This presentation was made by Richard Hugues, IMF, at the 8th Meeting of Senior Public-Private Partnerships and Infrastructure Officials held in Paris on 23-24 March 2015.

2. Getting More Bank for Your Public Investment Buck:
Outline of the Presentation
I. Public Investment and Infrastructure Quality
II. Estimating Public Investment Efficiency
III. Assessing Public Investment Management
IV. Explaining Public Investment Performance
V. Conclusions, Recommendations, and Next Steps
2

3. I. Public Investment & Infrastructure Quality
a. Trends in Public Investment
Public investment falling in advanced
economies, but recovering elsewhere…
…and growth in the public capital stock has
outpaced population but not output
3
0
1
2
3
4
5
6
7
8
9
10
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
PercentofGDP
Advanced Emerging Developing
Public Investment
(% of GDP)
0
2
4
6
8
10
12
14
16
18
20
0
20
40
60
80
100
120
140
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
ThousandsPPP$percapita
PercentofGDP
Advanced Emerging Developing
Real Public Capital Stock
per Capita (RHS)
Public Capital
Stock (LHS)
Public Capital Stock
(Real Value and % of GDP)

4. I. Public Investment & Infrastructure Quality
b. Public vs. Private Investment
Private sector accounts for the bulk of
core infrastructure investment in
advanced economies…
…but the public sector still dominates the
core infrastructure in emerging and
developing economies
4
UK Investment in Core Infrastructure
(US$ 257 billion, 2011-15)
33
13%
59
23%164
64%
Public
PPP
Private
310
64%
24
5%
150
31%
Public
PPP
Private
India Investment in Core Infrastructure
(US$ 485 billion, 2007-11)
Source: McKinsey (2013)

5. I. Public Investment & Infrastructure Quality
c. Trends in Infrastructure Quality
Survey measures suggest some
convergence in infrastructure quality
between rich & poor countries….
…but physical measures highlight the large
and persistent disparities in infrastructure
access & quality between rich and poor
5
0
1
2
3
4
5
6
2006
2007
2008
2009
2010
2011
2012
2013
2014
Advanced
Emerging
Developing
Perceptions of Infrastructure Quality
(2006-14)
Measures of Infrastructure Access
(Latest year)
0
10
20
30
40
50
60
70
80
90
100
0
2
4
6
8
10
12
14
16
18
Roadspercapita
Publiceducation
infrastructure
Publichealth
infrastructure
Electricityper
capita
Accesstowater
(RHS)
Advanced
Emerging
Developing

6. II. Estimating Public Investment Efficiency
a. Public Investment Efficiency Index
6
Sizeable public investment efficiency gaps both
across and with different income groups
0
20
40
60
80
100
120
140
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Physicalinfrastructurescore(100=AEaverage)
Public capital stock per capita, PPP US$
Advanced Emerging Developing Frontier line
Public Capital Stock vs. Infrastructure Quality

7. 0.0
0.2
0.4
0.6
0.8
1.0
Advanced Emerging Low-Income All Countries
Efficiencyscores
Average
efficiency gap
of 40%
II. Estimating Public Investment Efficiency
b. Public Investment Efficiency Gap
7
Variation in Public Investment Efficiency
Average country is 40% below efficiency frontier with
largest efficiency gaps among low income countries

8. II. Estimating Public Investment Efficiency
c. Public Investment Efficiency & Growth
8
-8
-6
-4
-2
0
2
4
6
8
10
0 5 10 15 20 25 30
AverageAnnualPerCapitaGDPGrowth,
2009-2013
Average Annual Investment, Percent of GDP (2009-2013)
High Efficiency Low Efficiency
Public Investment vs. GDP Growth
More efficient public investors get 1% more growth “bang” for
their investment “buck” than less efficient public investors

9. III. Evaluating Public Investment Management
a. Public Investment Management Assessment (PIMA)
The PIMA Framework
9
Planning
1. Fiscal rules
2. National & Sectoral Plans
3. Central-Local Coordination
4. Managementof PPPs
5. Regulationof Infra. Corps.
Allocating
6. Multi-yearbudgeting
7. BudgetComprehensiveness
8. BudgetUnity
9. ProjectAppraisal
10. Project Selection
Implementing
11. Protectionof Investment
12. Availabilityof Funding
13. Transparency of Execution
14. Project Management
15. Monitoringof Assets

10. III. Evaluating Public Investment Management
b. PIM Strengths and Weaknesses
10
PIMA Score by Institution
1.Fiscal rules
2.Natl/Sectoral Planning
3.Central-Local Coord.
4.PPP
5.Infrastructure Company
Regulation
6.Multi-year Budgeting
7.Budget Comprehensiveness
8.Budget Unity9.Project Appraisal
10.ProjectSelection
11.Investment Protection
12.Funding Availability
13.Budget Execution
Transparency
14.Mgmt. of Project
Implementation
15.Monitoring of Public Assets
Advanced
Emerging
Developing 1 - 5: Planning
6 - 10: Allocating
1 - 5: Planning
6 - 10: Allocation

11. IV. Explaining Public Investment Performance
a. Public Investment Efficiency & Productivity
Stronger PIM institutions associated
with more efficient investment…
…and (more weakly) associated with
more productive investment
11
PIMA Score vs. PI Efficiency PIMA Score vs. PICOR

12. IV. Explaining Public Investment Performance
b. Public Investment Levels
Stronger PIM institutions associated
with less overall investment…
…and less reliance on PPPs
12
PIMA Score vs. PI Level PIMA Score vs. PPP Commitments

13. IV. Explaining Public Investment Performance
c. Public Investment Stability
Stronger PIM institutions associated
with more stable levels of investment…
…and more stability in the allocation of
investment between sectors
13
PIMA Score vs. Overall PI Volatility
0
5
10
15
20
25
30
35
40
45
0 2 4 6 8 10
Volatility
Institutional Strength
Correlation Coef: -0.59
0
1
2
3
4
5
6
7
0 2 4 6 8 10
Churn
Institutional Strength
Correlation Coef: -0.57
PIMA Score vs. PI “Churn”
Advanced
Emerging
Low Income

14. IV. Explaining Public Investment Performance
c. Public Investment Execution
Stronger PIM institutions associated
with more credible capital budgets…
…and lower perceptions of government
corruption.
14
0
10
20
30
40
50
60
70
80
90
0 2 4 6 8 10
Implementation
Institutional Strength
Correlation Coef: -0.53
0
1
2
3
4
5
6
0 2 4 6 8 10
ICRGIntegrityScore
Institutional Strength
Correlation Coef: 0.60
PIMA Score vs. PI Over/Under Execution PIMA Score vs. Government Integrity
Advanced
Emerging
Low Income

15. V. Conclusions, Recommendations, and Next Steps:
a. Preliminary Conclusions
1. Scope to improve public investment efficiency by 40 percent on
average across 25 sample countries
2. Higher efficiency countries get 1 percent of GDP more growth “bang”
for their investment than lower efficiency countries
3. Strengthening public investment management (PIM) practices can
reduce the “efficiency gap” by almost half
4. Stronger PIM practices improve efficiency by ensuring:
– More sustainable levels of investment and PPPs
– More stable profile and allocation of investment spending
– Less overspending during project execution
– Lower levels of rent-seeking
5. Stronger PIM practices positively (but weakly) associated with more
economically productive public infrastructure (PICOR) 15

16. V. Conclusions, Recommendations, and Next Steps:
b. Tentative Recommendations
1. Advanced economies need to introduce more investment-
friendly fiscal frameworks, strengthen central-local
coordination, and adopt more binding MTBFs
2. Emerging economies should unify current and capital budgets
and adopt more rigorous and transparent mechanisms for
investment project appraisal, selection, and management
3. Developing countries should focus on strengthening
investment project execution and management of risks
associated with rapid growth in PPPs
4. All countries would benefit from integrating strategic
investment planning and budgeting
16

17. V. Conclusions, Recommendations, and Next Steps:
c. Next Steps in Conjunction with Other IFIs
17
Date Milestone
May 2015
Publication of IMF Policy Paper Making Public
Investment More Efficient
Summer 2015
Release of cross-country data set on capital stocks
public investment quality (PIQ-X) and efficiency (PIE-X)
Autumn 2015
Piloting of Public Investment Management Assessment
(PIMA) diagnostic
Winter 2015
Launch of IMF PPP Fiscal Risk Analysis and
Management (P-FRAM) tool
Spring 2016 Finalization of PIMA in light of lessons from pilots
Ongoing
Greater emphasis in IMF technical assistance on
strengthening public investment management