PUBLIC INVESTMENT

MANAGEMENT
ASSESSMENT
(PIMA)

Strengthening
Infrastructure
Governance
2  |  PIMA 2019 PUBLIC INVESTMENT MANAGEMENT ASSESSMENT  |  3

Why Public Investment Matters Key Features of the PIMA

Quality infrastructure investment is essential for sustainable and equitable
economic growth, and the benefits of additional investment depend
crucially on how it is managed.
IMF analysis suggests that the average country loses about 30 percent
of the returns on its investment to inefficiencies in its public investment
management processes (Figure 1), with substantial scope for improving
public investment efficiency across income groups (see 2015 IMF Board
Paper “Making Public Investment More Efficient”). Improvements in public
investment management can help countries close up to two-thirds of their
efficiency gap. The growth dividend from doing so is substantial—the most
efficient investors get twice the growth impact for their investment than the
least efficient investors.
FIGURE 1. LOSSES FROM POOR INFRASTRUCTURE GOVERNANCE
Recognizing the macro-criticality of infrastructure governance, the IMF’s
Public Investment Management Assessment (PIMA) is a comprehensive
framework to assess infrastructure governance for countries at all levels of
economic development. PIMAs evaluate the procedures, tools, decision-
making, and monitoring processes used by governments to provide
infrastructure assets and services to the public; help identify reform priorities;
and devise practical steps for their implementation. In this context, and as
part of the IMF’s Infrastructure Policy Support Initiative (IPSI), PIMAs also
promote the implementation of the 2015 Addis Ababa Action Agenda for
financing sustainable development and the infrastructure-related Sustainable
Development Goals (SDG).
The PIMA framework examines the institutional design and effectiveness of
15 key practices called “institutions” and three cross-cutting enabling factors
supporting infrastructure governance, which shape decision-making at the
three key stages of the public investment cycle (Figure 2).

FIGURE 2. PIMA FRAMEWORK

Low Income Developing Countries PLANNING

40% LIDC 1. Fiscal principles or rules
LIDC
2. National & Sectoral plans
EFFICIENCY Emerging Market Economies
27% EMEs 40% between entities
3. Coordination
LOSS
4. Project appraisal
Advanced Economies
13% AEs 5. Alternative infrastructure provision

IMPLEMENTATION ALLOCATION
11. Procurement 6. Multi-year budgeting
LIDC of funding
12. Availability 7. BudgetLIDC
comprehensiveness & unity
40% management & oversight
13. Portfolio 40%
8. Budgeting for investment
14. Management of project implementation 9. Maintenance funding
Strong infrastructure governance—i.e., strong public sector institutions in 15. Monitoring of public assets 10. Project selection
planning, allocating, and implementing public investment in infrastructure
—not only improves efficiency, but is also critical for macroeconomic stability,
economic growth and fiscal sustainability. This is particularly important
for countries with high debt levels, low revenue collection, and little fiscal CROSS CUTTING ENABLING FACTORS
space.
Legal and institutional
IT Systems Staff Capacity
frameworks
4  |  PIMA 2019 PUBLIC INVESTMENT MANAGEMENT ASSESSMENT  |  5

Planning investment. Efficient investment planning requires institutions that

ensure public investment is fiscally sustainable and effectively coordinated
across sectors and levels of government.
Allocating investment to the right sectors. Allocating public investment to
the most productive projects requires comprehensive, unified, medium-term
planning and objective criteria for appraising and selecting projects.
Implementing investment. Timely and cost-effective implementation of
public investment projects requires institutions that ensure projects are fully
funded, transparently monitored, and effectively managed throughout their
implementation.
Cross-cutting enabling factors. A comprehensive framework for
infrastructure governance should also address cross-cutting issues such as
the legal framework supporting infrastructure, staff capacity to implement
and manage processes, as well as the adequacy of IT systems to enable good
practices in all three phases of the public investment cycle.
PIMA Outputs
The findings and recommendations of a PIMA are summarized in a concise
report prepared by IMF staff. The efficiency of a country’s public investment
is estimated following a standard methodology, and the country’ access to
infrastructure assets and services is compared to peers (Figure 3 and 4). The
report provides an analysis of the public investment trends and its composition
by function, level of government, among others (e.g., Figure 5 and 6).
FIGURE 3. MALI: Efficiency of Public Investment
140
120
100
80

60 Advanced Economies

The Benefits of a PIMA 40 All Other Countries

Frontier
20 Mali
Comprehensive. It brings a macro-fiscal perspective in assessing the entire
public investment cycle, from investment planning, medium-term budget
0 10,000 20,000 30,000 40,000
allocation, to project implementation management.
Public Capital Stock per Capita (Input)
Accessible. It allows effective communication of country results to help
identify gaps and focus reform priorities (e.g., summary charts, peer
comparison, clear distinction between design and effectiveness of public FIGURE 4. IRELAND: Measures of Access to Infrastructure
investment institutions).
Ireland Comparator Average Advanced European Union
10 120
Economonies
Practical. It results in concrete findings and recommendations tailored to
country specific needs and capacities. Recommendations are summarized in 8
100
a sequenced and prioritized reform action plan.
80
6
Supports coordination. It is a catalyst for stronger coordination and follow- 60
up support by development partners. It facilitates shared understanding of 4
key challenges in public investment, allowing partners to coordinate country 40

strategies and mobilize funding. 2

20

0 0
Public education Electricity production Public health Access to treated
infrastructure per capita infrastructure water (RHS)
(Secondary teachers (kWh per (Hospital beds per (Percent of
per 1000 people) 1000 people) 1000 people) the population)
6  |  PIMA 2019 PUBLIC INVESTMENT MANAGEMENT ASSESSMENT  |  7

FIGURE 5. BOTSWANA: Composition of Public Investment by Function A summary heatmap assigns a score to each institution gives a
(Percentage) comprehensive picture of the institutional design and effectiveness of
a country’s public investment management institutions (Table 1) and
provides the basis for a prioritized set of recommendations and a
.42
3.1
2.3 2.2
Economic affairs
sequenced action plan.
4.04
4.04
Housing
4.82
4.82
Health TABLE 1. GEORGIA: PIMA Summary Heatmap
7.02 Recreation & culture
7.02 PHASE/INSTITUTION INSTITUTIONAL DESIGN EFFECTIVENESS PRIORITY
Education
A. PLANNING
60.8
60.8 Social protection
7.68
7.68
Defense 1 Fiscal targets High: There are per- Medium: The expendi- Medium
and rules manent legal limits for ture ceiling has been
General services general government fiscal breached 3 out of 4
7.84
7.84 Public order aggregates. years.
Environment protection 2 National and Low: The national and Low: Objectives are not High
sectoral plan- sectoral strategies are not properly defined in pub-
ning comprehensive and only lic investment strategies,
cover new initiatives. hindering implemen-
tation.

3 Coordination Medium: Capital transfers Medium: Central gov- Low

btw. entities from central to subnation-
al governments are coor-
dinated but ad-hoc. No
FIGURE 6. BRAZIL: Public Sector Investment Execution by Level of Government formal process to report
(Percentage) contingent liabilities to
central government.
ernment estimates and
discloses contingent
liabilities in budget
documents (21% GDP
by public corporations;
34% GDP by power pur-
chase agreements).

4 Project Low: Projects not funded Low: On average, 60% High

18%
Federal government appraisal by donors are not subject of projects are domesti-
to a standard appraisal cally funded.
Public corporations process or methodology.

Subnational governments 5 Infrastructure Medium: There is limited Medium: Public-Pri- High

38%
38%
financing or no competition in most vate-Partnerships law
infrastructure markets. approved, but regu-
Monitoring of public latory framework not
corporations and is frag- completed. Monitoring
mented. of public corporations
improving, but invest-
44% ment not addressed.
44%
B. ALLOCATION

6 Multi-year Medium: Multi-year capi- Low: Major projects con- Medium

budgeting tal ceilings not identified struction costs for outer
separately, and total years not provided or
construction costs are not updated in information
published. system.
8  |  PIMA 2019
PHASE/INSTITUTION INSTITUTIONAL DESIGN
7 Budget Medium: Investments
comprehen- undertaken by extra-bud-
siveness & unity getary entities without
disclosure or legislative
authorization
8
Budgeting for Medium: There are no
investment formal budget mecha-
nisms to give priority to
on-going vs. new capital
projects.
9
Maintenance Low: No standard meth-
odology to determine
maintenance require-
ments or funding.
10 Project selection Low: No standard project
selection procedures and
no project pipeline in
place.
C. IMPLEMENTATION
11 Procurement High: Procurement system
is open, transparent,
enables monitoring of
complaints.
12 Availability of High: Flexible commit-
funding ment rules and good cash
management for domestic
and donor funds.
13 Portfolio Medium: No systematic
oversight physical and financial
monitoring; no ex-post
reviews; flexible realloca-
tion.
14 Project Low: No implementation
management plans prepared; no guid-
ance on project adjust-
ments; irregular ex-post
audits.
15 Monitoring Medium: Non-financial
of assets assets not revaluated.
PUBLIC INVESTMENT MANAGEMENT ASSESSMENT  |  9
EFFECTIVENESS PRIORITY Key Findings of the PIMAs
Medium: Capital budget Low
by Partnership Fund Some important themes have emerged in PIMAs conducted to date.
20% of total capital
appropriations, but data
reported in Fiscal Risk • The design of PIM institutions is generally stronger than the
Statement. implementation of those systems. That is, there is often a gap between the
design and formal rules governing public investment, and how they are
Medium: Informal Medium
reporting by line minis- followed in practice (Figure 7).
tries to MOF of capital
projects budget need • There is room to strengthen the effectiveness of institutions at all stages of
for outer years. the PIM cycle: planning, allocation and implementation (Figure 8). Project
appraisal and selection are often the weakest.
Medium: Methodology High
for road maintenance • The effectiveness of PIM institutions can be improved across all income
(70% of total capital
budget). groups. Advanced economies on average have the highest PIMA scores,
followed by emerging economies—however scores vary greatly among
Low: No evidence that High countries within each income group. (Figure 9).
new PIM selection pro-
cedures will be ready for
soon implementation.
FIGURE 7. PIMA SCORES: Institutional design vs. Effectiveness
Medium: Complaint Medium
review board not inde-
pendent. 1. Fiscal targets
15. Monitoring of and rules
Public Assets 3 2. National and Sectoral Planning
High: No recent cases of Low 14. Management
delayed payments due of Project 3. Coordination
to lack of funds. Implementation between Entities
2
13. Portfolio
Medium: Re-allocations High Management 4. Project Appraisal
of Ministry of Regional and Oversight
Development and Infra-
structure 43% of 2016 12. Availability
1
5. Alternative
capital budget. of Funding Infrastructure
Financing
Low: No individual proj- High
ect audits were complet-
11. Procurement 6. Multiyear Budgeting
ed by State Audit Office
Institutional Effectiveness
(SAO) during 2015-17. (n = 48) (n = 48)
10. Project Selection 7. Budget Comprehensiveness
and Unity
Medium: SAO verifies Medium 9. Maintenance
ministry asset records on 8. Budgeting
Funding for Investment
sample basis.
10  |  PIMA 2019 PUBLIC INVESTMENT MANAGEMENT ASSESSMENT  |  11

PIMA Implementation Since its introduction in 2015, PIMAs have become a key tool for helping IMF
member countries strengthen their infrastructure governance, with over 50
assessments conducted by mid-2019 covering countries of all income and
FIGURE 8: Ranking of PIMA Scores (Average Effectiveness, All Countries) development levels.

7. Budget Comprehensiveness and Unity STRONGER FIGURE 10: PIMAs Around the World
1. Fiscal targets and rules

8. Budgeting for Investment

12. Availability of Funding

2. National and Sectoral Planning Planning

Allocation
11. Procurement
Implementation
5. Alternative Infrastructure Financing

3. Coordination between Entities

14. Management of Project Implementation

13. Portfolio Management and Oversight

9. Maintenance Funding

6. Multiyear Budgeting

15. Monitoring of Public Assets AFR APD EUR MCD WHD

18 11 9 7 6
4. Project Appraisal
WEAKER
10. Project Selection
1 2 2.333333 3
PIMAs and follow-up capacity development activities are conducted by IMF
staff with participation of staff from other organizations (e.g., World Bank,
FIGURE 9: Average and Dispersion of PIMA scores by Income Level Inter-American Development Bank), and supported by the IMF’s regional
(Effectiveness, All countries) capacity development centers.

2.6 Follow-up activities: In the last two years, almost every PIMA recipient
2.4 Highest Score country has had follow-up capacity development support to implement PIMA
2.2 2.2 recommendations and prioritized action plans.
2.0
Regional workshops: Workshops covering all regions are delivered to
1.8
1.7
provide training to government officials on good practices for infrastructure
1.6 1.6 governance and to share international experience among peers.
1.4
Lowest Score
1.2
1.0
LIDC EME ADV
12  |  PIMA 2019

The efficiency of public investment management is crucial to derive the

growth benefits from additional infrastructure investment

—Christine Lagarde, Managing Director of the IMF

Public investment can serve as an important catalyst for economic

growth, for example by supporting or enabling the delivery of key public
services and connecting citizens and firms to economic opportunities.

— Vitor Gaspar, D­irector of the Fiscal Affairs Department of the IMF

The PIMA will play an important role in identifying how institutions and
public governance systems in Ireland who are responsible for … public
capital infrastructure might be further strengthened. … [T]he IMF PIMA can
play a very helpful role in informing and guiding debate on public capital
investment planning in the future.

—Paschal Donohoe T.D., Irish Minister for Finance and

Public Expenditure & Reform

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