Strengthening Governance of Public Infrastructure
High-quality public infrastructure is essential for sustainable and equitable growth. To achieve this, infrastructure governance needs to be strengthened in almost all countries, regardless of development or income level as it allows governments to become more efficient, thereby increasing the outputs and quality of infrastructure assets and services generated from each dollar allocated to public investment projects. This is particularly relevant for countries in the SEE region, given large pressures on public expenditure primarily due to the need for increased public sector investment in infrastructure to comply with EU regulations and standards.
This workshop will be delivered as part of the “Strengthening Economic Governance and Public Financial Management’’ project, which supports fiscal reforms in six countries of South Eastern Europe (SEE)- Albania, Bosnia and Herzegovina, Kosovo*, North Macedonia, Montenegro, and Serbia. The project is implemented by IMF Fiscal Affairs Department (FAD) and funded by the European Commission, Directorate-General for Neighborhood and Enlargement Negotiations.
ABOUT THIS LEARNING INITIATIVE
This workshop will discuss key elements of a well-functioning infrastructure governance framework- i.e. the institutions, processes and procedures used to guide public investment management throughout all stages a project life cycle- based on good practices and international experience. The results of a recent IMF Fiscal Affairs Department (FAD) analysis “Making Public Investment More Efficient” suggest that the average country loses about 30 percent of the returns on its investment to inefficiencies in its public investment management processes; while more efficient countries get twice the impact on growth for their investment, compared to less efficient ones.
The workshop will review strengths and challenges in infrastructure governance in the SEE region, drawing from main findings of recent IMF’ capacity development activities in the region. Throughout the workshop, participants will discuss their own experiences and learn how other countries, both across the globe and regionally, are: planning investment to ensure that is fiscally sustainable; allocating public investment to most productive projects and sectors; and implementing and monitoring investment projects in a cost-effective manner.
The workshop will focus on discussing main regional challenges in infrastructure governance, highlighting key actions needed to support reform priorities. IMF analysis shows that, across all countries in the region, weaknesses in infrastructure governance exist in all stages of the project life cycle. At the planning stage, SEE countries have gradually strengthened their strategic planning but there is significant room for improvement to better align to good practices. Too many, poorly integrated, and inadequately costed sectorial strategies persist, with large implications for project budgeting and implementation, as well as for overall fiscal sustainability. At the allocation stage, medium-term budget frameworks remain unsuited to deal with long-term implications of infrastructure projects. Multiyear ceilings for capital expenditures are not always fully implemented, resulting in large deviations between budget forecast and execution, reducing the credibility of the budget. Project selection is hindered by lack of standardized selection criteria, and by a regional practice of dual project pipeline, where project selection processes differ based on national vs. EU financing. Finally, at project implementation stage SEE countries often lack strong processes in place to ensure effective project and portfolio monitoring and management. There are no systematic ex-post reviews of major infrastructure projects hindering government’s capacity to learn from past mistakes, and more importantly, to take corrective actions in a timely manner.
At this event, particular attention will be devoted to discussing challenges in managing complex infrastructure projects such as public-private-partnerships (PPPs). The rising use of private financing in delivering public infrastructure has not always guaranteed good contracting and/or high-quality infrastructure assets delivered in a cost-efficient manner. Poor understanding of the trade-offs between the costs and benefits of PPPs is at the heart of the issue- governments tend to overestimate the benefits of PPPs and are often underprepared to manage fiscal risks arising from it. Improving governments’ capacity to successfully attract and manage private financing to deliver high-quality infrastructure assets is essential. Therefore, at this workshop, participants will learn how to assess fiscal implications of typical PPP contracts (e.g., highway, airport, hospital) using the Public-Private-Partnership Fiscal Risk Assessment Model (PFRAM 2.0) analytical tool. Practical exercises will draw from SEE country experiences.
The workshop will promote peer learning across the SEE region, but it will also aim to include participants from other countries with relevant experiences in implementing IMF analytical frameworks. Since the event will be designed to be partaking, participants will be actively engaged in discussions and exercises and encouraged to share their country’s practices and achievements.
What will you learn?
The workshop’s objective is to enable better understanding of the importance of a strong infrastructure governance framework to guarantee an efficient use of government’s limited resources in public investment; what constitutes good practices in public investment management, including the management of infrastructure risks particularly from PPPs; and explore potential solutions to main challenges faced in the region.
After attending this workshop, participants will be able to:
- Contribute to raising awareness and consensus around the need for stronger infrastructure governance frameworks to support high-quality infrastructure assets and services;
- Understand how to evaluate strengths and weaknesses of a government’s public investment management institutions, processes, and procedures and identify reform priorities;
- Identify practical solutions and specific actions that can be designed to advance in the implementation of infrastructure governance reforms;
- Use the IMF-WBG PFRAM 2.0 tool to evaluate fiscal implications of PPPs, and identify the potential risks emanating from them;
- Plant the seeds for a regional infrastructure governance community of practice.
Who should attend?
The workshop has been designed primarily for senior level public officials working at ministries of finance or economy, and other government institutions dealing with large infrastructure projects, such as ministries of planning or regional development, ministries of public works, ministries of transportation and energy, public corporations responsible for delivering large infrastructure assets, who actively deal with:
- public investment strategic planning;
- project appraisal and selection of large infrastructure projects, including PPPs;
- medium-term and annual budgeting for public investment;
- implementation of oversight of large infrastructure projects;
- independent project evaluation.
- Gerd Schwartz, Deputy Director, Fiscal Affairs Department (FAD), IMF
- Carolina Renteria, Division Chief, Public Financial Management (M1), FAD, IMF
- Isabel Rial, Senior Economist, Public Financial Management (M1), FAD, IMF
- FAD expert – TBD
- EC Representative – TBD
Participants from Europe are welcome to apply for this event by submitting their online applications no later than October 9, 2019.
No fee will be charged. Travel, accommodation, and meals will be funded for up to four officials per beneficiary country (Albania, Bosnia and Herzegovina, North Macedonia, Kosovo*, Montenegro and Serbia). Additional participants from beneficiary countries or those applying from other countries will have to obtain funding from their sending institution or other donor(s).
In the selection process, priority will be given to candidates from beneficiary countries while others will be considered according to the space availability. Selected candidates will be notified by October 14, 2019.
The event will be held in English language and translation will not be provided.
- “Making Public Investment More Efficient” IMF, 2015
- “Public Investment Management Assessment: Review and Update” IMF, 2018
- “Public Investment Management Assessment, PIMA”, IMF, 2018
- “Public-Private Partnership Fiscal Risk Assessment Model, PFRAM 2.0”, IMF, 2019
- “PFRAM 2.0 User Manual”, IMF, 2016
- The IMF and Infrastructure Governance web page
* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.
 Since 2015 in SEE region, Public Investment Management Assessments (PIMA) were undertaken by Albania (2016), Kosovo* (2015), Serbia (2017), and Bosnia and Herzegovina (2018), while North Macedonia has agreed to undertake a PIMA in late 2019. Similarly, various capacity development activities related to PPPs, including missions, regional seminars and PPP Fiscal Risk Assessment Model (PFRAM 2.0) training, have been provided to Albania (2017 and 2018), Kosovo* (2017), and Montenegro (2019).
This learning initiative is supported by: