Managing Expenditure Pressures for Sustainability and Growth
●● Provision for sustainable operation of facilities: processes to ensure that a new facility is ready for operation and that the intended services can be delivered on a sustainable basis. Requires effective handover of management responsibility for operation and maintenance, and upkeep of robust and up-to-date capital asset registers40.
Evaluation and audit of completed projects ●● Basic completion review and ex post evaluation: a systematic review of all projects upon completion to assess whether a project was delivered as specified, on time and to budget. Introduction of a more sophisticated ex post evaluation to assess the project’s outputs and outcomes against objectives established in the design should follow.
4.3.2 Strengths and Weaknesses of Georgia’s Capital Budgeting System Georgia’s capital budgeting system is characterized by several strengths and weaknesses. Georgia has been successfully addressing critical infrastructure development needs in recent years and the investment program has been delivered in an expeditious and efficient manner. Strategic guidance on overall infrastructure development priorities is provided from the highest levels of government. Implementation of projects usually proceeds in a smooth, efficient, and timely manner, and procurement systems are being progressively improved. A disciplined budgeting process is set out in the Budget Code and the content of the capital budget is being improved as discussed in the previous section. On the other hand, the systems of project identification and selection are largely informal, lacking in methodological and procedural foundations, and heavily reliant on donors for analytical work for major projects. It is also not clear that the system will be able to continue to deliver in the context of an inevitable tightening of resource availability for infrastructure investment, diminishing donor support, and mounting pressure to enhance selectivity and efficiency of a growing pipeline of infrastructure development needs.
Strong strategic guidance on infrastructure priorities comes from high levels of government, although not always firmly grounded in technical analytical work. High level strategic guidance provides an important foundation for project identification. At the same time, the strategic thinking may not always be firmly grounded in technical analytical work and important trade-offs between sectors and within sectors may not be adequately addressed. The strategic direction is not formalized in publicly available strategies or plans and, therefore, potentially subject to arbitrary shifts in direction. While the BDD is an important tool for summarizing strategic priorities and setting out their medium-term financial implications, it should not be seen as a substitute for developing the national and sector strategies that would normally be expected to underpin a medium-term capital investment program. These issues will become more important as the more obvious investments of strategic national importance come to completion and more nuanced strategic thinking becomes necessary. Georgia benefits from a disciplined budget process as set out in the Budget Code and the content of the capital budget is improving. Budgeting is carried out within a medium-term perspective through the BDD that is growing in credibility and becoming more firmly embedded in the formulation process. Decision-making on current and capital expenditure is, in principle, integrated and externally-funded projects are being captured in 40 A good inventory of existing capital assets should identify each asset, the ministry owning it, the program it supports, the date it entered service and original construction cost, annual maintenance and repair expense history, current condition, current replacement cost, and similar data.
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Chapter 4. Capital Budgeting Systems