The International Monetary Fund (IMF) has recently published an updated framework for assessing the efficiency in the way public investment projects are delivered. The advice is presented as Public Investment Management Assessments (PIMAs). http://www.imf.org/en/Publications/Policy-Papers/Issues/2018/05/10/pp042518public-investment-management-assessment-review-and-update
Under the revised framework, the IMF shows how best to deliver investment projects, over the full cycle of public investment, from planning to execution. On foot of such assessments, the IMF then makes recommendations as to where improvements and changes might be made in countries’ systems.
The IMF’s recent updating of the PIMA tool is timely for Ireland, given that the Department of Public Expenditure and Reform is currently updating its Public Spending Code https://publicspendingcode.per.gov.ie/ and the Guidelines for the Provision of Infrastructure and Capital Investments through Public Private Partnerships https://ppp.gov.ie/wp-content/uploads/2014/03/Main-PPP-Guidelines-July-2006.doc
What is PIMA ?
Public Investment Management Assessment (PIMA) is a tool used to assess how robust countries’ frameworks are for delivering public investment projects over the full investment cycle—from planning to execution. Since its introduction in 2015, it has emerged as a very useful tool for countries, donors, and technical assistance providers alike. The IMF Paper of May 2018 draws lessons from the PIMAs undertaken so far, as well as improving the PIMA framework by filling some gaps.
For its assessments, the IMF uses a ‘grid-system’ of fifteen headings, with each heading having three dimensions – (i) design of systems; (ii) effectiveness of performance and (iii) reform priorities. This amounts to forty-five questions per assessment. Three scores are used in making the assessment – ‘not met’ (low), ‘partially met’ (medium) and ‘fully met’ (high).
The easiest way to appreciate the scoring system is to take a real result from the published work of the IMF. http://www.imf.org/en/Publications/Policy-Papers/Issues/2018/05/10/pp042518public-investment-management-assessment-review-and-update
Jordan is taken as that example. Table 1 shows the results:
For the 45 questions, Jordan got the following PISA results:-
- 6 High,
- 23 Medium/good, and
- 16 Low.
Put simply, there are 45 questions (3 by 5 by 3) that need to be answered by the IMF for each country being examined. It is from the answers provided that a country can learn where it needs to make improvements to its public investment management scheme. Following each assessment, the IMF provides recommendations to tackle any weaknesses that may have been identified.
How did Ireland perform under PIMA?
The latest IMF assessment on Ireland was undertaken in Summer 2017, at the request of the Department of Public Expenditure and Reform (DPER). The IMF report appears on DPER’s website. http://www.per.gov.ie/en/minister-donohoe-publishes-the-imf-public-investment-management-assessment-pima-report/ The scoring for Ireland was slightly different from the updated one currently being used by the IMF. The scoring went from ‘good’ to ‘medium’ and down to ‘low’. Fifteen areas were measured for their ‘institutional strength’ and ‘effectiveness’, providing a total of thirty individual scores (see Table 2). The breakdown of the 30 scores for Ireland was:-
- 12 at ‘good’;
- 17 at ‘medium’ and
- 1 at ‘low’.
The single ‘low’ result relates to the weak institutional strength in ‘assets accounting’. The IMF observed that – “…a comprehensive asset survey is not carried out, but data are available for some sectors. No information on infrastructure assets in financial accounts”. In the light of these findings, the IMF recommended that there should be improved – “…asset management and the allocation of maintenance funding by developing a central register of infrastructure assets valued at either book (initially) or (ultimately) market value”. http://www.per.gov.ie/en/minister-donohoe-publishes-the-imf-public-investment-management-assessment-pima-report/
The IMF concluded that Ireland’s overall performance is considerably stronger than the global average, while falling short of the average for the advanced G20 countries. In its May 2018 Report, the IMF notes that – “…in Ireland, the government has put the implementation of several PIMA recommendations in its updated Capital Plan Review for 2018–21 and the National Development Plan 2018–27, “to achieve significant improvements in the efficiency of public capital investment.”
Does Ireland need to do more?
While Ireland came quite well out of the IMF’s PIMA assessment in 2017, actions are still required to enhance the public investment management process. Early publication of an updated version of the Public Spending Code and the Guidelines for the Provision of Infrastructure and Capital Investments would certainly help. Equally publishing evidence on the strengths (or weaknesses) of completed public investment projects would be helpful.
The Public Sector can always learn from its mistakes. In this regard, it should be noted that the Department of Public Expenditure and Reform, following a recommendation from the Comptroller and Auditor General, has given a commitment to stress to Departments the importance of compliance with the Public Spending Code requirement to conduct post project reviews in the case of all large scale public investment projects, including PPPs. https://circulars.gov.ie/pdf/circular/per/2018/06.pdf
The Department of Public Expenditure and Reform has also accepted the recommendation that such post project reviews should be published, and indicated that a requirement to this effect (subject to redaction of any commercially sensitive information) will be included in a revision of the Public Spending Code.
By providing a revised assessment framework, the IMF is helping to identify where improvements needs to be made in public investment processes. This should help countries, including Ireland, get more value out of their investments by reducing white elephants, leakages and cost overruns.
Tom Ferris is a Consultant Economist specialising in Better Regulation.
He lectures on a number of PAI courses and contributes blogs regularly to PAI.
He was formerly the Senior Economist at the Department of Transport.