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Box 3.2
Are Ministries of Finance Well Informed about Public Infrastructure Investments? Implementation of advanced financial management information system (FMIS) and PIM technical capabilities is usually possible after building substantial institutional and technical capacity and gaining experience with core FMIS solutions over several years. Public investment projects have several characteristics that are likely to exert specific demands on the information system. Investment projects will typically span multiple budget years. Prior to actual approval in the budget, projects may be subject to periods of initial identification, prefeasibility, and appraisal. Projects are therefore typically assigned some unique identification that must subsequently be linked to annual budget information. At a minimum level, a functional system should provide the CFA with a real-time overview of the government’s project portfolio. The system should be able to identify the final to initial cost and time estimate of a project. Ideally, it should provide updates of the aggregated forward cost estimates of the existing project portfolio, which would help identify the fiscal space for new projects. Because project implementation is typically decentralized across line agencies, care must also be taken to ensure that updates on both the financial and physical implementation of projects are issued in a timely fashion. Users in key agencies must actually see the information being generated by the system as useful for ensuring sustainability. A key requirement for successful implementation of FMIS solutions supporting PIM and other advanced PFM functions is the daily recording and reporting of all financial data through a countrywide information system. This can be achieved through a reliable ICT infrastructure that connects all line ministries and agencies and provides online access to a centralized Web-based FMIS solution for all system users in order to share reliable and complete information from a central database. Moreover, a unified budget classification, including a detailed program segment capturing all important activities and projects, needs to be developed to ensure collection and analysis of consistent budget data over the years. The information demands of a PIM module are, however, likely to be high, especially if the system is intended to provide measures of financial and physical implementation as well as data assessing the value for money suggested by procurement processes. Since the late 1980s, the World Bank and other development agencies have been very active in funding treasuries/FMIS projects. Indeed, as of August 2010, the World Bank had financed 94 projects in 51 countries totaling over US$1.4 billion (continued next page)