Public Investment Management Challenges and Tools
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Box 3.2 (continued)
(55 completed, 32 active, and 7 pipeline projects). Recently, a report titled “The World Bank’s Experience in Treasury and Financial Management Information Systems (1984–2010)” was prepared by a group of Bank specialists (it is an updated and expanded version of the draft FMIS review report prepared in 2003) to highlight achievements and challenges observed during the design and implementation of Bank-funded projects since 1984. According to the findings of this study, a significant number of countries have developed customized software modules for PIM, often as a part of integrated FMIS solutions. Within the 55 completed FMIS projects, there appear to be PIM and MTEF/ program-based budgeting components mainly in Latin America (Argentina, Colombia, Ecuador, Guatemala, Honduras, and Nicaragua) as well as in Africa (Burkina Faso). Similarly, other information systems supporting PIM are being implemented in 31 ongoing treasury/FMIS projects in Albania, Ukraine, Mongolia, and Lao People’s Democratic Republic. Source: Dener, Watkins, and Dorotinsky 2011.
challenges in the prevailing country contexts. Beyond the significant resource flows associated with public investments, the long-term fixed and sunk costs pose significant challenges for intertemporal regulatory and political credibility, as well as time inconsistency.30 A variety of strategies can be used to address perceived weakness in public infrastructure creation and operation. PIM benchmarking can be used to establish baselines for reform prioritization and capturing of progress over time. Earmarking/hypothecation can under certain circumstances better align resource allocation, notably for more optimal maintenance, whereas shifting the emphasis of financing for subnational governments or line agencies from pure inputs to outcomes can enhance public infrastructure creation performance. Balance sheet and accrual accounting innovations can support improvements in public investment spending over time but require a realistic appreciation of the information and procedural demands for applying these approaches in practice. Finally, there is a growing recognition that transparency and demand-side measures can enhance accountability for effective public infrastructure provision. The provision of public-private partnership infrastructure may be particularly vulnerable to time-inconsistency challenges and thus may deter either upstream investment or the effective operation and maintenance