## cr18114 ## Source details **Canonical URL:** [cr18114](https://www.imf.org/-/media/files/publications/cr/2018/cr18114.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2018/cr18114.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2018/cr18114.pdf.json) --- ### Mission and assessment framework - Mission requested by Dr. Boubou Cissé, Minister of Finance and Economy of Mali; mission dates: June 1-15, 2017; wrap-up meeting on June 16, 2017. - Lead: Benoit Taiclet (Senior Economist, FAD). Core team: Gwénaëlle Suc; Fabienne Mroczka; Yemdaogo Tougma; Nicolas Botton; Onintsoa Raoilisoa; Pierre Roumegas. - Assessment methodology: Public Investment Management Assessment (PIMA), Fiscal Affairs Department (FAD), IMF. - Objective: take stock of public investment, review management procedures, identify weaknesses and priorities for reform. ### Key executive-summary findings - Overall characterization: - PIMA finds a "robust, although paradoxically inefficient, management framework." - Institutional framework generally scores "at or above average levels" compared with peers and LICs, with notable exceptions. - Principal institutional weaknesses (selected): - Institutional framework for public private partnerships (PPPs) is incomplete. - Accounting and valuation of assets, particularly non-financial assets, need improvement. - Availability of financing undermined by poor commitment management and cash flow projections. - Project assessment is not systematic or comprehensive. - Quantitative efficiency gap: - "In Mali only 57 percent of capital expenditure materializes in fixed capital stock, compared with an average of 73 percent in the rest of the world." - Overarching policy objective: - Change administrative practices to produce sustainable infrastructures of higher quality without fundamental institutional redesign. - Three operational approaches: (1) Optimize existing resources; (2) Mobilize resources and devote them to investment; (3) Improve sustainability of the stock of infrastructures. Cross-cutting: establish a results-based culture of integrity. ### Patterns of public investment and fixed capital stock (selected statistics) - Public investment in 2015: 20.8 percent of total public and private investment combined. - Share of capital expenditure in national resources in the budget: approximately 40 percent during 2004-2015. - Development partner aid channels: sectoral/general budget support = 10-20 percent; project aid = 80-90 percent of donor aid. - Share of project support in public investment: between 20-50 percent. - Volatility: public gross fixed capital formation standard deviation = 1.7 percent of GDP year on year. - Mali lag vs WAEMU average: in 2015 Mali's lag amounted to 4 percent of GDP. - GDP growth average over period cited: 4.6 percent. - Fixed capital stock trends: - Stock of fixed capital ≈ 110 percent of GDP in 2000 and < 70 percent of GDP in 2015. - Fixed capital stock per capita declined by approximately 17 percent between 2000 and 2015 (constant U.S. dollars, purchasing power adjusted, per capita). - Public debt and fixed capital: - Public debt declined from 91 percent of GDP (2000) to 17 percent (2006) after cancellations. - Public debt kept at approximately 20-36 percent of GDP subsequently; below WAEMU ceiling of 70 percent. - Public debt / fixed capital ratio worsened from 22 percent of fixed capital in 2005 to 53 percent in 2015. ### Quality, efficiency, and impact indicators - Public Investment Efficiency Index (PIE-X) for Mali: 0.57 (scale 0 to 1). - Comparative averages: Sub-Saharan African countries = 0.64; emerging countries = 0.73. - PIE-X components (Mali): - Quality component: 0.81 (Mali) vs 0.78 (emerging countries) and 0.80 (Sub-Saharan African countries). - Physical (access) component: 0.32 (Mali) vs world average 0.59 and Sub-Saharan average 0.46. - Combined efficiency gap: 0.43 (Mali) vs 0.27 for other countries of the world. - Synthesis (2015-2017): investment effort insufficient and volatile; assets deteriorated quickly due to lack of maintenance; perceived quality declined since 2012; fixed capital per capita among lowest in subregion. ### PIMA overall assessment (institutions and major reform priorities) - PIMA covers 15 institutions across Planning, Allocating, Implementing, plus cross-cutting issues. - General pattern: - Most components score at or above LIC averages for institutional strength. - Effectiveness gaps concentrated in: project appraisal; project selection; asset accounting; PPP management and monitoring; financing availability and commitment management; maintenance; central-local roles. - High institutional strength / high effectiveness examples: - National and sectoral planning; Programmation pluriannuelle. - High-priority reform areas (three-star priority): Coordination central-local; Public-private partnerships; Regulation/surveillance of infrastructure enterprises; Ex ante project appraisal; Project selection; Asset accounting; Maintenance inclusion of recurring costs. ### Pillar I — Planning: findings and priorities - Budget rules: - Institutional framework: Moderate. "The permanent fiscal rules no longer specifically apply to capital expenditure." - Effectiveness: High. Capital expenditure level preserved while debt limited to WAEMU ceilings. - National and sectoral planning: - Institutional framework: High. Three-year investment plan published and sector breakdown exists. - Effectiveness: High. Annual coordination and consolidation of sectoral strategies. - Coordination central-local: - Institutional framework: High. Legal limits and planning frameworks exist. - Effectiveness: Low. Local governments' financial/operational role in financing is "practically very low." Priority: *** - Public-private partnerships (PPPs): - Institutional framework: Moderate (Law 2016-061; Decree February 9, 2017); lacks ceiling on public guarantees; PPP unit established but not fully operational. - Effectiveness: Low. Pre-2016 PPP-like contracts lacked preliminary PPP appraisals; financial commitments not systematically recorded. Priority: *** - Regulation and surveillance of infrastructure enterprises: - Institutional framework: Moderate; markets legally open but electricity market has de facto monopoly. - Effectiveness: Low. Insufficient consolidated monitoring of public enterprises’ investment plans and financial risks. Priority: *** ### Pillar II — Allocating: multiyear budgeting, budget comprehensiveness, project appraisal/selection - Multiyear programming: High institutional framework; High effectiveness. Tools: DPEBP, PTI, CDMT, BSI. - Budget comprehensiveness: Moderate. Budget does not fully include PPPs; externally financed capital expenditure recording incomplete. - Budget unity: Moderate. Transition to program budget planned for 2018; investment-related recurring expenditure recorded but not disaggregated by project. - Ex ante project assessment: Institutional framework Moderate; Effectiveness Low. Major structuring projects not systematically subject to cost-benefit analysis using standard methodology. - Project selection: Institutional framework Moderate; Effectiveness Low. Lack of systematic technical review, transparency issues, selection criteria unpublished in practice. - Distribution of capital expenditure (Table 6, in billions of CFAF): - Capital expenditure: 2015 = 649.5; 2016 = 803.3; 2017 = 864.8 - Domestic financing: 2015 = 339.1; 2016 = 524.7; 2017 = 561.9 - Equipment and investment: 2015 = 189.2; 2016 = 289.3; 2017 = 274.3 - Domestic special capital budget: 2015 = 149.9; 2016 = 235.4; 2017 = 287.6 - External financing: 2015 = 271.2; 2016 = 260.2; 2017 = 285.1 - Budget support: 2015 = 39.3; 2016 = 18.4; 2017 = 17.7 - Composition facts of Special Capital Budget (BSI): - 27 projects (7 percent) represent 50 percent of the BSI. - 195 projects (50 percent) have appropriations ≤ CFAF 500 million and account for only 10 percent of the budget. - 25 percent of those 195 small projects have more than 10-year maturities. - 87 projects are in near or past completion phases. - Project readiness: - No standardized verification of procurement schedules, technical specifications, or property availability; risk of including non-feasible projects in budget, causing delays and quality issues. ### Pillar III — Implementing: protection, financing availability, transparency, implementation, asset monitoring - Protection of investment: - Institutional strength: High. Project total costs presented in budget documentation; protection from in-year reallocations and carry-forward allowed. - Effectiveness: Moderate; stronger with improved information systems (PRED, AICE, SIGIP). - Availability of financing: - Institutional strength: Moderate. RGCP prescriptions include procurement plans and commitment/cash plans; CUT should hold all public funds in principle. - Effectiveness: Moderate. Absence of implemented commitment plans and external financing outside CUT undermines availability; SIGMAP technical issues; Mali has not accumulated payment arrears on capital expenditure in past two fiscal years; project funds disbursed within 90 days after recording in accounting system for 2015–2016. - Recommendation: update, reconcile, and share PPMS/PPMCs/PES/PEC and cash plans. - Transparency in execution: - Institutional strength: High. Open procurement framework, monitoring, and ex post audits exist. - Effectiveness: Moderate. Lack of traceability and poor coordination among players; recommendations to strengthen information sharing, coordination, audit publication, and accountability. - Management of implementation: - Institutional strength: Moderate. Rules apply but do not explicitly cover in-execution adjustments; information system weaknesses complicate effective management; ex post assessments insufficiently outcome-focused. - Asset accounting and monitoring: - Institutional strength: Low. Inventory partial; valuations absent; balance sheets exclude nonfinancial assets; no amortization/depreciation recorded. - Effectiveness: Low. Preparatory works needed ahead of accrual accounting implementation planned for 2019. - Pillar III key departures (verbatim importance highlights): - No commitment plan; insufficient correlation between programming instruments. Importance: Moderate. - No integrated information system accessible to all participants. Importance: Moderate/High. - Implementation of accrual accounting not completed. Importance: High. ### Cross-cutting issues: capacities, IT systems, procurement, maintenance - Human and technical capacities: "satisfactory and are improving" but need better integration and training; high turnover undermines capacity. - Information systems: project data fragmented; SIGIP used but not integrated with DGB, DNTCP, DGMP; modernization under SDI; need central cross-steering mechanism. - Public procurement: - Legal framework strong; > 90 percent of contracts executed via public requests for tenders between 2013-2016. - Contracting timelines (regulatory periods vs averages, in days): - Document processing period (DAO): Regulatory 12; Average 2015 = 13; Average 2016 = 19 - Average period for publication of requests for tenders: Regulatory 37; Average 2015 = 30; Average 2016 = 30 - Average period between opening of bids and forwarding assessment to supervisory body: Regulatory 10; Average 2015 = 9; Average 2016 = 21 - Processing of assessment reports: Regulatory 11; Average 2015 = 5; Average 2016 = 7 - Average time between signing by successful bidder and approval of the contract: Regulatory 6; Average 2015 = 30; Average 2016 = 25 - Average general periods: Regulatory 86; Average 2015 = 87; Average 2016 = 102 - Gaps: access, periodicity, sharing of procurement database reports; contracting delays, especially contract signing. - Maintenance and recurring costs: - Recurring cost estimation rudimentary; requirement to estimate recurring costs for projects > CFAF 1 billion often not met. - Maintenance expenditure insufficient; amortization/depreciation not identified in financial statements. - Figure: maintenance funds trending upward but not yielding improved preservation of infrastructures. - Key quantitative efficiency finding reiterated: - Only 57 percent of Mali’s investment spending materializes in fixed capital, vs 73 percent average worldwide. ### Action plan structure and selected recommendations (high-level) - Strategic approaches: 1. Optimize existing resources. 2. Mobilize resources and devote them to investment (increase gross fixed capital formation). 3. Improve sustainability of infrastructure stock (maintain fixed capital stock). 4. Cross-cutting: establish results-based culture of integrity and professional management standards. - Selected cross-cutting recommendations: - Use program budget reform to develop accountability; adopt performance contracts for project heads. Players: MEF, CARFIP, all services. - Strengthen capacities in risk analysis, financial analysis, monitoring of physical execution. Players: DNPD, DGB, CPS. - Quarterly inter-ministerial CPS meetings for practice exchange. Player: DNPD. - Share common project views by adapting information systems/interfaces across MEF directorates. Players: DNPD, DGB, DGMP, DNTCP, CAISFF. - Civil-society/local-government engagement: annual regional CROCSAD/CLOCSAD/CCOCSAD meetings; involve civil society in infrastructure acceptance; establish periodic meetings between management units and civil society committees. - Anticorruption and governance: appoint authorities for procurement approvals; ensure net-worth statements and operationalize OCLEI; establish Anticorruption Observatory; publish court judgments relevant to governance. - Area 1 (selection and socioeconomic impact): - Update programming/monitoring manuals; add selection criteria and apply them to projects in execution and final stages; pre-arbitrate and bundle low-cost projects before DNPD submission; publish selection criteria on MEF website. - Area 2 (consolidate investment effort): - Improve capital-budget composition: target 85 percent capital expenditure per project; align functional classification with international standards. - Increase domestically financed investment: improve revenue mobilization; propose transferring 30 percent of budget revenue to local governments to increase local resources. - Manage PPP and private-sector risk: publish PPP implementing decree establishing legal ceiling on commitments/guarantees; specialize DGB staff for PPP financial surveillance; publish inter-ministerial order for reporting financial information to DGB; publish consolidated annex on PPP liabilities and public-enterprise financial performance. - Ensure timely availability of funds: strengthen SIGMAP coverage/functionality; develop commitment plans; link commitment plans to cash plans; incorporate external financing gradually into CUT. - Area 3 (maintenance and asset sustainability): - Expand accounting/financial information on public assets: document monitoring, assessment, amortization/depreciation; continue inventories for opening balance sheet; strengthen linkage between materials accounting and general government accounting. - Ensure maintenance costs covered: define maintenance/upkeep costs; systematically include future operating and maintenance cost estimates in project documentation; produce sectoral methodological guides for operating/maintenance cost calculation. - Governance for maintenance: designate focal points in key ministries; establish participative annual/multiyear sectoral planning for maintenance; periodic monitoring of maintenance expenditure coordinated by DGABE. - Project-specific operational activities (examples): - Clean up the three-year investment plan: review project database, consolidate old projects, combine small residual projects, terminate inactive projects. Players: DNPD; DGB; Selection Committee. - Strengthen ex ante/ex post assessments: training/coaching prior to specifications; replenish funds for project studies; define thresholds and adopt standard cost-benefit framework including risk analysis; generalize ex post reviews and publish assessments; submit annual annex on investment performance to Parliament. _Italic: IMF staff Public Investment Management Assessment (PIMA) findings and Mali country assessment excerpt._ ### PREFACE __________________________________________________________________________________________ 6 ### PREFACE ### Mission and participants - Mission requested by Dr. Boubou Cissé, Minister of Finance and Economy of Mali. - Mission dates: June 1-15, 2017 (visit to Bamako); wrap-up meeting on June 16, 2017. - Leading and core team members: - Benoit Taiclet (Senior Economist, FAD) — mission leader. - Gwénaëlle Suc (Economist, FAD). - Fabienne Mroczka and Yemdaogo Tougma (Economists, World Bank). - Nicolas Botton (Resident Adviser for Mali, FAD). - Onintsoa Raoilisoa and Pierre Roumegas (Experts, FAD). - Principal national counterparts and interlocutors engaged: - Bamoussa Koné (National Director of Planning and Development). - Sidiki Traoré (Director General of Budget). - Sidi Almoctar (National Director of Treasury and Public Accounting). - Boubacar Ben Bouillé (Director General of Public Procurement). - Accounting Section of the Supreme Court; PPP Unit of the Office of the Prime Minister; Office of the Auditor General; BCEAO; Inspectorate General of Finance; DGABE; DGDP; DNCF; INSTAT; ANICT; senior management from Énergie du Mali (EDM); strategic planning units and finance/materials directorates from ministries responsible for national education, mining, energy and water, health and public hygiene, decentralization and government reform, equipment, and improved access. - Meetings with Mali's technical and financial partners: - Arsène Kaho (World Bank). - Dicko Hamaciré (African Development Bank). - Myriam Bacquelaine (Head of the Diplomatic Mission of the Embassy of Belgium). - Bernard Dagouassat and Jacques Batut (Embassy of France). - Jan Meise (Embassy of Germany). - Lieve Deherder (Embassy of Denmark). - Michiko Miyamoto and Mamadou Barry (Japan International Cooperation Agency, JICA). - A draft version of the report was given to staff of the Ministry of Economy and Finance (MEF) during the wrap-up meeting. ### Scope, methodology, and institutional arrangements - Assessment framework used: Public Investment Management Assessment (PIMA) methodology, Fiscal Affairs Department (FAD), IMF. - Objective: take stock of public investment, its features, and its efficiency; review management procedures to identify weaknesses. - The mission worked closely with MEF directorates and other national bodies to collect evidence and present preliminary conclusions. ### Key findings from the Executive Summary - Overall characterization: - The PIMA finds a "robust, although paradoxically inefficient, management framework." - Compared to peer countries and low-income countries (LICs), the institutional framework performs "fairly robust" and generally scores "at or above average levels" across most components. - Principal institutional exceptions and weaknesses identified: - Institutional framework for public private partnerships (PPPs) is incomplete. - Accounting and valuation of assets, particularly non-financial assets, need improvement. - Availability of financing for investments is undermined by poor commitment management and cash flow projections. - Project assessment is not systematic or comprehensive. - Quantitative efficiency gap and fixed capital outcomes: - Public gross fixed capital formation is "extremely irregular" and "on a downward trend in the long term." - Mali ranks among the least equipped countries in the sub region in terms of fixed capital per capita. - Efficiency measure: "in Mali only 57 percent of capital expenditure materializes in fixed capital stock, compared with an average of 73 percent in the rest of the world." - Institutional strengths and priorities for reform (selected from summary matrix, Table 1): - Areas assessed as High institutional strength and High effectiveness: "National and sectoral planning" and "Programmation pluriannuelle". - Areas with Moderate/Low institutional strength or Low effectiveness requiring priority reforms (indicated with three stars as highest priority): "Coordination between the central authorities and local governments"; "Public-private partnerships"; "Regulation of infrastructure enterprises" (surveillance); "Évaluation ex ante des projets" (project appraisal); "Sélection des projets" (project selection); "Comptabilisation des actifs" (accounting of assets); "Maintenance" (inclusion of recurring costs). - Specific examples from the summary assessment: - Fiscal rules: "Moderate. The permanent fiscal rules no longer specifically apply to capital expenditure." - Budget unity and comprehensiveness: "Moderate. The budget is prepared with an economic, administrative, and functional nomenclature... Investment-related recurring expenditure is recorded in the budget, but not disaggregated by project." - Project appraisal and selection: "Moderate. The process for investment project preparation includes ex ante assessment. The assessment methodology is under review." Yet: "Major structuring projects are not systematically subject to a cost-benefit analysis using a standard methodology." - Asset accounting: "Low. The institutional framework for stock and accrual basis accounting requires more detailed, operational regulation... The inventory of public assets is conducted on a partial basis, the information is not included on the balance sheets, and there is no amortization/depreciation." - Overarching policy objective and action-plan orientation: - Overarching objective: change administrative practices to produce sustainable infrastructures of higher quality without fundamental changes to the existing institutional framework. - Three operational approaches in Part III (Recommendations and Action Plan): 1. Optimize existing resources. 2. Mobilize resources and devote them to investment. 3. Improve the sustainability of the stock of infrastructures. - Cross-cutting (4): establish a results-based culture of integrity by raising professional standards of management to support implementation of the three operational approaches. ### Institutional diagnosis and effectiveness (figures and synthesis) - The PIMA assessed 15 institutions/components spanning fiscal principles, planning, central-local coordination, PPPs, regulation of infrastructure enterprises, multi-year budgeting, budget comprehensiveness and unity, project appraisal and selection, protection of investment, availability of funding, transparency of project execution, management of project implementation, monitoring of public assets, and procurement and maintenance arrangements. - General pattern: - Most components score at or above LIC averages for institutional strength. - Effectiveness gaps are concentrated in project appraisal, project selection, asset accounting, PPP management and monitoring, financing availability and commitment management, maintenance, and central-local fiscal and operational roles. *Source: PREFACE, cr18114* ### 5. Public investment is a powerful leverage for public policy. Public investment provides ### 5. Public investment is a powerful leverage for public policy. Public investment provides ### Overview - Public investment provides users with infrastructures or public goods that support the operations of the government, and stimulate private investment. - Public investments are financed by: the share of budget expenditure earmarked for gross fixed capital formation; and fixed capital accumulation from public agencies and enterprises (excluding merchant sector). - When integrated into a sustainable economic policy approach, public investment ensures that community goods and services are provided consistently and that the country is economically attractive, while supporting growth. ### Patterns of Public Investment and Fixed Capital Stock - Public investment in 2015 represented only one fifth (20.8 percent) of total public and private investment combined. - Public and private investment cycles began to be synchronized in 2002. - The government aims to increase capital expenditure (equipment and investment expenditure in the state budget) and has affirmed this since the 2010s in connection with the IMF program supported by the Extended Fund Facility. - The share of capital expenditure in national resources in the budget remained at approximately 40 percent (roughly one half of fiscal revenue) during the period 2004-2015, with a pronounced decline during the 2012 crisis. - Development partner aid channels: - Sectoral or general budget support: 10-20 percent of the financial aid from all donors combined. - Project aid: 80-90 percent of the financial aid from all donors combined. - The share of project support in public investment has varied in the range of 20-50 percent. - Long-term trends and volatility: - Public gross fixed capital formation shows a steady decline in its share of GDP over a 25-year study and volatility with a standard deviation of 1.7 percent of GDP year on year. - Mali’s public investment has drifted downwards from, and has not caught up with the WAEMU’s average since 2011; in 2015 Mali's lag behind the WAEMU average amounted to 4 percent of GDP. - Explanatory factors include average GDP growth of 4.6 percent over the period, lower growth in public investment, volatile external financing, and vulnerability to macroeconomic and geopolitical shocks (notably 2012). - Fixed capital stock trends (past 15 years): - Stock of fixed capital represented approximately 110 percent of GDP in 2000 and less than 70 percent of GDP in 2015. - Fixed capital stock per capita declined by approximately 17 percent between 2000 and 2015 (in constant U.S. dollars, purchasing power adjusted, per capita). - The stock of fixed capital per capita falls short of levels observed in other WAEMU countries. - Public debt and fixed capital ratio: - Public debt declined from 91 percent of GDP (2000) to 17 percent (2006) following creditor cancellations. - Public debt has since been kept at approximately 20-36 percent of GDP, below the WAEMU ceiling of 70 percent of GDP. - The public debt / fixed capital ratio worsened from 22 percent of fixed capital in 2005 to 53 percent in 2015. ### Quality, Efficiency, and Impact of Public Investment - Development planning and investment: - The latest development plan noted is the “strategic framework for economic recovery and sustainable development of Mali” (CREDD 2016-18). - Approximately 40 percent of projected expenditure under the CREDD (CFAF 3,440 billion) is devoted to investment, emphasizing access to health and education infrastructures, drinking water, electricity, and improving access to landlocked parts of the country. - Access and quality indicators: - Access to infrastructures (teachers per thousand inhabitants; kilometers of road per thousand inhabitants; hospitals per thousand inhabitants; percentage of population with access to drinking water) have improved in recent years, with the noteworthy exception of health. - Perceived quality of infrastructures declined since 2012 based on surveys compiled by the World Economic Forum. - Public Investment Efficiency: - Public Investment Efficiency Index (PIE-X) for Mali: 0.57 on a scale of 0 to 1. - Comparative averages: Sub-Saharan African countries 0.64; emerging countries 0.73. - Efficiency components: - Quality component: 0.81 (Mali) compared with 0.78 in emerging countries and 0.80 in Sub-Saharan African countries. - Physical (access) component: 0.32 (Mali) compared with a world average of 0.59 and an average of 0.46 for Sub-Saharan African countries. - Combined efficiency gap: 0.43 (Mali) compared with 0.27 for other countries of the world. - Synthesis of shortcomings (2015-2017 position): - Despite partner aid, the investment effort (gross fixed capital formation) was insufficient and volatile. - Infrastructure assets deteriorated quickly owing to lack of appropriate maintenance in a difficult natural and geopolitical environment. - Users perceive the quality of infrastructures to have declined since 2012. - Although access to essential infrastructures improved over 25 years, the stock of fixed capital per capita remains among the lowest levels in the subregion. - Conclusion on value for money: - Inefficient management has led to considerable wastage of invested funds, while capital budgets have declined over time, leading to a decline in gross fixed capital formation. ### Public Investment Management Assessment — Overall findings - The PIMA assesses three pillars: planning, allocation, and execution, plus cross-cutting issues. Institutional strengths were scored for institutional framework and effectiveness; reform priority levels were indicated. - Overall institutional strength of the management framework is good compared with comparable countries, with generally good scores at or above average levels for LICs in almost all components. - Four notable exceptions and weaknesses: 1. The institutional framework applicable to public private partnerships (PPPs) is incomplete. The legal framework was not established by law until 2016. The PPP unit reporting to the Prime Minister has yet to become operational. Mali has accumulated just over 3 percent of GDP in fixed capital through PPPs (public service concessions). 2. Scope for improvement in the accounting and valuation of assets, particularly non-financial assets. Stock accounting and general accounting systems are not comprehensive or consistent. 3. Availability of investment funds is still unstable. Management is adversely affected by commitment and cash flow projections with scope for improvement, even though Mali is not accumulating payment arrears. 4. Project assessment is not systematic or thorough; assessments focus more on indicators than on expected socioeconomic results. *Source: cr18114* ### 21. A number of reforms will improve the institutional strength of public investment ### 21. A number of reforms will improve the institutional strength of public investment ### Summary of institutional reforms and outlook - Departures from good practices identified in the public investment management assessment are being addressed while authorities implement WAEMU regional directives. - Reforms aimed at implementing program budget, commitment control, accrual-basis accounting, and the treasury single account could improve Mali’s public investment management framework, which is described as relatively robust and generally effectively implemented, albeit somewhat formally, by managers. - Implementation of results-based management is expected to shift administrative culture from formal application toward a more performance-driven approach. ### Public Investment Management Assessment Framework (PIMA) - The PIMA assesses the quality of institutional frameworks and practice to help optimize public investment for growth and development. - The tool assesses 15 practices ("institutions") across the public investment cycle stages: Planning, Allocating, and Implementing. - Planning includes: 1. Fiscal rules; 2. National and Sectoral Planning; 3. Central‐local Coordination; 4. Management of PPPs; 5. Company Regulation. - Allocating/Implementing include: 6. Multiyear Budgeting; 7. Budget Comprehensiveness; 8. Budget Unity; 9. Project Appraisal; 10. Project Selection; 11. Protection of Investment; 12. Availability of Funding; 13. Transparency of Execution; 14. Project Management; 15. Monitoring of Assets. - For each institution, three indicators are scored to determine whether criteria are fully, partially, or not met; average scores determine institutional strength (high, moderate, low). ### Pillar I: Planning — institutional effectiveness and priority reforms - Component objective: determine whether Mali has (i) fiscal principles or rules to preserve investment; (ii) national and sectoral plans defining investment strategies; (iii) effective central-local coordination; (iv) transparent PPP management; (v) regulation of infrastructure enterprises to promote competition. - Overall finding: institutional framework for public investment planning is insufficient for entities outside the central government. The framework is sound and complete except for PPPs and infrastructure enterprises. Scope for improved implementation for non-central entities. Table 2 summary (stage/institution — institutional framework — effectiveness — priority of reforms): - 1 Budget rules - Institutional framework: Moderate. The permanent fiscal rules no longer specifically apply to capital expenditure. - Effectiveness: High. The level of capital expenditure is preserved while debt is limited to the ceilings established by the WAEMU. - Priority: * - 2 National and sectoral planning - Institutional framework: High. The three-year investment plan, which is published, breaks the national investment strategy down by sector. Preparation is based on an ascending partnership process. - Effectiveness: High. Sectoral and national strategies are properly coordinated, reviewed every year, and consolidated into a unified document that presents key indicators for economic activity and impact for each sector. - Priority: * - 3 Coordination between the central authorities and local governments - Institutional framework: High. Recourse to borrowing for investment by local governments is limited by law. The amount of transfers is known more than six months before the beginning of the fiscal year. Planning is coordinated on a concerted basis. - Effectiveness: Low. The financial and operational role of local governments in financing efforts is practically very low. - Priority: *** - 4 Public-private partnerships - Institutional framework: Moderate. The 2016 Law on PPPs is in the process of implementation. It does not provide a general definition of PPPs and does not impose the principle of a ceiling on multiyear guarantees or commitments. Monitoring of financial commitments in connection with PPPs is not organized. - Effectiveness: Low. PPPs undertaken prior to 2016 have not been subject to preliminary studies. Financial commitments are not systematically recorded. - Priority: *** - 5 Regulation of infrastructure enterprises - Institutional framework: Moderate. Major economic infrastructure contracts undergo international and national competitive bidding procedures. These contracts are regulated by independent authorities, and prices are unrestricted, except for electricity. Surveillance of public infrastructure enterprises is insufficient. - Effectiveness: Low. Because of insufficient structured surveillance, investment plans of public enterprises are not reviewed by government staff. Financial risks in connection with enterprises’ investment operations are not monitored in a consolidated report. - Priority: *** ### Fiscal rules — status and recent measures - WAEMU convergence indicators (applied by Mali) do not specifically target capital expenditure; Mali applies the Union's convergence criteria established under a 1999 directive, updated in 2015, implemented in the multiyear budget and DPEBP. - Until 2015, a second-tier criterion required the ratio of investments financed with domestic resources to tax revenue to exceed 20 percent; this criterion was eliminated in 2015 (also in ECOWAS). There is no high level permanent fiscal rule applicable to capital expenditure. - Table 3: Trends in WAEMU Convergence Indicators for Mali (values preserved verbatim) - Normes, 2012, 2013, 2014, 2015, 2016 - First-tier criteria - Overall fiscal balance/GDP: >= - 3% ; -0.9 ; -2,3 ; -2,8 ; -2,3 ; -3,7 - Inflation rate: <= 3% ; 5,3 ; -0,6 ; 0,9 ; 1,5 ; <3,0 - Outstanding public debt balance/GDP: <= 70% ; 24,3 ; 26,4 ; 27,3 ; 31,3 ; 30,3 - Second-tier criteria - Wage bill/tax revenue: <= 35% ; 38,4 ; 36,1 ; 35,2 ; 33,1 ; 32,8 - Tax pressure: >= 20% ; 11,9 ; 12,3 ; 12,5 ; 14,0 ; 14,7 - GDP growth rate (percent): -0,8 ; 2,3 ; 7,0 ; 6,0 ; 5,3 - Source: WAEMU Commission, National Economic Policy Committee, Mali. - Recent measures since 2015 designed to protect capital expenditure: - Steps to limit operating expenditure and maintain investment levels. - WAEMU harmonized PFM framework: budgeting of capital expenditure under commitment authorizations scheduled to be fully implemented from the 2018 fiscal year to place such items in a multiyear context. - A presentation of budget appropriations identifying commitment authorizations and payment allocations has been appended to the budget law on an informational basis since 2016. - Capital expenditure and debt developments (exact figures preserved): - Capital expenditure, including items financed directly by the state, increased from CFAF 389.6 billion in 2013 (6 percent of GDP) to CFAF 740 billion in 2016 (8.9 percent of GDP). - Public debt represented 30.5 percent of GDP in 2016, as against 26.4 percent in 2013. - The stock of public debt is deemed to be sustainable with a moderate risk of debt distress. ### National and sectoral planning — processes and monitoring - National investment strategy: CREDD (strategic framework for economic recovery and sustainable development) covers 2016-2018 and is broken down by sector in the three-year investment plan (PTI). - PTI: sliding three-year plan attached to the Budget Law; presents breakdown of planned projects by sector and ministry, costs for each investment project; part of the macroeconomic framework for CREDD implementation; sectoral programming in PTI is reflected in medium-term expenditure frameworks. - Strategy development: CREDD produced through consultations with stakeholders; annual circular letter from minister responsible for planning defines PTI preparation; strategic planning units (CPS) lead sector discussions and channel requirements to DNPD; not all CPS pre-select between ministries’ raw projects before submission, but sector priorities are integrated into the PTI. - Monitoring: CREDD has a monitoring and assessment system at national level; annual sector reviews monitor project status; indicators combine activity and results. - Examples of sector indicators (as presented in source): - Energy: Rate of access to electricity, national level (percent); Rate of access to electricity, urban areas (percent); Rate of access to electricity, rural areas (percent). - Roads: Length of maintained paved roads; Length of paved roads in good condition. - Rail transportation: Ton per kilometer; Passenger per kilometer; Number of passengers; Total cargo. - Education: Gross school enrollment rate, junior secondary education (in percent); Gross school enrollment rate, junior secondary education, girls (in percent); Enrollment rate, junior secondary education (in percent); Completion rate, junior secondary education (in percent); Percentage repeaters, junior secondary education (in percent); Gross school enrollment rate parity index, girls/boys; Ratio of students to teachers, junior secondary education. ### Coordination between central and local governments — arrangements and limitations - Legal limits on local government borrowing: Article 227 of Law 2012-007 (February 7, 2012) allows local budgets to include authorized loans only if earmarked to investments; Article 216 permits local governments to levy specific taxes earmarked to capital expenditure, with rate set by central government representative after consultation with the local executive president. - Local investment planning: guided by PDSEC and implemented since 2015 through plan contracts between the central government and regions; targets structuring investments that create jobs and wealth. - Coordination frameworks: national steering committee for technical support to local authorities (CNO); regional committees (CROCSAD); local committees (CLOCSAD); municipal committees (CCOCSAD). - Transfers timing: ANICT provides local governments a fiscal framework with planned amount of transfers from central government; in 2016, this framework was issued on June 9; the amount of transfers for capital expenditure is generally known at least six months before the fiscal year. - Role of local governments: in practice, local governments play an insufficient role in the investment effort for financial and technical reasons; financing and execution are highly dependent on central government; since 2007, local governments’ own revenue has been continuously insufficient (particularly nontax revenue); central government operates a substantial share of local capital expenditure through decentralized units and multiregional projects. - Composition and shares (figures preserved as presented): - PEFA 2016 data: capital expenditure amounted to CFAF 27.4 billion, equivalent to 14 percent of total expenditure in the budgets of the local governments. - The share of capital expenditure in local budgets has more than doubled in three years (2014–2016) but remains limited due to shortage of local resources and dependence on the state budget. ### Public-private partnerships (PPPs) — legal framework, gaps, and legacy contracts - Legal framework: Law 2016-061 (December 30, 2016) and Decree of February 9, 2017. The law lists contract types considered PPPs (concessions for works or services; concessions of general interest involving or not public service delivery; third-party management; combined contracts; partnerships involving payment from the government). The law provides for a PPP unit to provide expertise. PPP contracts are subject to prior approval and budget sustainability check by the minister of economy and finance. - Good practices missing from the law/sub-regulations (items listed in source): - Introduction of the principle of a ceiling on financial commitments or guarantees for PPPs from the public sector; - Indication of the risks that the private partner must undertake so that the contract does not entail excessive risks for the public party; - Incorporation of the rate of return on investment for the private operator among the criteria for awarding PPPs and in the compulsory clauses of the contract; - The vote by Parliament on the commitment authorization for PPPs beginning with the first year of implementation (see Organic Law on Budget Laws—LOLF) and the requirement to make all PPP contracts public (see governance decree). - Waiver options in law that should be more restrictive in implementing decrees: - The law excludes spontaneous offers and contracts executed by direct negotiation in emergencies from the procedure; - While the law establishes the general principle of transparency and competitive bidding, it allows restricted bidding and negotiated mechanisms that can bypass competitive procedures; - The law provides the option for the private partner to receive an indemnity if the economic balance of the contract is disrupted by unforeseeable events, which could lead to numerous, costly renegotiations. - Legacy PPP-like contracts (executed prior to 2016) have not undergone PPP-specific appraisal despite the law requiring pre-procedure evaluations including: (i) economic and social utility and positive environmental impact; (ii) demonstration that PPP is more profitable for government than public procurement; (iii) budget sustainability analysis assessing fiscal impact and availability of funds. - Examples of pre-2016 PPP-like contracts listed: Transrail (railroad), Ozone (sanitation), a zoo, Mali Technique Système (technical vehicle inspection), Mali Plaques (production of vehicle license plates), Énergie du Mali (electricity), SOMAGEP (drinking water distribution). These contracts contributed a noteworthy stock of capital. _Italic: IMF staff Public Investment Management Assessment (PIMA) findings and Mali country assessment excerpt._ ### 39. While the PPP unit is becoming operational, there is a need to foster its ### 39. While the PPP unit is becoming operational, there is a need to foster its ### Coordination between the PPP Unit and the Ministry of Economy and Finance (MEF) - The PPP Unit was established under the authority of the Prime Ministry in February 2017 with missions including: technical assistance and expertise, validation of preliminary assessments, opinions on draft contracts, and participation in project monitoring. - The MEF must play an essential role in identifying, assessing, and monitoring budget sustainability and any liabilities in connection with PPPs. - Current gap: No structure or procedure has been established with the MEF to monitor PPP costs or mitigate PPP budget risks. - Recommendation (implicit in text): Set up mechanisms for communication and information exchange between the PPP Unit and the MEF to address fiscal risks before they materialize. ### Regulation of infrastructure enterprises - Major economic infrastructure contracts are subject to international and domestic bidding procedures; service prices are freely established. - Markets for water, electricity, telecommunication, and transportation are legally fully open to competition; however, there is a de facto monopoly on the electricity production market. - Independent authorities are involved in regulation, but prices are freely determined except for electricity distribution. ### Surveillance of public infrastructure enterprises and public enterprises more broadly - The state wholly or partially owns 52 public enterprises (including five public industrial and commercial establishments). - Portfolio monitoring: - Monitored by the Directorate General of Government Asset Management (DGABE). - DGABE sends questionnaires annually by June to collect financial information and store it in a database; approximately one third of the questionnaires are not responded to. - Consolidated assets of public enterprises amount to CFAF 62.5 billion, equivalent to 1.5 percent of GDP. - Data consolidated by the DGABE is forwarded to technical oversight authorities but is not used by the Directorate General of Budget. - Investment plans: - Except for the five public industrial and commercial establishments with performance contracts, investment plans of public enterprises are not subject to government review. - It is not possible to ensure enterprises’ investment plans: (i) comply with priorities set in the government three-year investment plan; and (ii) do not entail fiscal risks. - Specific monitoring: - Only Électricité du Mali is subject to specific financial surveillance in the context of the program with the IMF requiring quarterly financial reports. - Directorate General of Budget has plans to develop analysis of budget risks related to public enterprises, but this function is yet to be developed. ### Key departures from best practices (Pillar I) — identified institutional gaps and reform priorities - There is no concept of a ceiling on financial commitments or guarantees from the public sector for PPPs — Importance: High - Insufficient coordination between the Ministry of Economy and Finance and the PPP Unit — Importance: High - Insufficient financial surveillance for PPPs and public enterprises — Importance: High - Failure to report financial information between the Directorate General of Budget, the Directorate-General of Government Asset Management, oversight ministries, and public enterprises — Importance: Moderate - Insufficient financial analysis capacities for PPPs and public enterprises — Importance: Moderate - No consolidation of contingent liabilities — Importance: Moderate - Insufficient capacities and resources for regional governments — Importance: High ### Pillar II — Allocating: institutional strengths and weaknesses for allocating resources to needs - Assessment scope: whether Mali conducts multiyear budgeting with transparent/predictable appropriations for investment; issues a comprehensive budget including all public investments; implements a unified budget process; conducts ex ante project assessments; implements a project selection system. - Overall judgment: Quality of institutional framework for allocation of public investment is fairly good; room for improvement in project management, selection, and assessment processes. Key summary entries (from Table 5): - Multiyear programming: High institutional framework quality; High effectiveness; Reform priority: * - Comprehensiveness of the budget: Moderate institutional framework quality; Moderate effectiveness; budget does not contain information on PPPs; recording of externally-financed capital expenditure is not complete; PPP transactions not monitored. - Budget unity: Moderate institutional framework quality; Moderate effectiveness; transition to program budget planned for 2018; investment-related recurring expenditure recorded but not disaggregated by project. - Ex ante project assessment: Moderate institutional framework quality; Low effectiveness; major structuring projects not systematically subject to cost-benefit analysis using a standard methodology; risk analysis still limited. - Project selection: Moderate institutional framework quality; Low effectiveness; assessment process does not systematically involve a technical review of study quality; lack of executable criteria. ### Multiyear programming and budget comprehensiveness - Multiyear tools/documents (examples cited): - The Medium Term Economic and Fiscal Framework (DPEBP) for 2017-19 to be submitted to Parliament during the FY 2018 budget pre-debate. - Volume I of the program budget appended to the 2017 Budget Law contains multiyear projections by type of expense and by ministry. - The three-year investment plan (PTI) for 2017-19 prepared by the National Development Planning Directorate (DNDP). - The Special Budget for Investment (BSI) is the annual component of the three-year investment plan and is incorporated into the budget. - All ministries prepare sectoral Medium-Term Expenditure Frameworks (CDMT). - The multiyear budgeting mechanism secures allocation of resources for public investments; tools (DPEBP and PTI) are consistent with the annual budget. - Carry-forward mechanism: systematically used for externally financed expenditure; subject to government decision for domestically financed expenditure. - Commitment control through commitment authorizations and payment allocations scheduled to start in 2018. ### Budget inclusions and gaps - The Budget reflects general government capital expenditure including central government, decentralized administration, and transfers to local governments and public institutions; capital expenditure is included in Title V and distributed into equipment and investments. - Current budget documentation does not include specific information on transactions in connection with PPPs (mechanism in process of being established). Table 6 — Distribution of Capital Expenditure, 2015–2017 (In billions of CFAF) - Capital expenditure: 2015 = 649.5; 2016 = 803.3; 2017 = 864.8 - Domestic financing: 2015 = 339.1; 2016 = 524.7; 2017 = 561.9 - Equipment and investment: 2015 = 189.2; 2016 = 289.3; 2017 = 274.3 - Domestic special capital budget: 2015 = 149.9; 2016 = 235.4; 2017 = 287.6 - External financing: 2015 = 271.2; 2016 = 260.2; 2017 = 285.1 - Budget support: 2015 = 39.3; 2016 = 18.4; 2017 = 17.7 - The budget reflects approximately half of public sector externally financed investments (approved, agreed by financing agreements, and proceeded through domestic procedures). - Less mature projects included in donors’ financing projections and those executed outside national procedures are not included in the budget documentation. - Local government investments are tracked outside the state budget in the national fund to support local governments (FNACT); most FNACT funds are provided by donors with the rest from state endowments and subsidies. - A Medium-Term Resource Framework, CRMT 2016-2018, prepared by the Secretariat for Aid Harmonization (SHA), reports extrabudgetary project aid reflecting approximately 40-50 percent of total project support for 2015-2018. ### Budget unity and recurrent costs - Capital expenditure is presented in a single document using classification compliant with IMF Government Finance Statistics Manual 2001 and WAEMU directives. - Some capital expenses are recorded under other items than capital expenditure (cross-department appropriations combine capital and current expenditure; certain capital items recorded in topical trust funds outside the budget). - Recurring expenditure included in the budget are not connected with the relevant projects in practice: - Sector ministries are required to estimate recurring costs but in practice this is not carried out except for projects with costs > CFAF 1 billion. - Road maintenance costs are included in the three-year investment plan and presented as investment projects. - Generally no budget lines specifically related to recurring expenditure (upkeep, maintenance, renovation) for infrastructures as they are built, with the exception of the program for refurbishment of public buildings included in the special capital budget. ### Project assessment and selection processes - Ex ante assessment: - No standard methodology for ex ante assessments exists. Since 2014, DNPD manages a fund to finance project studies and preparation but funds are insufficient for systematic assessment of all projects. - Cost-benefit analyses are not systematically conducted on major projects. Some preliminary feasibility and return factors included in selection criteria but not systematically implemented. Donor-financed projects are generally better prepared and often include cost-benefit analysis. - Investment project selection: - Since 2014 a technical committee (chaired by ministerial planning representative; includes DNPD, DGB, DGMP, DNCF, DNTCP, CPS units) studies, assesses, and selects projects for the three-year investment plan and special capital budget; meets two ordinary sessions per year. - Project submission template includes identification, duration, sector, region, financing level, provisional schedule (preparation, execution, post-project), performance framework, monitoring framework, and identification/projection of domestic and external financing. - Practical constraints: - Ministries lack technical capacity for complete ex ante assessments; submissions to DNPD often incomplete with limited socioeconomic impact studies and poor assessments of relevance, sustainability, and economic/financial returns. - Project assessments generally do not include ex ante risk analyses; risk analysis is identified as a major weakness requiring capacity development. - The project selection process, although robust and organized via the Mali programming and monitoring manual, lacks transparency: the manual and selection criteria are not published on the IMF's website. - Unpublished selection criteria used by the technical committee include preliminary criteria (feasibility study existence, proper formulation), basic criteria (alignment with strategic framework, value added rate, impact on debt service, rate of external financing, poverty reduction impact, jobs created), additional criteria (environmental effects, rehabilitation effects, integration/disparity reduction), and budget criteria (availability of financing, priority level with national counterparts, assessment and coverage of recurring costs). A DNPD weighting system supports selection. - Reform of selection processes applies only to new projects; no criteria for projects in progress or completion stages. Sector ministries have not fully internalized new processes and rarely preselect before DNPD submission. ### Need to reassess legacy projects in the special capital budget (BSI) - DNPD policy aims to drop projects with low value-added or excessively lengthy terms, but BSI still includes many small-budget, long-lasting projects consuming investment funds inefficiently. - Distribution facts: - Only 27 projects (equivalent to 7 percent of the total number of projects) represent 50 percent of the BSI. - 195 projects (equivalent to 50 percent of the total number of projects) have been appropriated with CFAF 500 million or less. - 25 percent of these 195 small projects have more than 10-year maturities. - 87 projects are in the near or past completion phases. *Italic: Content derived from the provided IMF chapter/section text.* ### 60. Last, there are no assessments on projects’ readiness or feasibility. The selection ### cr18114 - 60. Last, there are no assessments on projects’ readiness or feasibility. The selection ### Project readiness and feasibility - The selection criteria do not include any verification as to whether the projects are ready for execution (such as public procurement schedules, detailed terms of reference, technical specifications, and availability of properties). - Absent this technical review, not ready or not feasible projects can be included in the budget, with the risks of substantial delays in the execution of capital expenditure, and adverse impact on the quality of the projects’ outputs. - Charted composition notes (verbatim text from figure): - 7 percent of the projects (27 in absolute value) account for 52 percent of the budget - 27percent of the projects (105 in absolute value) account for 80 percent of the budget - 50 percent of the projects (195 in absolute value) have budgets of FCFA 0.5 millions or less, they account for only 10 percent of the budget ### Pillar III — Implementing: objectives and institutional assessment - Purpose: Ensure that public investment delivers productive, sustainable assets by verifying that players: - (i) have an investment protection mechanism; - (ii) ensure that the funds are available; - (iii) ensure transparency in project execution; - (iv) manage implementation of projects; and - (v) monitor public assets. - Overall: The quality of the institutional framework for investment execution is fairly high, albeit with some weaknesses in asset accounting. Management of project execution is generally effective, and execution of the capital expenditure budget is generally satisfactory. The administration must implement a more effective accounting and monitoring system. Reforms to implement accrual-basis accounting in line with the WAEMU directives will help offset these weaknesses. - Summary assessment (stage/institution — institutional strength / effectiveness / priority of the reforms) — key items preserved: - Protection of investments - Institutional strength: High. Investments are protected under the institutional framework and the budget documentation incorporates total project costs. - Effectiveness: Moderate. While effectiveness will only be perceptible with the full implementation of information systems, recent practices permit this protection. - Priority: * - Availability of financing - Institutional strength: Moderate. The regulatory framework provides for different programming and management tools but allows the option of external financing with commercial banks. - Effectiveness: Moderate. Although funds are disbursed in a timely manner, this availability is undermined by the absence of commitment plans and external financing outside of the treasury single account. - Priority: ** - Transparency in execution - Institutional strength: High. The institutional framework provides for open, transparent public procurement, physical and financial monitoring of projects, as well as ex post external audits. - Effectiveness: Moderate. In fact, the absence of traceability in procedures and coordination between the players can adversely affect transparency. - Priority: * - Management of implementation - Institutional strength: Moderate. While rules apply to project management and assessment, such rules do not reflect improvements made to projects during the process of execution. - Effectiveness: Moderate. Effective management is complicated by weaknesses in the information system and assessments are still insufficiently focused on the expected results. - Priority: ** - Asset accounting - Institutional strength: Low. The institutional framework for stock and accrual basis accounting requires more detailed, operational regulation. - Effectiveness: Low. The inventory of public assets is conducted on a partial basis, the information is not included on the balance sheets, and there is no amortization/depreciation. - Priority: *** ### Protection of investments — findings and reforms - Legal and budgetary provisions: - The Law on Budget Laws (LLF) prescribes budgeting of public investment funds under commitment authorizations at the beginning of the project and under payment allocations adjusted and budgeted on an annual basis. - Information on the total cost of the projects is presented in the budget documentation submitted to Parliament. - Credit transfers from capital to current expenditure items are exceptional and subject to authorization by decree of the Council of Ministers. - Last, unused funds may be carried forward on an unlimited basis, provided that the resources are still available to finance them. - Recent practices: - In 2017, project financing was allocated on an annual and three-year basis. - Two important mechanisms implemented: (i) protecting investment funds from in-year reallocation; and (ii) allowing carry-forward of investment funds left over at the end of the fiscal year. - Effectiveness will be stronger with full implementation and upgrade of information systems (PRED, AICE, and SIGIP integrations noted). ### Availability of financing — findings and risks - Regulatory framework and arrangements: - Procurement plans (PPM) are mandatory. - Commitment plans and cash plans are prescribed under the decree establishing the general regulation on public accounting (RGCP) deriving from the transposition of the WAEMU directive. - Compliant with RGCP all public funds, including external financing, should be deposited into a single treasury account (CUT) at the Central Bank of West African States (BCEAO). - RGCP derogatory options include: - (i) donors’ financing set up through financing agreements: funds should be deposited on Mali’s national territory at the BCEAO or at a commercial banks; - (ii) other financing to be used on Mali’s national territory: funds can be deposited at commercial banks; - (iii) financing used abroad: funds can be deposited at foreign financial institutions agreed by the minister of finance. - Implementation weaknesses and implications: - The absence of external financing and commitment plans outside of the CUT impedes availability of funds. - SIGMAP (integrated public procurement management system) usage is compromised by technical problems and incomplete user access, undermining comprehensiveness and quality of information. - Commitment plans have not been implemented yet, leading to incoherence in upstream programming and management tools and undermining reliability of the cash plan. - Efforts to extend CUT coverage to external financing should be pursued. - Payment arrears: - Mali has not accumulated payment arrears on capital expenditure over the past two fiscal years. In 2015 and 2016, funds in connection with projects were disbursed in a timely manner, i.e., 90 days after they were recorded in the accounting system. - Box 2 definition (verbatim): - « residual balances payable will be comprised of any validated payments that have not been settled. They include funds in transit and payment arrears. Funds in transit are comprised of all payments validated and not settled that are less than three months old. Payment arrears are comprised of all payments validated and not settled that are more than three months old. ». - Recommendation (prescribed action in text): - Update, reconcile and share data tracked through sectoral public procurement plans (PPMS), consolidated public procurement plans (PPMCs), sectoral commitment plans (PES) and consolidated commitment plans (PECs), and cash plans to avoid delays or disruption in project execution and accumulation of payment arrears. ### Transparency in execution — findings and recommendations - Institutional provisions: - The institutional framework provides for openness and transparency in public procurement operations, physical and financial monitoring of projects, and ex post external audits. - Mali's regulatory texts and donor procedures require that major investment projects be subject to physical and financial monitoring during implementation and to an ex post audit. - Control bodies with legal competence: ARMDSP, Accounting Section of the Supreme Court, and the Auditor General. - Weaknesses: - Lack of traceability in public procurement procedures. - Poor coordination between multiple players and poorly interconnected information systems can adversely affect transparency. - Recommendations: - Encourage better information sharing and strengthen coordination, with the Ministry of Finance systematically coordinating with sector ministries. - Improve coordination between control bodies to increase audit effectiveness. - Publish outcomes from audits and hold incriminated managers accountable and sanctioned when necessary. - Box 3 (players involved in execution processes) — verbatim list of players involved: - The finance and materials directorates (DFM), strategic planning units (CPS), and project management units in the sector ministries, for physical and financial monitoring; - The DNCF, for preliminary financial supervision on commitments and when the services are provided; - The Directorate General of Public Procurement and Public Service Delegation and the Regulatory Authority for Public Procurement and Public Service Delegation in the area of public procurement supervision; - The DGB for budget supervision; - The DNTCP for accounting and financial monitoring; - The external auditors assigned by the government or donors, for externally financed projects, in connection with ex post external audits; - The DNPD for tools in connection with monitoring and assessment, and the consolidation of information; - The various ministerial inspection bodies; - The Accounting Section of the Supreme Court and the Auditor General of Mali; - And last, Parliament. ### Management of project implementation — findings and gaps - Institutional framework: - Rules apply to project management and assessment; ex post reviews are required and a project management team led by a project coordinator should be appointed for project implementation. - The institutional framework does not mention specific rules for adjustment or redevelopment of projects during execution, except for amendments to public procurement contracts. - Information systems and monitoring: - Management is complicated by insufficient information systems: Mali lacks a system to monitor large projects from planning to the end result and to consolidate information. - The DNPD plans to roll out an upgrade of its SIGIP integrated public investment management system in ministries’ planning units (CPS). - Assessments and results focus: - Assessments are still insufficiently focused on expected results. - Reviews or reassessments of justification, costs, or expected results of amended projects are not required. - Few reviews of completed projects exist; those conducted focus more on outputs than on projects’ outcomes. ### Monitoring of public assets — findings and reform needs - Regulations and accounting transition: - Regulations on asset management are insufficiently detailed and operational. - A more detailed, operational regulatory framework is necessary for the gradual implementation until 2019 of accrual accounting. - The Directorate General of Government Asset Management (DGABE) has drafted and is updating relevant regulations. - The DNTCP is continuing efforts to draft a compendium of government accounting standards, including standards on assets, to be documented through technical specifications for full operational implementation. - Current shortcomings (verbatim descriptions preserved): - The inventory of public assets is partial, no information is incorporated into the balance sheets, and there is no amortization/depreciation. - Different units maintain nonfinancial assets lists whose comprehensiveness and timeliness are dubious. - Stock taking does not involve a valuation of assets surveyed, in the absence of any defined valuation methods. - Central government balance sheets do not include information on nonfinancial assets: the accounting assessment mechanism designed to reclassify budget operations under fixed assets has not been implemented yet. - Depreciation of tangible assets, although provided in the government chart of accounts, has yet to be recorded in the operating accounts. - Although implementation of asset monitoring is planned for 2019, the preparatory works should now be carried out so that this extensive effort can be completed. - Pillar III key departures from best practices (verbatim table entries): - Institution 12: No commitment plan, insufficient correlation between financial programming instruments. Importance: Moderate - Institution 14: No information system accessible to all participants to permit physical and financial monitoring of projects. Importance: Moderate - Institution 14: There is still further scope for development in the approach of assessing expected project results. Importance: High - Institution 15: Implementation of accrual accounting has not been completed. Importance: High ### Cross-cutting issues and capacities - Focus: Capacities (human and information technology), regulatory frameworks (management and public procurement), and infrastructure recurring costs (maintenance and upkeep) are critical for robust public investment management across all phases and institutions. *Source: cr18114 - 60. Last, there are no assessments on projects’ readiness or feasibility. The selection* ### 79. The human and technical capacities of Mali's government are satisfactory and are ### cr18114 - 79. The human and technical capacities of Mali's government are satisfactory and are ### Human and technical capacities; accounting and budget systems - Finding: "The human and technical capacities of Mali's government are satisfactory and are improving." - Accounting and budget systems have developed to reflect changes in practices and in the regulatory framework. - Gap: Systems would benefit from slightly better integration and ongoing supervision of projects from selection to completion. - Recommendation: Staff training to accompany these changes is recommended. - Reference: See Title V of Decree 2014-0774/PR-M of October 14, 2014 on the Government Chart of Accounts. ### Institutional framework for public procurement - Finding: Quality of institutional framework is high and its effectiveness is improving. - The public procurement code (provisions of the law and regulatory texts) has developed effectively to reflect requirements. - Scope for progress: transparency and contracting periods could be improved. ### Maintenance costs and infrastructure sustainability - Weakness: Confirmation and budgeting of infrastructure maintenance costs is a weakness that should be corrected. - Finding: Maintenance costs are generally not effectively assessed or reflected in the budget. - Consequence: This recurring weakness may explain constant attrition in Mali's stock of infrastructures (see Section 1, Paragraph 11, Figure 7). ### Summary assessment (cross-cutting issues and capacities) - Cross-cutting issues: "Moderate. The regulatory framework, which is being updated, incorporates public investment requirements. There is a need for staff capacity and information technology strengthening." - Project monitoring: "Moderate. Lack of tools and exchanges of information deny a comprehensive monitoring of projects from planning to execution. Training plans should improve." - Public procurement: "High. According to the legal framework, the procurement process should be open and transparent... Moderate. Public procurement arrangements could be more transparent, open, and effective; timing delays may adversely affect transparency and efficacy." - Maintenance: "Moderate. Certain ministries have rules and methodologies to assess major projects’ recurring costs... Low. Maintenance costs, when assessed, are not systematically or comprehensively included in the budget." ### Integration of the information system - Principle: An information system enables effective management of public investments when adapted, accessible, and used by trained personnel. - Finding: Mali information systems for public investments are not unified and process partial information. - Process described: - Project data collected in hard-copy form, submitted to ministries for selection into three-year investment plan. - Data entered into the DNPD's SIGIP but not comprehensive and not transmitted to other units (DGB, DNTCP, DGMP). - No overview from ex-ante assessment to maintenance-costs monitoring; computer applications lack automated exchange capability. - Modernization: System is being modernized under an information technology master plan (SDI). - Requirement: Need for a central cross-steering mechanism separate from individual system modernization steering mechanisms. - Responsibility: DNPD must complete the monitoring and assessment module for its application and ensure developments in other applications are monitored. ### Legislative and regulatory framework - Status: Regulatory framework is consistent and updated but implementation is limited in certain phases of public investment management. - Included Laws and subregulations (listed verbatim): - 2013-028 of July 11, 2013 Transposing Directive 06/2009/CM/UEMOA - 2013-031 of July 23, 2013 Transposing Directive 1/2009/CM/UEMOA Establishing the Code of Transparency in Financial Management, - Decree 2014-0694/P-RM of September 12, 2014 on Budget Nomenclature, - Decision 007/MPP-SG of March 27, 2014 Establishing the Selection Committee for Public Investment Programs, - Decree 08-485/P-RM of August 11, 2008 Establishing the Public Procurement Code in the Republic of Mali, - Manual of Public Procurement Contracting Procedures for Local Governments established under Interministerial Decree 10-0203/MEF/MATCL-SG. - Note: Some aspects of this framework have only been partially implemented. ### 2018 Budget Law provisions - Finding: Upcoming provisions under the 2018 Budget Law would lead to durable improvements. - Planned reforms for 2018 include: - multiyear management through commitment authorizations and payment allocations, - new rules for fund reallocations, - the program budget. - Expected outcome: Effective implementation should improve capital expenditure management and transparency via issuance of annual performance report and projects, and multiyear projections. ### Human resource capacities - Finding: Capacities of teams responsible for public investments are moderate and can be undermined by excessive turnover. - Training: Ministries' training plans exist but progress is undermined by turnover; DNPD provides training for newly hired staff but strategic planning unit staff do not always receive it. - Expertise shortages in areas including: - risk analysis in ex-ante assessment of projects, - recurring cost assessments, - PPPs. - Need: Additional efforts for training to support reforms (multiyear management, program budget, accrual accounting for assets, management of recurring costs). - Status: No cross-cutting training plans established to date. ### Procurement contracting: practice and performance - Legal framework: Promotes open, transparent procedures and rigorous monitoring of contracts; public requests for tenders are default mechanism, supplemented by restricted invitations and direct contracting. - Principles: free access, transparency, economy, efficacy, equitable treatment; physical and financial control during implementation; a posteriori supervision by regulatory body. - Trends (Figure 22 summary): Between 2013 and 2016, more than 90 percent of contracts were executed through public requests for tenders and this proportion is increasing. - Transparency measures: Publication of requests for tenders in newspapers and on DGMP and ARMDS websites; DGMP database operational since January 1, 2017. - Remaining gaps: - Recent database system: access, regularity, periodicity of production, and sharing of reports need improvement. - Physical and financial supervision processes need improvement; some contracts (e.g., with delegated developers—MDODs) fall outside DGMP supervision. - Public contracting delays generally exceed regulatory periods, particularly for contract signing stages (note 16: contract signing stages can require more than three months in certain cases). ### Public procurement contracting periods (Table 9) - Regulatory periods (in number of days) and averages: - Document processing period (DAO) Regulatory period: 12 Average period in 2015: 13 Average period in 2016: 19 - Average period for publication of requests for tenders Regulatory period: 37 Average period in 2015: 30 Average period in 2016: 30 - Average period between the opening of bids and forwarding of the assessment reports to the supervisory body Regulatory period: 10 Average period in 2015: 9 Average period in 2016: 21 - Processing of assessment reports Regulatory period: 11 Average period in 2015: 5 Average period in 2016: 7 - Processing of draft contracts Regulatory period: 10 Average period in 2015: - Average time between signing by the successful bidder and approval of the contract Regulatory period: 6 Average period in 2015: 30 Average period in 2016: 25 - Average general periods Regulatory period: 86 Average period in 2015: 87 Average period in 2016: 102 - Source: DGMP, 2017. ### Recurring maintenance and upkeep costs - Finding: Calculation of recurring costs is rudimentary and even nonexistent in some sectors. - Requirement: Recurring maintenance and upkeep costs must be calculated and identified for each year in the project document, particularly for projects exceeding CFAF 1 billion. - Methodologies: Some sectors have standard-cost methodologies (education, health, road maintenance fund), but they are not harmonized or consolidated. - Budget practice: Funds allocated to recurring costs are insufficient and not specifically related to investment projects, creating a disconnect between planning and budgeting of recurring maintenance costs. - Result: Insufficient maintenance quality undermines preservation of investments; amortization/depreciation expenditure is not identified in the government's financial statements. - Figure 23: Shows upward trend in maintenance funds in budget laws without specifically leading to improved preservation of infrastructures. - Pillar III key departures from best practices (verbatim list): - Institution 16: "No integrated system accessible to stakeholders so that projects can be managed throughout their cycle." Importance: High - Institution 16: "The strategic planning units can lack competence and training, and turnover levels are high." Importance: Moderate - Institution 17: "Some bottlenecks are still present in procurement contracting, despite serious improvements." Importance: Low - Institution 18: "Disparate methodologies and insufficient budget coverage for recurring costs." Importance: High - Institution 18: "Maintenance expenditure is insufficient." Importance: High ### Key quantitative efficiency finding - Only 57 percent of Mali’s investment spending materializes in fixed capital, compared to an average 73 percent in other countries throughout the world. ### Action plan structure and strategic approaches - Objective: Optimize the management framework by establishing a results-based administrative culture. - Three operational approaches: 1. Optimize existing resources. 2. Mobilize resources and devote them to investment (Increase gross fixed capital formation). 3. Improve the sustainability of the stock of infrastructures (Maintain fixed capital stock). - Cross-cutting approach (4): Establish a results-based culture of integrity through an enhanced professional standard of management to support the three approaches. ### Selected recommendations and activities (cross-cutting and Area 1 highlights) - Cross-cutting: Strengthen governance for public investment management - Use the program budget reform to develop accountability and performance of managers; develop performance contracts for project heads and structures. Players: MEF, Support Unit for Fiscal Reform (CARFIP), all services. Technical assistance: All. - Develop capacities through induction and ongoing training on risk analysis, financial analysis, and monitoring of physical project execution. Players: DNPD DGB CPS. Technical assistance: All. - Hold quarterly inter-ministerial strategic planning unit meetings to exchange good practices. Player: DNPD. Technical assistance: All. - Share a common view of each investment project by adapting information systems and interfaces across MEF directorates (particularly DNPD). Players: DNPD DGB DGMP DNTCP IT Support Unit for the Tax and Financial Departments (CAISFF). Technical assistance: All. - Civil society and local government involvement to improve maintenance and receiving of new infrastructures: - Hold an annual regional meeting for CROCSAD, CLOCSAD, and CCOSAD coordinated by governors and DNPD on infrastructure maintenance and capital budget execution. Players: CROCSAD CLOCSAD CCOSAD. Relevant institutions: 3, 8, 18. - Establish periodic meetings between infrastructure management units and civil society committees (e.g., parents' associations) for infrastructure management. Players: DGABE Civil society. Relevant institutions: 8, 18. - Include civil society representatives when infrastructures are accepted. Players: Sector ministries DGABE Civil society. Relevant institutions: 8, 18. - Anticorruption and governance improvements: - Adopt the order appointing authorities responsible for approving and signing public procurement arrangements. Players: DGMP ARMDS MEF. Relevant institutions: 13, 17. - Ensure all officers submit statements of net worth and make OCLEI operational. Player: OCLEI. Relevant institutions: All. - Establish the Anticorruption Observatory to strengthen citizens' oversight. Player: Ministry of Justice. Relevant institutions: All. - Publish judgments of commercial courts and other courts on governance topics. Player: Ministry of Justice. - Area 1: Improve the socioeconomic impact of investment; strengthen selection process: - Update programming and monitoring and assessment manuals for projects, project specifications, and definition of the reference framework for projects (activity partially completed: a draft reference framework is available). Player: DNPD. Relevant institution: 10. - Add selection criteria and apply them to projects being executed and those in final stages. Player: DNPD; Selection Committee. Relevant institution: 10. - Systematically conduct an initial arbitrage in sector ministries and bundle low-cost projects before forwarding proposals to DNPD. Players: Ministries, CPS, DNPD. Relevant institution: 10. - Publish criteria adopted for selection of projects on the MEF website. Player: DNPD; MEF. Relevant institution: 10. *Italic source: IMF, cr18114 (PDF chapter/section).* ### 5. Clean up the three-year investment plan ### 5. Clean up the three-year investment plan ### Review and rationalize the three-year investment plan - Activity: Review the three-year investment plan project database to reflect the duration of the projects involved and the amount allocated to each project (to avoid spreading funds too thinly). - Players / Institutions / Tech. assist.: DNPD 10 ### General review and consolidation of old projects - Activities: - Conduct a general review of old projects to identify those to be discontinued and budget those to be maintained in the portfolio as a priority. - Combine projects with small residual amounts to optimize their operating costs. - Terminate inactive projects that do not generate fixed capital. - Players / Institutions / Tech. assist.: DGB; Selection Committee; DGB 8 ### Standardize project adjustment rules and procedures - Activity: Adopt and apply standardized rules and procedures for the adjustment of projects to reflect the justification, costs, and expected results of a given project. - Players / Institutions / Tech. assist.: DNPD 14 X; DNPD 9 ### Recommendations / Treatment timeline (as presented) - Heading shown in source: "Recommendations Activities Urgent 17 18 19 Subsequent treatment Players Institutions Tech. assist." - (Actions above map to that framework in the source) --- ### 6. Strengthen ex ante/ex post assessments - Training and preparation - Activity: Organize training/coaching sessions before issuing project specifications (consistently with the annual budget schedule). - Players / Institutions / Tech. assist.: Selection Committee - Replenish funds for project studies and ex ante/ex post assessments - Activity: Replenish funds for project studies and preparation to expand their scope of use, particularly for systematic ex ante/ex post assessments of major projects, and clearly specify the conditions for eligibility. - Players / Institutions / Tech. assist.: DNPD 9 and 14; Selection Committee - Define thresholds and adopt cost-benefit framework - Activity: Define the thresholds making it possible to identify investments of major importance and adopt a standard cost-benefit analysis framework for these projects, including a risk analysis. - Players / Institutions / Tech. assist.: DNPD 9; CPS; Ministries - Generalize ex post reviews and publish assessments - Activity: Generalize ex post reviews and assessments of completed projects focusing on their efficiency and socioeconomic impact, and publish the assessment reports. - Players / Institutions / Tech. assist.: External auditors 14; Accounting section; Auditor General - Annual annex on investment performance - Activity: Submit an annual annex as provided under the LOLF describing central and local investment operations in connection with the budget discussions. This presentation will highlight the performance of investment from the previous year, its socioeconomic impact, and the status of major projects. - Players / Institutions / Tech. assist.: DNPD, DGB, DNTCP, ANICT 13, 14 --- ### AREA 2: Consolidate the investment effort — Selected measures - Improve composition of the capital budget - Activity: Reduce the share of operating expenditure and wages in projects by introducing an efficiency criterion targeting a ratio of 85 percent capital expenditure per project. Incorporate projects having a substantial impact on fixed capital formation into the budget. - Players / Institutions / Tech. assist.: DGB DNPD CPS 8 - Activity: Align the functional classification with international standards to facilitate socioeconomic impact analyses. - Players / Institutions / Tech. assist.: DGB DNPD CPS 8 - Increase investments financed with domestic resources - Activity: Increase mobilization of revenue through more efficient fiscal controls and an expanded tax assessment base. - Players / Institutions / Tech. assist.: DGI DGD 1 - Activity: Increase the resources of the local governments by transferring 30 percent of the budget revenue to the local governments. - Players / Institutions / Tech. assist.: DGB ANICT 3 - Manage PPP and private-sector risk - Activity: Publish an implementing decree for the Law on PPPs establishing (i) the principle of a legal ceiling on commitments or guarantees; and (ii) organizing coordination of financial surveillance. - Players / Institutions / Tech. assist.: Public-Private Partnership Unit DGB 4 - Activity: In connection with the organizational reform of the DGB, identify and specialize staff responsible for financial surveillance of PPPs and public enterprises. - Players / Institutions / Tech. assist.: DGB 4, 5 - Activity: Publish an inter-ministerial order establishing the procedure for reporting financial information to the DGB by the DGABE, the DGDP, oversight ministries, and public enterprises. - Players / Institutions / Tech. assist.: Public-Private Partnership Unit DGB DGABE DGDP Sector ministries Public enterprises 4, 5 - Activity: Develop financial analysis capacities for PPPs and financial statements of public enterprises. - Players / Institutions / Tech. assist.: DGB 4, 6 X - Activity: Publish as an annex to the Budget Law a consolidated report on any liabilities in connection with PPPs and the financial performance of public enterprises. - Players / Institutions / Tech. assist.: DGB 4, 6 - Ensure timely availability of funds - Activity: Strengthen the quality and comprehensiveness of information provided upstream in procurement contracting plans by extending the coverage and functionalities of SIGMAP. - Players / Institutions / Tech. assist.: DGMP-DSP Sector ministries DNCF 12 - Activity: Develop commitment plans for sector and consolidated expenditure, particularly by incorporating data from the procurement contracting plans. - Players / Institutions / Tech. assist.: Sector ministries DNCF DGB 12 X - Activity: Continue the effort to make the cash flow plan more reliable by gradually reducing discrepancies between revenue projections and outturn. - Players / Institutions / Tech. assist.: DNTCP DGI DGD DGABE 12 X - Activity: Link the commitment plans to the cash flow plan, and on this basis, regulate commitments upstream. - Players / Institutions / Tech. assist.: DGMP DGB DNTCP 12 X - Activity: Strengthen the CUT by gradually incorporating external financing into the account. - Players / Institutions / Tech. assist.: DNTCP TFP 12 --- ### AREA 3: Maintain infrastructures in the long term — Selected measures - Expand accounting and financial information on public assets - Activity: Strengthen and implement the documentation on monitoring, assessment, and amortization/depreciation of non-financial assets. - Players / Institutions / Tech. assist.: DGABE DNTCP 15 X - Activity: Continue to conduct inventories and asses them for the future opening balance sheet. - Players / Institutions / Tech. assist.: DGABE Sector ministries DNCF 15 X - Activity: Strengthen the linkages between materials accounting and general government accounting, including through their respective information systems. - Players / Institutions / Tech. assist.: DGABE DNTCP CAISFF 15 X - Ensure maintenance costs are covered - Activity: Establish a precise definition of maintenance and upkeep costs. - Players / Institutions / Tech. assist.: DNPD DGB 8, 18 - Activity: Systematically include estimates of future operating and maintenance costs for investment projects in the project specifications or documentation. - Players / Institutions / Tech. assist.: DNPD 8, 18 - Activity: Establish one or more sectoral methodological guides for the calculation of operating and maintenance costs with a list of standard cost/benefit s. - Players / Institutions / Tech. assist.: DNPD CPS 8, 18 X - Governance for maintenance works - Activity: Identify the focal points in certain key ministries to plan and manage maintenance and upkeep expenditure, coordinated by the DGABE. - Players / Institutions / Tech. assist.: DGABE Sector ministries 8, 18 X - Activity: Establish a participative annual and multiyear sectoral planning process to prioritize maintenance and upkeep activities. - Players / Institutions / Tech. assist.: Sector ministries DGABE 8, 18 X - Activity: Establish a periodic monitoring process for maintenance and upkeep expenditure, in collaboration with the DGABE. - Players / Institutions / Tech. assist.: Sector ministries DGABE 8, 18 --- *cr18114 - 5. Clean up the three-year investment plan* --- _Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18114.pdf_