit-seeking investments for commercial purposes, operate in competitive markets, and make investments that present no major externalities, governments should take a hands-off approach, a scenario that may include cases in which governments simply exit and leave the corporate governance in the hands of private investors. Governments should let SOEs make their own investment decisions in pursuit of business efficiency. In such instances, governments need to establish a level playing field on which SOEs can operate and compete with private actors and exercise their public interest as a shareholder. In other cases, however, governments should establish a robust system - well aligned with the national public investment management (PIM) architecture to regulate SOE investments. This alignment should occur when SOE investments extend the role of line ministries and are financed by the general government budget or involve large-scale projects, posing significant fiscal risks through implicit or explicit contingent liabilities. The PIM practiced by SOEs should also align with the national PIM system when there are potential detrimental impacts on the environment, climate, and resilience. Our DF consists of four matrices intended to be used in combination to assess the gap between a country’s current SOE PIM and international best practices. Matrix 1 sketches the guideposts to determine which stakeholders should guard SOE investments, focusing on who. Matrix 2 helps assess PIM functions, focusing on what should be done under each PIM function and by whom. Matrix 3 presents a framework and a set of measurement indicators to evaluate how governments should introduce PIM processes and systems. Matrix 4 gives some consideration to the project viability of SOEs. To effectively apply the DF, it cannot be used mechanically: it must be grounded in a good understanding of the country’s political economy and the vested incentives of all stakeholders involved in SOE PIM. -
Publication
Mind the Rural Investment Gap: Disparities in Access to Basic Infrastructure and Directions for Mozambique’s Public Investment Program
(World Bank, Washington, DC, 2019-12)Against the backdrop of increasing income inequality, this report uses spatial analysis to assesses whether disparities in access to basic infrastructure between Mozambique's lagging and leading regions are growing or declining and whether the public expenditure program is effective in addressing emerging disparities. The report finds that overall, the gap has been growing between rural and urban areas, especially in the rural parts of Mozambique's central and northern provinces – which are the poorest. It also found that Mozambique's public investment program has made limited progress in reducing access disparities, including during the investment boom years. Lower investment levels in underserved areas, combined with spending inefficiencies, contributed to increased gaps in access. The report concludes with recommendations for better targeting of public investments to reach underserved areas. -
Publication
Belarus Strengthening Public Investment and Public Private Partnerships: Assessment Report
(World Bank, Washington, DC, 2018-09)Faced with a prolonged economic downturn and resulting fiscal constraints, the Government of Belarus is looking to increase the efficiency of public funds spent on public investment. As the total envelope on public capital spending is likely to stagnate or even decrease further in the coming years, it becomes important to increase the output for each ruble spent on infrastructure and other public investment. Several international studies point to a significant payoff from improving Public Investment Management (PIM) – the institutions, systems, and processes guidingdecisions on how to prepare and implement public investment projects. The InternationalMonetary Fund (IMF) estimates – based on a survey of the efficiency of PIM systems in a range of countries having gone through PIM assessments – suggest that an average country obtains 30 percent less output in terms of physical infrastructure for a given expenditure than the most efficient countries. Up to two-thirds of this efficiency gap could be clawed back through improved PIM institutions (IMF, 2015). At the same time, alternative modalities have developed for procuring andimplementing public investment projects through the involvement of private partners. Such Public Private Partnerships (PPPs) can in some cases increase the efficiency of project implementation and likelihood of achieving project outcomes, although attention must be devoted to properly identifying and managing significant fiscal and other project-related risks. Against this background, the Government of the Republic of Belarus (GoB) has requested the World Bank to provide technical assistance to strengthen PIM and PPPs. As a first step, this report assesses the current systems and procedures for public investment against good international practice using a diagnostic methodology developed by the World Bank and tested in a large number of countries worldwide. The analysis identifies gaps in the current system, and options for improvement are provided as a basis for further discussion and prioritization by the GoB. -
Publication
Public Investment Management in Vietnam: Assessment and Reform Priorities for Overcoming the Bottlenecks
(World Bank, Hanoi, 2018-07)Vietnam’s on-going reform program places emphasis on improving the efficiency of public investment in order to boost the country’s economic performance, which remains highly dependent on factor accumulation. Despite the improvements introduced by the government in recent years, including the issuance of the public investment law, progress in restructuring of public investment has been slow and mostly focuses on cleaning up of the existing fragmented portfolio. A major factor behind the slow progress of restructuring public investment is the lack of a well-designed reform program with clear specific objectives and priorities. Against this background, the Ministry of Planning and Investment (MPI) requested the World Bank to undertake a diagnostic assessment of Vietnam’s public investment management (PIM) system in order to identify weaknesses compared to good practice models, determine priorities for reform and make specific recommendations on actions over the short, medium and long term. This framework analyzes the presence and quality of institutional arrangements required to support the performance of eight must-have functionalities across the project and capital budgeting cycles, thus enabling a robust assessment against good international practice. -
Publication
Public Investment Management in Colombia
(World Bank, Washington, DC, 2018-03)The Colombian Government has made significant progress in the implementation of effective processes, practices, and methodologies for public investment management (PIM). A 2011 IMF-published report ranked Colombia among the top 5 countries with best PIM practices out of a sample of 71 low- and middle-income countries (Dabla-Norris and others, 2011). The report assessed the following 4 key features: (a) strategic guidance and project review, (b) project selection and budgeting, (c) project implementation, and (d) project evaluation and auditing. Colombia was deemed to have achieved a good performance on 3 out of the 4 key features. Nevertheless, the country’s PIM system still faces the need for areas of improvement identified by the World Bank’s PIM framework. This framework allows for identification of not only the presence of must-have features in PIM systems that are key to promoting effective and efficient public investment but also if those features are implemented in the field and if they have achieved their intended purpose. In the case of Colombia, the main challenges identified were related to the broad implementation of tools designed, particularly for management of public investment projects as well as with the fractioning of standards and practices, and the overemphasis placed on formal controls during the formulation and project implementation stages. In addition, the country PIM processes had weaknesses in terms of the review and ex post project evaluation. This document summarizes the main findings of a PIM study carried out in Colombia in 2015. The document includes an analytical framework for assessing public investment management and presents the assessment results as well as improvement recommendations to strengthen the institutional set-up to increase the effectiveness and efficiency of public investment in Colombia. -
Publication
Budget Management Analysis in Khyber Pakhtunkhwa for Improved Service Delivery
(World Bank, Washington, DC, 2017-10)The role of public financial management (PFM) as a contributory factor in improving service delivery and stimulating economic progress is getting greater attention in the sector-related literature. A robust PFM can provide an enabling environment for improving service delivery and promoting economic growth. This report acknowledges that PFM and other factors influence the quality of service delivery. It also makes a case for how in the existing dispensation in the Khyber Pakhtunkhwa (KP) province, enhanced budget management can contribute to infrastructure development and improved service delivery. Inherent deficiencies in budget utilization in KP imply that high-budget execution needs to be looked at in combination with the quality of budget formulation in order to make the budget contributions to service delivery more meaningful. -
Publication
Improving Transparency and Accountability in Public-Private Partnerships: Disclosure Diagnostic Report--Nigeria
(World Bank, Washington, DC, 2017-09-01)A World Bank Public-Private Partnerships (PPP) team conducted a study in Nigeria between September 2016 and April 2017, using the PPP Disclosure Diagnostic template recommended by the World Bank's Framework for Disclosure of Information in PPPs. This study has been consolidated in the form of a PPP Disclosure Diagnostic Report for Nigeria. The Diagnostic Report examines the political, legal, and institutional environment for disclosure in PPPs. Based on a gap assessment exercise with key political, legal, institutional, and process findings benchmarked against the World Bank Framework, the Diagnostic Report makes specific recommendations to improve disclosure. The recommendations include a suggested enhanced framework for disclosure of PPPs applicable to all federal government projects in Nigeria, and an extended disclosure framework (beyond PPPs) for three types of investments by the Nigeria Sovereign Investment Authority (NSIA). -
Publication
Moldova Climate Adaptation Investment Planning
(Washington, DC, 2016-10)Moldova ranks as the most climate vulnerable country in Europe, according to the widely used NDGAIN vulnerability assessment methodology. Temperature and rainfall have increased in Moldova over the last century, and severe floods and droughts have been occurring more regularly in recent times. For example, in the years prior to 2007, average annual losses from climate-related disaster losses were estimated at over USD60m per year, but in the same year, a severe drought occurred which was later assessed to have caused around USD1 billion of damage and losses. Looking forward, climate models predict further mean temperature rises and more variable rainfall with anything from a slight increase to a significant decline in total precipitation. Even under scenarios with an increase in mean rainfall, however, water availability will decrease due to increased temperatures and rates of evapotranspiration. Rainfall will also become more variable and more concentrated due to the more common extreme events. In general, climate adaptation issues in Moldova have been well characterized. The National Climate Change Adaptation Strategy identifies six sectors at particular risk. Agricultural productivity will significantly decrease due to increasing water stress on crops, even without accounting for the increasing impact of extreme weather events (i.e., hailstorms and late frosts, major floods and droughts, or changes in patterns of disease and pests). Total water availability will fall below total demand within a couple of decades. Health effects of climate change will include increases in heat related ailments (including cardio-vascular disease), transmission of gastro-intestinal diseases, air pollution and allergies, as well as higher numbers of casualties from natural disasters. The productivity of forests will diminish and pathology patterns are expected to change. Peak energy consumption patterns will shift from the winter to the summer, energy distribution and transmission infrastructure may also be impacted and the country’s potential to reduce energy imports through development of renewable sources (mainly solar, biomass, wind, and geothermal) could be compromised. Transport infrastructure could be disrupted. The current study extends existing analyses through a quantitative assessment of adaptation investment opportunities and returns across the target sectors. To achieve this, the study evaluated the cost of inaction in each sector, i.e., the expected annual opportunity cost of not being better adapted to prevailing climate conditions. -
Publication
Public-Private Partnerships in the Context of Public Investment Management in Ukraine: An Assessment
(World Bank, Washington, DC, 2016)Ukraines vast needs in infrastructure coupled with a constrained fiscal space require concerted efforts in strengthening public investment management. Investments in infrastructure are important for fostering economic growth. Translating public investments into assets crucially depends on how efficiently all types of public investments are management. The structure to handle PPPs is currently inadequate to access the global PPP market. Since a PPP system needs to be built on the foundations of a workable PIM system, the prospects for Ukraine attracting international standard investments from the global PPP market may appear to be out of reach for the time being. Recent reforming legislation aimed at fixing some of the issues highlighted in the 2012 PIM Assessment is encouraging but much will depend on the effectiveness of the implementation and the capacity of the institutional actors to understand and absorb them. This Assessment must by its very nature capture the situation at the time of the Assessment rather than an expectation of future potential.