PublicInvestmentManagement(PIM) ForInvestingtoCapablyInvest

JayHyung Kim WorldBank,PRMPS ICGFMWinterConference,WashingtonDC December911,2013

Outline
WhyPublicInvestmentManagement(PIM)Matters? EightMustHaveFeaturesforPIM:ADiagnosticTool TheBanksPIMAgendaforInvestingtoCapablyInvest FindingsfromPIMCountryDiagnoses TradeoffsandSequence:StrengthenAppraisalor

ImplementationFirst?
LessonsforPIMReforms ComingSoon:ANewPIMIndicatorDrillDown(PIMforPPP)

WhyPublicInvestmentManagement(PIM)Matters?
Publicinvestmentisjustifiedbyitsexpectedpositiveeffecton economicgrowthandsocialwelfare. Buttheefficiencyofpublicinvestmentdependsonthe effectivenessofPublicInvestmentManagement(PIM)whichis oftenweak. PIMDiagnosticToolisaWBGproductthatanalyzesand providesaplatformforcountrydialogueonhowpublic investmentmanagementcancontributetopolicyobjectives anddevelopmentoutcomes. OnceyoulearnthePIMDiagnosticTool,youwillbeableto: Identifykeyaspectsofeightmusthavefeaturestoawell functioningPIMsystem; DescribekeyinitiativesandentrypointsforPIMreformin developingcountries.
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EightMustHaveFeaturesforPIM:ADiagnosticTool
Eightspecificfeaturesprovideadegreeofassurancethatthereareno systemicloopholesthatwouldenablewastefulorcorruptdecisions. Theyareconsideredtobemusthavefeatures,notwiththeintention ofestablishingagoldstandardbuttoprovidealogicalandinternally consistentsystemthatevenalowcapacitycountryshouldtrytofollow toestablishbasicdisciplinesforprojectselectionandmanagement.

Source:Rajaram,Anand,etal.(2010),'FrameworkforReviewingPublicInvestmentEfficiency', WorldBankPolicyWorkingPaper,No.5397(August)),17.

TheBanksPIMAgendaforInvestingtoCapablyInvest
DiagnosticTool QualitativeAssessmentTool: PIMMustHaveFeatures PolicyDialogue OperationalAssistance

Identifyingneeds, DiagnosticOperations validation,peer topeer learning TechnicalAssistance Operations QuantitativeAssessmentTool: Conferences PIMIndicatorDrillDown

QualitativeAssessmentTool(PIMMustHaveFeatures): Brazil/Chile/China/EastTimor/EquatorialGuinea/Korea/Latin America/Lesotho/Mongolia/Nigeria/Peru/SierraLeone/Uganda/USA /Vietnam/WestBalkans/Zambia/Zimbabwe(completed) QuantitativeAssessmentTool(PIMIndicatorDrillDown):Cape Verde/Ukraine(completed),Georgia/Jamaica/Thailand/Vietnam (ongoing)

FindingsfromPIMCountryDiagnoses
Advanced PIM Countries
Strengthening appraisal Establishing clear expectations of new project proposals Building capacity across government in the techniques of project appraisal Independent reviews Fully costed sector strategies integrated with MTEF Transparency

FindingsfromPIMCountryDiagnoses

AdvancedPIMCountries
Strengtheningappraisal Establishingclearexpectations ofnewprojectproposals Buildingcapacityacross governmentinthetechniques ofprojectappraisal Independentreviews Demandsidestrengthening Centerofexcellence Transparency

LessDevelopedPIM systems
Strengtheningproject planning

Strategicguidance Mediumtermorientation Projectpreparation Projectappraisal(costbenefit analysis,otherappraisal analyses)

Procurementreform Internalandexternalaudit

FindingsfromPIMCountryDiagnoses

AdvancedPIMCountries
Strengtheningappraisal Establishingclearexpectations ofnewprojectproposals Buildingcapacityacross governmentinthetechniques ofprojectappraisal Independentreviews Demandsidestrengthening Centerofexcellence Transparency

LessDevelopedPIM systems
Strengtheningproject planning
Strategicguidance Mediumtermorientation Projectpreparation Projectappraisal(costbenefit analysis,otherappraisal analyses)

AidDependentCountries
Strengtheningproject

Procurementreform Internalandexternalaudit

implementation Centralizedcapacityfor procurementreform Contractingoutof capacity Rationalizingand reducingthenumberof publicinvestmentunits Improvingqualityof nationalstrategicplans

TradeoffsandSequence: StrengthenAppraisalorImplementationFirst?
Improvingprojectexecution maygenerategreaterandfaster benefits

Reducingthenumber ofpoorprojects selectedforfunding

LessonsforPIMReforms
Ownershipofassessmentisimportant. Often,butnotalwaysMinistryofFinance(MoF)atthecenterofprocess Developstheframeworkforinvestmentdecisionandhasoversightcontrolof publicinvestment ClarityofrolesandresponsibilitiesiscrucialforeffectivePIM. Coordinationacrosssectorsandlevelsofgovernment Theroleofcentralguidelinesareaparticularlycriticalaspectofawellfunctioning PIM. Monitoringisimportantforearlyremedialaction. FinancialManagementInformationSystem(FMIS) PublicTransparency&Accountability PIMreformsareincentivecompatible. Basedonasoundunderstandingofandtailoredtofitindividualcountry trajectories,circumstancesandpractices Technicallyfeasible,relyingongoodenoughpractice Carefullydesignedandsequenced WellfunctioningPEMandbudgetingsystem,PPPandSOEgovernance,anddebt managementsystemarealsoimportant.
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ComingSoon:ANewPIMIndicatorDrillDown(PIMforPPP)
AnewPIMIndicatorDrillDown(PIMforPPP)isrecentlydevelopedby

PRMPStoprovideaunifiedframeworkforintegratingbothtraditional governmentprojectimplementationandPPP.
Mostcountrieshavebeenmanagingpublicprivatepartnership(PPP)

projectsseparatelyfromtraditionalgovernmentprojects.
A principalkeytoinitiatingPPPprojectsistoestablishwhethera

governmentcanmaintainthesameleveloffiscalefficiencyand sustainabilitythroughPPPsasthroughconventionalmeansof implementation.

ThePIMforPPPtooldevelopsnewindicatorsandmeansofverificationto

assesstheeightmusthavefeaturesofPPPsystems,processes,and institutions.
ThePIMforPPPtoolhelpsgovernmentsputinplacetheunifiedapproachfor

publicinvestmentthatenablesthemtoselectthepublicinvestmentoptionthat deliversthebestvalueformoney,whetherbytraditionalbudgetfinancingor PPP.

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ThankYou

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