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PEAM Course 2006 Infrastructure Public Expenditure Reviews Drawing on Some Recent Experiences

PEAM Course 2006 Infrastructure Public Expenditure Reviews Drawing on Some Recent Experiences. Cecilia Briceño Garmendia AFTPI. Why include Infrastructure in PERs? What drives the issues in Infrastructure PERs (I-PER)? How do we go about doing an I-PER? What are the lessons?. Roadmap.

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PEAM Course 2006 Infrastructure Public Expenditure Reviews Drawing on Some Recent Experiences

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  1. PEAM Course 2006Infrastructure Public Expenditure Reviews Drawing on Some Recent Experiences Cecilia Briceño Garmendia AFTPI

  2. Why include Infrastructure in PERs? What drives the issues in Infrastructure PERs (I-PER)? How do we go about doing an I-PER? What are the lessons? Roadmap

  3. Some Facts Infrastructure and Growth Infrastructure and Income Inequality Infrastructure Characteristics and Fiscal Implications Infrastructure Spending and Fiscal Policy Why include Infrastructure in PERs?

  4. Some Concerns Traditional PERs mostly assess budgetary spending Infrastructure has been neglected in PERs  In AFR, out of 54 PERs budgeted bet.FY02 and FY07: 28 having Transport Components 25 having WSS Components 2 having Oil and Gas Components Solutions are country driven How to use PERs to learn about the micro-macro linkages Why include Infrastructure in PERs?

  5. What drives the issues in I-PERs? • 4 general concepts (e.g. expenditures, financing, efficiency and management)… • … country specific issues

  6. How do we go about doing an I-PER? Providing Diagnostics and Policy Recommendations

  7. Mapping Institutions General Layout of Institutions and Flows involved in Providing Infrastructure Services Source: Public Expenditure Review for Infrastructure Sectors: Turkey (2005)

  8. Mapping Institutions Jurisdictional Responsibilities in the Infrastructure Sectors

  9. Providing Diagnostics Under-budgeting or Over-budgeting?

  10. Providing Diagnostics Misclassification of Spending?

  11. How do we go about doing an I-PER? Providing Diagnostics and Policy Recommendations

  12. Mapping Data: Expenditure SideSummary Template

  13. Mapping Data: Expenditure Side An Example from the on-Going work in Uganda Source: Uganda, forthcoming CEM (2006)

  14. Mapping Data: Expenditure Side An Example from the Turkey I-PER:Investment Composition Source: Turkey, Infrastructure PER (2004), Unpublished

  15. Providing Diagnostics What part of the story are we missing? Source: Uganda, forthcoming CEM (2006)

  16. Providing Diagnostics What part of the story are we missing? Source: Uganda, forthcoming CEM (2006)

  17. Providing Diagnostics Can a country afford infrastructure?

  18. How do we go about doing an I-PER? Providing Diagnostics and Policy Recommendations

  19. Mapping Data: Income SideSummary Template

  20. Mapping Data: Income Side Road Investment Financing Source: Turkey, Infrastructure PER (2004), Unpublished

  21. Mapping Data: Income Side An Example Uganda: Donors as part of Infrastructure Budget Source: Uganda, forthcoming CEM (2006)

  22. Providing Diagnostics Is there an Absorptive Capacity Problem?

  23. Providing Diagnostics Is there an ‘Affordable’ Financing Gap?

  24. Providing Diagnostics Are Donors part of the problem? Source: Uganda, forthcoming CEM (2006)

  25. How do we go about doing an I-PER? Providing Diagnostics and Policy Recommendations

  26. 100 Very Good 90 -Filling Cracks 80 70 Good -Geotextile and Strengthening 60 Condition of Pavement (%) -Reconstruction of the Surface -Reconstruction of the partial base course Fair 50 40 Poor -Complete Reconstruction 30 20 Very Poor 10 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 Lifetime of Pavement (years) Determining Efficiency The Maintenance Dilemma

  27. Providing Diagnostics Inadequate Investment Decision Making? Turkey: Multi-year Projects in 2005-Investment Portfolio

  28. Providing Diagnostics Optimistic (or Disguised) Cost-Recovery Assumptions? Uganda: Parastatals Cost-Recovery Ratios • Annual implicit subsidies up to 2 percent of national budget • Accumulated debt 10 %GDP

  29. Providing Diagnostics Are Parastatals able to (at least) preserve the asset stock? Uganda: Parastatals Investment/Depreciation Ratios Source: Uganda, forthcoming CEM (2006)

  30. What are the Methodological Lessons? • Data Availability and Quality: A Problem • Records/Accounting, Misallocation of Expenses • Infrastructure Sector Nuances • One size does not fit all, e.g. roads vs. energy vs. water • Fragmentation of Infrastructure Provision • Institutional Setting Matters • Central Government, Local Governments, Public Enterprises • Overlapping Sources and Use of Public Funds • Own Investments and O&M, Subsidies, PPP, Guarantees • Cheap Money? Role of Multilaterals increased focus on maintenance?

  31. What are the Lessons?(Emerging) Policy Challenges • Quantity of (Public) Spending Fiscal discipline and coverage of fiscal targets • Quality of Public Spending Budget Rigidities and Integrity, Efficiency • Country Institutional Capacity Governance and Risk Management Financial Market Capacity

  32. Emerging Issues – Food for Thought • Public Expenditure Management in Infrastructure: • The PEM system: institution, expenditure and income mapping • Diagnosis and Recommendations • Public Spending in Infrastructure and Macro-economic Balances: • Country Affordability and Fiscal Space • Infrastructure for Growth • Distributional Impact of Infrastructure Spending

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