## 1ugaea2019003 ## Source details **Canonical URL:** [1ugaea2019003](https://www.imf.org/-/media/files/publications/cr/2019/1ugaea2019003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2019/1ugaea2019003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2019/1ugaea2019003.pdf.json) --- ### Mission, scope, and participants - Capacity development mission from the IMF’s Fiscal Affairs Department (FAD) visited Kampala during April 29 to May 13, 2019. - Team led by Christiane Roehler and comprised Arturo Navarro (both FAD staff), Eduardo Aldunate, Margarita Rosas and Matthew Simmonds (all FAD experts). - Purpose: deepen advice on public investment management. - Meetings with MoFPED and other officials included: Kenneth Mugambe, Dr Joseph Muvawala, Maris Wanyera, James Wokadala, Jim Mugunga, G.A. Dhatemwa, Fred Twesiime, Robert Okudi, senior officials from MoFPED, Prime Minister’s Office, President’s Office, Ministries of Works and Transport, Energy and Minerals Development, Water and Environment, National Planning Authority, Uganda National Roads Authority; representatives from the World Bank, European Commission, and Kreditanstalt für Wiederaufbau (KfW). - Workshops (May 7–8, 2019): interactive sessions with PAP, the PPP unit, MoFPED, Office of the President, Ministry of Health, Ministry of Water and Environment, NPA and other MDAs; total: 50 officials attended at least one workshop session. Topics included moving from the PIP stock-take to regular management of PIP information, the Multi-Annual Commitment Statement, PPP Project finances, and strategic management of the PIP pipeline and portfolio. ### Executive summary — key findings and numerical facts - Progress since 2015: - Strengthened public investment management (PIM) with first results. - Appraisal stage: well-articulated four-stage appraisal process in place and broadly enforced, controlled by the Development Committee (DC). - Stock-take completed, producing a comprehensive database of investment projects. - Size and composition of public investments: - Authorities estimate public investments at UGX 87 trillion (87 percent of GDP) from the stock-take. - Stock-take identified 94 new initiatives worth around 40 percent of GDP. - New information was used in the FY19/20 budget process, including cancelling and requesting reassessment of existing projects. - Core reform themes: - Transition the stock-take to an annual “flow-take” and strengthen practices for project prioritization and budgeting. - Implement the Integrated Bank of Projects (IBP) database to support improved processes. - Further strengthen institutional and legal framework. - Need to institutionalize improvements and strengthen implementation; emphasis on annual updates, Multi-year Commitment Statement (MYCS) integration, and clarifying lead teams for integration across planning, implementation tracking, reporting and budgeting. ### From the stock-take to the flow-take — key findings and operational recommendations - Rationale and design elements: - Stock-take is a one-off exercise; data will quickly become outdated unless updated through systematic annual updates at the start of the budgeting process (planned by PAP). - For ongoing projects: include actuals for previous budget year, approved budgets, and updated cash flow forecasts. - For extending/reappraising projects: require a well-justified cash flow update approved by the DC. - Exiting projects: update one more time to incorporate final-year actuals; retain in main database or archive with easy access. - New projects receiving budget allocations: include estimated cash flows even if DC approval is pending; require a fast-track project recognition process with the DC before inclusion in the PIP; noncompliance could be enforced by freezing the budget allocation. - Red-flagging criteria for exit or review: - Project slated to end in the upcoming fiscal year. - Significant changes in total cost. - Severe delays in implementation. - Concerns about project effectiveness to accomplish its mission. - Misalignment and risks: - MDAs planned to execute resources beyond annual ceilings in FY17/18 and FY18/19; FY18/19 and FY19/20 budgets have project resources beyond ceilings. - Forward estimates appear too low and project end-dates in some cases unrealistic. - Absence of a rigorous process to reconcile approved projects and budgeted resources weakens implementation and risks deficit bias and under-delivery of projects. - Archiving and reporting: - Finalize and publish the draft stock-take report. - Archive the stock-take database as a baseline starting in FY17/18 and include projects that exited in FY18/19 and FY19/20. - Consider publishing the existing Excel-database on the MoFPED website and storing project templates for each project. ### Multi-Year Commitment Statement (MYCS) — findings and suggested improvements - MYCS role and current status: - MYCS provides a high-level overview of multi-annual commitments; introduction of project-specific data from the stock-take improved accuracy. - Annex tables are more detailed and informative than previous reports. - Suggested enhancements: - Consolidate total commitments per sector by value or function. - Provide details and analysis of how costs, cash-flow or implementation of commitments evolved over the past year and their impact on the budget. - Treat the MYCS as an analytical product of project oversight and budget development roles of MoFPED, aligning service delivery commitments with financing and funding. - Clarify MYCS coverage vis-à-vis the PFM Act and limit MYCS to projects in the development budget or PIP as resolved by authorities. - Types of multi-annual commitments to define and report (in order of increasing certainty the obligation to pay will arise): - Remaining total project costs during the investment phase. - Signed contracts. - Certificates of work not yet paid (accounts payable even if not yet registered with the Accountant General). - Updated estimated operating and maintenance costs. - Presentation and publication: - MYCS should be presented as part of formal budget documentation and tabled in Parliament, published online with other budget documentation. - Analytical tables and charts suggested to comply with Section 23 of the PFM Act and improve transparency and decision-making. ### Implementing the Integrated Bank of Projects (IBP) — status, phases, and design considerations - IBP objectives: - Centralized repository to share common project information across stakeholders, improve availability and reliability, support appraisal gatekeeping, record financial and tracking information, and support M&E. - Phase I: - Records appraisal-stage information and provides workflow support; almost complete and expected to go live soon; aligned with DC guidelines. - Current IBP Phase I populated with new projects only; migration of ongoing projects requires clear practices and explicit migration plans. - Phase II: - Will record key information for implementation and ex-post M&E; design to start in the next few months and should be subdivided into stages. - Phase II priority linkages: IFMIS and PBS. - Phase II should operationalize annual project review and red-flagging and include safeguards to prevent unapproved modification of project purpose and key characteristics. - Data migration and prioritization: - Stock-take database requires restructuring (project log frames incomplete for many ongoing projects; at least one component of the log frame is incorrectly defined in half the PIP projects). - Line item costing needs migration to performance-based costing required by IBP; migration not worthwhile for projects ending soon. - Migration prioritization should concentrate on high priority projects: 90 projects subject to specific monitoring by OPM; 65 largest projects representing 80 percent of the budget per March 2019 MYCS; other candidate groups include projects executed by more than one vote (8 projects), projects entered before FY17/18 (279 projects), projects with cash flow estimates beyond FY20/21 excluding new FY19/20 projects (163 projects), and projects with external funding (143). - Sectoral migration plans and three-year transition plans proposed for ongoing projects. - Scope, typology and coding: - Decide whether IBP/PIP covers only capital investments or also social and development projects; clarify hierarchical structures (projects, subprojects, programs). - Adopt project typology to distinguish capital-intensive initiatives, productive/social programs, retooling programs, and appraisal studies. - Project coding must be project-specific and immutable through lifecycle to preserve history and enable cross-system tracking; current code: sequential number – sector code – vote formulator code (risks with government restructuring). - Register coverage and limits: - IBP designed to keep track of initiatives presented to the DC independently of approval status; projects not formally presented to PAP/DC (e.g., some PPPs, politically sponsored projects) may not be captured. - Define rules for inclusion for projects not presented to the DC (e.g., serious PPP proposals, high likelihood of future budget needs, initiatives substituting GoU expenditure). - Distinguish “public awareness” entries from projects complying with DC guidelines; flag ineligible projects. ### Institutional and legal framework — findings and recommended reforms - Current legal architecture and gaps: - Reforms since about 2014 produced DC Guidelines and the PPP Act; MoFPED developed a 1 page PIM framework and adopted a PIM Action Plan. - The PFM Act provides limited public investment regulation (public investment mentioned only in articles 8 and 13; articles 19 and 22 refer to guarantees and multi-annual commitments but do not provide comprehensive PIM provisions). - PPP Act (2015) provides detailed legal framework for PPPs, complemented by PPP Regulations (most recent dated April 12, 2019). - Public Procurement and Disposal of Public Assets Act lacks requirement to reappraise when procurement bids exceed feasibility-stage estimates. - PIM practices rely on DC Guidelines not backed by higher-level legislation; lack of formal legal basis risks dismantlement when office holders change. - Options for legal support (Box 6.2): 1. Specific PIM Law (strongest). 2. PIM provisions in the PFM Law/Act. 3. PIM based on institutional roles (weakest). - Role and constraints of the Development Committee (DC): - DC is key gatekeeper but overloaded, with limited authority beyond PS/ST support; members have limited time; DC Subcommittee lacks clear roles; DC lacks ex-post authority to require reappraisal when projects deviate. - Harmonization of TPI and PPP processes: - Recommend unified initial appraisal process up to pre-feasibility for TPIs and PPPs to create a common pipeline and permit prefeasibility to inform choice of implementation modality. - PPP guidelines and tools (e.g., Project Screening Tool, PCN requirements) are more advanced and can inform DC Guidelines. - PIM policy and institutionalization: - Develop a Public Investment Management Policy to create stakeholder buy-in and guide legal framework updates. - Formalize the DC as a high-level committee and clearly define and formalize the DC Subcommittee. - Strengthen appraisal stage by creating a single approval process up to pre-feasibility for all initiatives. - Extend DC gatekeeping beyond appraisal by giving authority to review projects deviating from plans during early execution. ### Summary of prioritized recommendations (Table 0.1 Actions 1–11) - From the Stock-Take to the Flow-Take: Improving Project Prioritization and Budgeting 1. Based on the experiences of the stock-take exercise, define a minimum set of basic public investment project information that should inform public investment management going forward. - Responsible: PAP with broad input - Timeline: November 2019 2. Develop regular processes and procedures for updating project information and use it to support prioritization and budgeting of public investment projects. - Responsible: PAP supported by BPED, ISSD, PAD & LMs - Timeline: August – November 2019 3. Improve the use of medium-term fiscal envelope forecasts to achieve better project prioritization and budgeting, by drawing on the DC gatekeeper function and assigning the responsibility within MoFPED to bring together information from planning and budgeting. - Responsible: BPED supported by PAP and Macro - Timeline: Instructions: August 2019 4. Distinguish between the approval of a project’s feasibility studies from an approval for a project to receive budget funding and enter into multi-year commitments. - Responsible: PAP with BPED and Macro - Timeline: November 2019 5. Improve information on multi-year commitments for public investment projects to support project prioritization within the medium-term resource envelope. - Responsible: PAP, BPED, Accountant General - Timeline: March 2020 - Implementing the IBP 6. Develop a vision and design of the IBP for it to support all stages of the project cycle: planning, allocation, implementation and M&E. - Responsible: PAP with Government IT Agency - Timeline: June 2020 7. Increase public investment information quality and accessibility by accelerating the transition of projects into IBP Phase I, with explicit and prioritized migration plans. - Responsible: PAP and Line Ministries - Timeline: June 2022 8. Decide on specific PIM definitions and procedures required for the further implementation of the IBP. - Responsible: PAP, BPED - Timeline: June 2020 - Strengthening the Institutional and Legal Framework 9. Develop a PIM policy and guidance for amending the legal framework to ensure stakeholder buy-in and limit the risk that new procedures are dismantled. - Responsible: PAP - Timeline: June 2020 10. Strengthen the appraisal stage by creating a single approval process up to pre-feasibility studies for all public investment initiatives. - Responsible: PAP - Timeline: December 2020 11. Extend the gatekeeping role of the DC beyond the appraisal stage by giving it the authority to review projects that have deviated from plans during the early stages of execution. - Responsible: PAP, PPP unit - Timeline: November 2019 ### Status of prior technical assistance and action plan progress (Annex I highlights) - Background: - Diagnostic study: “Strengthening Public Investment Management in Uganda: A Diagnostic Study”; Projects and Public-Private Partnerships Department, MoFPED, August 2016. - IMF CD support: HQ-led missions March 2017 and March 2018; expert visits July 2017 and November 2018. - Selected progress updates from March 2017 and March 2018 recommendations: - Stock-take and data validation: Achieved. - DC operating as gatekeeper and appraisal manual published: Partly Achieved (link with MTEF not yet strengthened). - IBP Phase I commissioned; Phase II design TBD. - PIP clean-up undertaken: Done; 45 projects exited (UGX 810 billion), 83 projects requested to reapply (UGX 1,585 billion), 1 transferred to recurrent, 216 ongoing and on track, 86 extended or re-admitted. - Multi-annual Commitments Statement submitted March 2019; cash-flow forecasts remain weak. - Annual project review process initiated for Aug – Nov 2019. ### Project typology, lifecycle and IT integration - Proposed typology (as used in analysis): - Capital Intensive Initiatives: Investment Projects, Investment Programs, Retooling Programs. - Economic and Social Development: Productive Programs, Social Programs. - Appraisal Studies: Basic Studies. - Recommendations: - Require time-bound initiatives in the PIP or bind exit to measurable indicators to avoid gradual shift of recurrent expenditure into the PIP. - Adopt hierarchical typology to group repetitive initiatives and streamline appraisal (e.g., group hospital rebuilding into a single program). - Ensure IBP Phase II designs interconnections with existing systems to avoid multiple entries and enable real-time consolidation (priority linkages: IFMIS, PBS). - Use immutable project-specific codes for lifecycle tracking and cross-system integration. ### Final synthesis — priority implementation actions - Institutionalize the flow-take as an annual project review at the start of the budget cycle to keep project data current and support prioritization and budgeting. - Accelerate migration into IBP Phase I with prioritized migration plans focusing on the largest and most monitored projects. - Develop and publish a PIM policy and clarify legal options to formalize DC roles and ensure continuity of PIM procedures. - Strengthen MYCS content, operationalize contract and certificate registration in IFMIS, and present MYCS with budget documentation to Parliament. *Source: 1ugaea2019003 - PREFACE; Box 1.1; Chapters on Flow-take, IBP, Legal/Institutional Framework; Table 0.1; Annex I (excerpts).* ### PREFACE __________________________________________________________________________________________ 6 ### PREFACE ### Mission, Scope, and Participants - A capacity development mission from the IMF’s Fiscal Affairs Department (FAD) visited Kampala during April 29 to May 13, 2019. - Team led by Christiane Roehler and comprised Arturo Navarro (both FAD staff), Eduardo Aldunate, Margarita Rosas and Matthew Simmonds (all FAD experts). - Purpose: deepen advice on public investment management. - Meetings with MoFPED and other officials: - Kenneth Mugambe, Director Budget - Dr Joseph Muvawala, Executive Director NPA - Maris Wanyera Ag. Director, Debt and Cash Policy, The Accountant General’s Office - James Wokadala, Commissioner, Project Analysis and Public Investment Department (PAP) - Jim Mugunga, Ag. Director Public-Private Partnerships (PPP) Unit - G.A. Dhatemwa, Commissioner, Debt Policy Issuance Department (DPI) - Fred Twesiime, Ag. Commissioner Development Assistance and Regional Cooperation (DARC) - Robert Okudi, Ag. Commissioner Cash Policy Department - Senior officials from Ministry of Finance, Planning, and Economic Development (MoFPED) - Senior officials from Prime Minister’s Office led by Professor Albert Byamugisha - Senior officials from the President’s Office led by Mr. Vincent Tumusiime - Senior officials from the Ministries of Works and Transport, the Energy and Minerals Development, the Water and Environment - National Planning Authority; Uganda National Roads Authority - Representatives from the World Bank, European Commission, and Kreditanstalt für Wiederaufbau (KfW) - Workshops (May 7–8, 2019): - Interactive workshops with PAP, the PPP unit, MoFPED, Office of the President, Ministry of Health, Ministry of Water and Environment, NPA and other MDAs. - Total: 50 officials attended at least one workshop session. - Topics: Moving from the PIP stock-take to regular management of PIP information; the Multi-Annual Commitment Statement; PPP Project finances; strategic management of the PIP pipeline and portfolio. - Acknowledgements: - Thanks to Mr. Hannington Ashaba, Assistant Commissioner PAP; Ms. Gertrude A. Basiima and Mr. Calyst Ndyomugabi, Principal Economists in PAP; Ms. Roselyn Kyalisiima, Economist in PAP, for daily coordination. - Thanks to Clara Mira, IMF Resident Representative, and Pelga Origasha, IMF office Uganda, for support. ### Executive Summary — Key Findings - Progress since 2015: - Strengthened public investment management (PIM) with first results. - Appraisal stage: well-articulated four-stage appraisal process in place and broadly enforced, controlled by the Development Committee (DC). - Stock-take completed, producing a comprehensive database of investment projects. - Size and composition of public investments: - Authorities have a reliable and stable estimate of the size of public investments of UGX 87 trillion (87 percent of GDP). - Stock-take identified 94 new initiatives worth around 40 percent of GDP. - The new information was used in the FY19/20 budget process, including cancelling and requesting reassessment of existing projects. - Need to institutionalize improvements and strengthen implementation: - Proposed actions organized under three themes: - Transition the stock-take to an annual “flow-take” and strengthen practices for project prioritization and budgeting. - Implement the Integrated Bank of Projects (IBP) database to support improved processes. - Further strengthen institutional and legal framework. - From the Stock-Take to the Flow-Take: - Stock-take data will quickly become outdated unless updated. - Annual project review at the beginning of the budget cycle is recommended (planned by PAP). - Identified inconsistencies between projects’ planned use of resources, approved project budgets and the medium-term resource envelope. - Reliable and updated information on forward estimates and commitments (signed contracts, certificates of work) is fundamental to ensure sufficient and timely funding and to determine available fiscal space. - Preparation of the Multi-year Commitment Statement (MYCS) could become part of the annual budget process. - Integration needed across project planning, implementation tracking, reporting and budgeting; clarify responsible lead team. - Implementing the IBP: - IBP under development; potential cornerstone of PIM as centralized repository of appraised projects, gatekeeper support, financial and tracking information, and M&E support. - Phase I: records appraisal-stage information and provides workflow support; almost complete and expected to go live soon; aligned with DC guidelines. - Need clear practices and plans for data migration into IBP Phase I. - Phase II design to start in the next few months; will record key information for implementation and ex-post M&E. Phase II should be subdivided into stages; comprehensive stakeholder requirements analysis needed (multi-sector team); develop overall vision and phasing for IBP IT system. - Specific issues to clarify for IBP design: - Define project registration function to track all projects, including priority projects not yet complying with DC guidelines. - Decide which projects are included in the IBP (only capital investments, or also social and development projects). - Review project coding structure to ensure lifecycle tracking. - Institutional and Legal Framework: - Recent PIM process strengthening accomplished with limited legal changes, leaving imbalances and gaps. - TPIs governed by DC Guidelines issued by the PS/ST; PPPs regulated in a PPP Act. - Need for a PIM policy to clarify roles and responsibilities, set out elements and operation of the PIM system, and guide legal framework updates. - Suggested updates: - Strengthen DC authority to request re-appraisal when execution is off track or procurement exceeds cost estimates. - Harmonize processes for TPIs and PPPs up to the pre-feasibility stage to develop a real pipeline of investment projects. ### Selected Implementation Observations - The stock-take produced a database more comprehensive than the PIP in number of projects covered and years of forecasts. - The PIP clean-up presented a review of all ongoing projects to the DC and resulted in decisions including cancellations and reassessments. ### Summary of Key Numerical Facts - UGX 87 trillion (87 percent of GDP): estimated size of public investments from the stock-take. - 94 new initiatives identified through the review process, worth around 40 percent of GDP. - Mission dates: April 29 to May 13, 2019. - Workshops attendance: 50 officials. ### Table 0.1 — Summary of Recommendations (Actions 1–11) - From the Stock-Take to the Flow-Take: Improving Project Prioritization and Budgeting 1. Based on the experiences of the stock-take exercise, define a minimum set of basic public investment project information that should inform public investment management going forward. - Responsible: PAP with broad input - Timeline: November 2019 2. Develop regular processes and procedures for updating project information and use it to support prioritization and budgeting of public investment projects. - Responsible: PAP supported by BPED, ISSD, PAD & LMs - Timeline: August – November 2019 3. Improve the use of medium-term fiscal envelope forecasts to achieve better project prioritization and budgeting, by drawing on the DC gatekeeper function and assigning the responsibility within MoFPED to bring together information from planning and budgeting. - Responsible: BPED supported by PAP and Macro - Timeline: Instructions: August 2019 4. Distinguish between the approval of a project’s feasibility studies from an approval for a project to receive budget funding and enter into multi-year commitments. - Responsible: PAP with BPED and Macro - Timeline: November 2019 5. Improve information on multi-year commitments for public investment projects to support project prioritization within the medium-term resource envelope. - Responsible: PAP, BPED, Accountant General - Timeline: March 2020 - Implementing the IBP 6. Develop a vision and design of the IBP for it to support all stages of the project cycle: planning, allocation, implementation and M&E. - Responsible: PAP with Government IT Agency - Timeline: June 2020 7. Increase public investment information quality and accessibility by accelerating the transition of projects into IBP Phase I, with explicit and prioritized migration plans. - Responsible: PAP and Line Ministries - Timeline: June 2022 8. Decide on specific PIM definitions and procedures required for the further implementation of the IBP. - Responsible: PAP, BPED - Timeline: June 2020 - Strengthening the Institutional and Legal Framework 9. Develop a PIM policy and guidance for amending the legal framework to ensure stakeholder buy-in and limit the risk that new procedures are dismantled. - Responsible: PAP - Timeline: June 2020 10. Strengthen the appraisal stage by creating a single approval process up to pre-feasibility studies for all public investment initiatives. - Responsible: PAP - Timeline: December 2020 11. Extend the gatekeeping role of the DC beyond the appraisal stage by giving it the authority to review projects that have deviated from plans during the early stages of execution. - Responsible: PAP, PPP unit - Timeline: November 2019 ### Introduction — Context and Priorities - Progress since 2016 Action Plan: - Under PAP leadership, many action items from the 2016 PIM System Action Plan and IMF CD recommendations have been implemented. - Key achievements: DC Guidelines instituting a four-stage appraisal process (project concept, profile, pre-feasibility study, feasibility study) and a project appraisal manual; stock-take and data validation (2017–18) creating a more comprehensive and reliable database of ongoing projects than the PIP. - PPP unit strengthened capacity, passed 2019 regulations for the PPP Act, and began developing PPP guidelines and tools. - The stock-take informed a PIP clean-up and decisions by the DC on project futures. - Annex I (referenced) presents components of the 2016 action plan and completion levels of IMF recommendations as understood by the mission. *Source: 1ugaea2019003 - PREFACE; IMF FAD mission report (April 29–May 13, 2019).* ### Box 1.1. Uganda. The Project Universe and Databases ### Box 1.1. Uganda. The Project Universe and Databases ### Project universe and existing databases - Public Investment Plan (PIP): projects funded in the current annual budget plus their 3-year medium term forecasts; recorded in the government’s program-based budgeting system (PBS). The budget allocation for the PIP is also referred to as the development budget. Previous year’s information is overwritten in the PBS during the budget cycle and historic information is only available in hardcopy. Budget execution for PIP projects is recorded in the government’s FMIS system, except for some externally funded projects where the external partner directly pays invoices. - Stock-take database: collected information on all projects included in the FY 17/18 PIP via project templates consolidated into a stock-take database. Several iterations exist. - Amended stock-take database: during FY 18/19 amended to follow projects under active consideration; projects removed or revised when decisions to exit or restructure were taken; includes most, but probably not all, projects of the FY19/20 PIP; update status of project information is no longer uniform. - IBP Phase I: new database currently being fed with new projects only, specifically all projects currently at some stage in the appraisal process before the DC. - Other projects: groups not systematically incorporated in a central database include external grant-funded projects unless they require counterparty funds, external loan-funded projects not adhering to DC guidelines, and politically sponsored projects not formally presented to the DC. Externally funded projects will be captured in MoFPED’s debt and aid management system once they become known to MoFPED. ### Key accomplishments from the stock-take - Improved project information and analytical coverage: - Coverage decided as all projects that received budget funding in FY17/18 (i.e., all projects in the 2017/18 PIP). - Information collected included total project costs and cash flow forecasts; updated commencement and completion dates, and completion status; share of recurrent/capital content; forecasts by funding source; and consistency of project objectives and activities with the NDP. - Creation of a project typology based on review of descriptions and purposes: - DC guidelines specify that the capital component of projects in the PIP should be at least 70 percent (50 percent for ongoing projects), but only 60 percent of projects meet this criterion. - Typology categories identified include ongoing investment programs, “retooling” projects or programs for replacement or maintenance, productive or social development projects, and studies. - Data validation improved internal consistency: only 1 percent of projects had problems with information submitted to MoFPED. - Revision of PIP size: overall size of the PIP was significantly revised upward between May 2018 and May 2019 (stock-take databases of March 2018, November 2018 and May 2019 show growth; March 2018 omitted projects with highly incomplete data; May 2019 includes project values of some projects that exited in FY18/19). ### Clean-up exercise and impact on the PIP - Strategic use of stock-take for MTEF 2019/20–2021/22 decisions: sector review presented to the DC classified projects as ongoing/continuing, needing justification, or not retained. - Clean-up outcomes (of 431 projects reviewed): - 216 projects were ongoing and on track. - 86 were extended or re-admitted. - 1 project was transferred to the recurrent budget. - 45 projects that are due to exit in FY19/20 were eliminated (UGX 810 billion). - 83 projects have been earmarked for review for next FY and have been requested to reapply (UGX 1,585 billion). ### Capacity development and institutional effects - Capacity gains in MoFPED from collecting, validating and analyzing stock-take information: - Strengthened MoFPED’s ability to challenge MDAs on project status. - Improved understanding of how and where to obtain physical and financial project information from MDAs. - The IBP (with future phases) could consolidate all public investment project information and support the full project cycle, but important definitions (scope of investment projects, interactions with other systems) must be addressed in the IBP design to ensure adoption. ### Challenges and data weaknesses identified - Difficult-to-collect elements: - Execution information: financial data dispersed when projects do not receive current-year budget funding or are executed by more than one vote. - Physical project progress: especially difficult for non-investment and program-type projects. - Development partner projects: partner-specific management and information structures; payments not processed through government accounting system. - Contractual commitments: physical and contractual milestones, signed contracts, and work completion. - Additional observations: - Collaboration with MDAs is essential; accountability of MDAs for planning and budgeting data should be enhanced, potentially via MoFPED’s challenge function and senior management communication. - Significant blocks of information could be updated from MoFPED internal systems such as IFMIS, the Aid Management System, the debt management system, and potentially the PBS. - In some MDAs, important project information is only held by individual officers and is lost when redeployments occur. - The start of the annual budgeting process is crucial to obtain updated project documentation. - Processes should be improved to collect credible information about projects executed by more than one vote or funded by development partners. ### Transition from stock-take to flow-take and process recommendations - Rationale: - The stock-take was a one-off upgrade; data are becoming outdated as new projects and FY18/19 outturns and FY19/20 budgets affect medium-term cash flow forecasts. - PBS retains only current-year submissions and overwrites previous submissions, hampering year-on-year comparisons and tracking of changes in the universe of projects. - Flow-take design elements: - Systematic annual updates at the start of the budgeting process to support a regular annual project review and validation ahead of and during budget discussions. - For ongoing projects: incorporate actuals for the previous budget year, approved budgets, and updated cash flow forecasts. - For extending or reappraising projects: require a well-justified cash flow update approved by the DC. - Handle exiting and new projects systematically: - Exiting projects: update one more time to incorporate final-year actuals; retain in main database or archive with easy access. - New projects receiving budget allocations: include estimated cash flows even if DC approval is pending; require a fast-track project recognition process with the DC before inclusion in the PIP (and later in the IBP). Initiatives that bypass DC approval should face a post-approval review to meet minimum information standards; noncompliance could be enforced by freezing the budget allocation. - Annual project review: - Planned by authorities; similar to the clean-up exercise but should become less demanding over time as information robustness improves. - Should have a strong portfolio focus guiding entry/exit decisions for budget funding; projects scheduled to end and large projects should receive special attention. ### Archiving, reporting and next steps - Recommendations for reporting and archiving: - Finalize and publish the draft stock-take report, clarifying its intention and audience and ensuring coverage of: - Main data outputs obtained, including structure and status of the project portfolio. - Reporting on and analysis of the clean-up exercise. - Data weaknesses identified and actions from MDAs to address them. - Lessons learnt to guide future processes for collecting, consolidating, analyzing and using public financial data. - Archive the stock-take database as a baseline starting in FY17/18 to monitor project execution and ex-post evaluation. Archive should include projects that exited in FY18/19 and FY19/20 to ensure consistent observation of total project value. - Consider publishing the existing Excel-database on the MoFPED website and storing the project templates collected for each individual project. - With completion of IBP Phase II, all changes to project information should be captured and stored by the system. ### Summary of formal recommendation - Recommendation 2.1: Based on the experiences of the stock-take exercise, define a minimum set of basic public investment project information that should inform public investment management going forward. - Finalize and publish the report on the stock-take exercise, identifying key outputs obtained and further improvements required to the data. - Use lessons learnt to improve data collection and maintenance. - Archive the database built through the stock-take as a baseline of public investments. *Source: Box 1.1. Uganda. The Project Universe and Databases (excerpt).* ### 25. The “flow-take” should continue to red-flag projects for exit from the PIP or that ### 25. The “flow-take” should continue to red-flag projects for exit from the PIP or that ### A. Flow-take red-flagging and database transition - Main criteria for red-flagging projects for exit from the PIP or for specific review and justification for continued budget funding: - The project is slated to come to an end in the upcoming fiscal year; - Significant changes in the total cost of the project; - Severe delays in implementation (which are usually associated with cost overruns); - Concerns about the project effectiveness to accomplish its mission. - For the transition period prior to full use of the IBP: - The database structure of the stock-take can be used to record the most updated information of the projects. - New versions of this database should be created in a systematic manner. - This may require moderate changes to the stock-take database structure, such as adding information on whether a project is due to exit or should to be reappraised or include actual execution and approved budgets at the beginning of each fiscal year. ### B. Towards robust project prioritization and budgeting — findings - Successful project implementation on time, on budget and with impact requires alignment of physical project progress with budget funding. - Projects not moving as planned: - Block resources for other projects and result in underspending of the development budget. - Cause delayed service delivery outputs and foregone social and economic benefits. - Undermine future effectiveness; long delays may require re-evaluation or re-planning of the whole project. - Project scheduling and allocation of budget funding should take place within a defined and credible top-down medium-term expenditure envelope. - There is an inherent tendency to overcommit on the project pipeline and the list of projects admitted into the PIP; over-commitment typically slows project implementation. - In Uganda: - The first stage of the prioritization task has been assigned to the DC, which reviews and approves individual projects on their merits; once approved by the DC projects are considered eligible for budget funding (inclusion in the PIP). - Subsequent steps of achieving project readiness and project implementation have not been actively reviewed by the DC to-date. - The DC does not consider how a project fits into the medium-term envelope for the overall PIP or the sector. - Misalignment of project and financial planning: - For FY17/18 and FY18/19 MDAs planned to execute resources beyond the annual ceilings defined by the macro-fiscal framework. - The project resources in the budget for FY18/19 and in the one recently approved for FY19/20 have also been beyond these ceilings. - Project requirements as reported by MDAs show inconsistencies with the amounts included in the annual budgets, suggesting project needs could not be fully met and should result in re-phasing of projects’ funding. - Forward estimates and project end-dates: - Forward estimates appear too low, including reported project end-dates that are not realistic. - The re-phasing of planned expenditure for ongoing projects from recent years that could not be included in the annual budget will use a substantial amount of available fiscal space over the medium-term planning horizon. - Absence of a rigorous process, reliably supported by credible data, to reconcile approved projects and budgeted resources: - Weakens the project implementation phase. - Creates a risk of deficit bias and results in the under delivery of important social and economic projects. - Currently, approvals by the DC are given without comprehensive consideration of medium-term envelopes. - Approval forms for the DC could be designed to include a summary of financial information against the medium-term envelope. - Responsibility and information fragmentation: - Project forward estimates are only available at MDAs; MDAs need to be encouraged to prepare better forward estimates. - Forward-looking project knowledge in MoFPED is split between BPED, ISSD, PAD, PAP, BMAU, cash and debt management, and the PPP Unit; the Accountant General holds execution information. - A structured interface between budget reporting, monitoring and planning functions would strengthen planning and budget processes. - Suggested institutional assignment: - A unit within MoFPED should be assigned responsibility for ensuring project funding is consistent with the medium-term envelope (could be one department or a committee of representatives). - In many countries this function is done by the equivalent of BPED or strong planning departments. - Feasibility study approval versus budget inclusion: - Approval of a project’s feasibility study should not imply inclusion in next year’s PIP and budget. - Approval of feasibility should imply inclusion in a project pipeline; projects selected from this list would be chosen for budget inclusion. - Conditions for budget funding should include: demonstration of full implementation readiness, costs consistent with global and sectoral ceilings, and that operational and maintenance costs have been taken into account. - The DC could be assigned a formal role in approving readiness for budget funding. - IBP design enforcement: - The IBP currently requires that projects can only be considered for funding once project proposals are approved by the DC and registered in the IBP — this control step should remain. - Integration between the IBP and PBS would enforce the DC’s gatekeeper function: when completing budget programming in the PBS, line ministries would only see initiatives with approved project proposals. ### C. Summary of recommendations — actionable items Recommendation 3.1: Develop regular processes and procedures for updating project information and use it to support prioritization and budgeting of public investment projects. - Setup an annual project review to update project information at the start of the budget cycle covering key information such as project end-dates, total cost estimates and cash flow forecasts. - Assess all red-flagged projects and seek approval for their updated information from the DC. - For FY19/20 specific attention is needed for the 83 projects that reapplied and the 200 projects that are scheduled to exit. - Use the database structure of the stock-take exercise to compile and store updated information until the IBP is ready to incorporate ongoing projects. - Archive the database at key stages of the project review and budget cycle, using the different vintages to keep track of the evolving information for exiting projects. Recommendation 3.2: Improve the use of medium-term fiscal envelope forecasts to achieve better project prioritization and budgeting, by drawing on the DC gatekeeper function and assigning the responsibility within MoFPED to bring together information from planning and budgeting. - Design DC approval forms for new projects that clearly convey the total project costs, post-investment operational costs, and how these forecasts fit into the total and sectoral medium-term fiscal envelope. - Use the medium-term forecasts of the previous budget cycle as the starting point for the following year’s project review and budget discussion. - Review and determine who in MoFPED will be assigned the responsibility for bringing together information from project planning and budgeting (budget execution, reporting and the medium-term ceilings) to drive toward more realistic project forecasts and ensure adherence to medium-term envelopes. Recommendation 3.3: Distinguish between the approval of a project’s feasibility studies from an approval for a project to receive budget funding and enter into multi-year commitments. - Incorporate this distinction in the DC Guidelines and in the design of the approval process in the IBP. - Determine a checklist of conditions that a project must meet to become eligible for funding such as an updated implementation plan, availability of sufficient fiscal space in the medium-term development budget, and confirmation that the MDA can cover the asset’s operation and maintenance expenditure. ### D. Improving oversight and reporting of multi-year commitments — findings and suggested MYCS improvements - Commitment monitoring and public reporting are important for managing expenditure within sustainable levels, enhancing budget credibility, and delivering projects successfully. - Development projects are a significant share of the budget and project approval typically signifies approval of expenditures that span beyond one budget year. - Available data shows financial commitments by MDAs have historically been significantly in excess of budgeted resources. - The 2019/20 MYCS: - Provides a very high-level overview of multi-annual commitments, total values in 2019/20, and total value of projects exiting the PIP. - The introduction of project specific data from the stock take has allowed for a more accurate and credible assessment of expenditure commitments. - The annex tables accompanying the report are significantly more detailed and informative than previous reports, providing project by project information and identifying projects exiting and entering the PIP, along with total costs per project. - Further improvements to the MYCS: - Consolidate total commitments per sector, by value or by function of spending to bridge granular project data and total value. - Provide details and analysis of how costs, cash-flow or implementation of commitments have evolved over the past year, and their impact on the budget. - The MYCS should be a product of project oversight and budget development roles of MoFPED — an analytical document relating service delivery commitments, their financing and their funding. - The coverage of the MYCS in relation to the requirements of the PFM Act should be made clear and explained; authorities have resolved to limit the MYCS to projects in the development budget or PIP. - Clarify and report different types of multi-annual commitments (in order of increasing certainty the obligation to pay will arise): - Remaining total project costs during the investment phase (contextualize with original and revised total project costs and cash flow forecasts). - Signed contracts (obligation to pay if contractor delivers). - Certificates of work not yet paid (accounts payable even if not yet registered with the Accountant General). - Updated estimated operating and maintenance costs (to be provided in the recurrent budget upon project completion; could be based on annual costs or an average over e.g., 5 years). - Define MYCS purpose and stages aligned with government processes: - Internal discussions in conjunction with the annual project review (project-by-project assessment of historical and revised cashflows, factors informing changes, recommendations to senior management). - Cabinet engagement (identify where delivery, costing and budgeting deviations are significant and threaten project delivery or sectoral expenditure frameworks). - Parliamentary report (MYCS tabled in parliament should provide narrative overview and data that updates parliament on financial performance in the previous fiscal year(s), alignment with government fiscal objectives, and revised forward-looking plans). - Analytical enhancements to meet Section 23 of the PFM Act: - Develop high-level analysis identifying trends in commitments, major changes in costs and delivery schedules, and implications for the upcoming annual budget and medium-term plans. - Suggested tables and/or charts with narrative could include: - Consolidated commitment costs – outcome for previous year, adjustments to current year, medium-term outlook, changes since the previous medium-term estimates; - New large projects entering the budget – total value and allocation over the medium-term, number of years; - Projects underway – largest changes in cost or timing, and reasons why; - Revised project cash flows – total, largest changes, and reasons why; - Main projects progress – For the largest 10 projects total value, spending outcomes, revised medium-term cash flows, reasons for significant revisions. *Source: Content unit 1ugaea2019003 (extracted text).* ### 46. The discussion of developments of individual projects should be set in the context ### 1ugaea2019003 - 46. The discussion of developments of individual projects should be set in the context ### Context for project developments and medium-term envelope - Projects—especially large ones—that are delayed or over budget will squeeze out other projects in the project pipeline; relevant choices should be made clear in the report. - The discussion of developments of individual projects should be set in the context of the medium-term envelope for the development budget or the sector. - It is imperative that the total project commitments do not exceed the binding upper limit of the development budget allocations. ### Budget impact, cash flow pressures, and reconciliation - Significant changes in projected cash flow impact on the budget can: - create pressure that can increase the deficit; - reduce expenditure in other areas; - result in underperformance of the projects or arrears. - Trends in the development budget should be briefly explained and reconciled with pressures arising from project commitments. ### IFMIS, contract registration, and certificates of works - Operationalize and enforce capabilities in the IFMIS for contract registration and timely recording of certificates of works. - When information on signed contracts is linked with the IBP and PBS, it will allow for immediate identification of instances where contracted commitments exceed budget allocations. - Issued certificates of works should be tracked, even if there is no budget allocation yet available, to provide reliable information on accounts payable and potential arrears. ### MYCS (Multi-Year Commitment Statement) presentation and publication - The MYCS should be presented as part of the formal budget documentation. - The MYCS is an outcome of the relationship between the state’s financial commitments and resources and should be presented to Parliament along with the budget proposals. - Care should be taken to ensure that data and narratives in the MYCS are consistent with the budget documentation. - As the MYCS is written for Parliament in response to a legal requirement, the MYCS and its annexes should be published online with all other budget documentation. - Annex III presents a proposed structure for a multi-year commitment statement based on the ideas mentioned. ### Summary of Recommendations (extract) - Recommendation 4.1: Distinguish between the approval of a project’s feasibility studies from an approval for a project to receive budget funding and enter into multi-year commitments. - Publish the MYCS with the budget documentation, ensuring that the financial information is consistent with the budget documentation for both the budgeted year and the medium-term projection. - Operationalize and enforce timely registration of contracts and certificates of works in the IFMIS and include this information in the MYCS. ### Implementing the IBP — Background and objectives - The IBP is being developed in at least two phases: - Phase I is currently being commissioned and covers the appraisal stage. - Phase II is to be designed soon and is intended to cover project implementation and M&E. - The IBP is an initiative to share a common set of project information between all stakeholders and make project information more widely available, reliable and easily accessible. - Key issues the IBP design/implementation revisits: - (i) what constitutes a project, and which projects should be included in the PIP; - (ii) how projects are identified and can be traced through their life cycle and across IT systems; - (iii) how to define, track and monitor the universe of projects in Uganda. ### IBP Phase I — appraisal, workflow, and reporting - IBP Phase I is based on a strong appraisal methodology to facilitate improvements in investment project quality. - The IBP enables a project methodology combining performance-oriented project costing linked to project goals, outputs and activities, with economic analysis techniques. - The gatekeeping role of the DC will be enhanced through a complete step-by-step methodology of project appraisal defined in IBP Phase I. - The system records project preparation progress and stakeholder communication, creating a knowledge base for continuous improvement of the appraisal flow. - Limitations and mitigation: - Previous analysis shows that only 45 percent of the PIP projects are investment projects properly bounded by location, objectives and time. - Because the PIP has a single work flow for all project types, users may face decision points with criteria not relevant to their project; developing differentiated criteria per sector or project type could mitigate this risk. - Enhanced reporting functions can provide MoFPED a better understanding of the investment portfolio and project preparation process, with reports covering project costs at different stages and project rankings, plus oversight metrics (e.g., number of projects rejected, returned or approved at each stage by sector). ### IBP Phase II — design considerations, roles, and functionality - IBP Phase II aims to provide support for tracking ongoing projects during implementation and M&E, and to support project monitoring and evaluation. - Not all stakeholder requirements for Phase II may be covered in a single phase; more than one further IBP development phase may be needed. - Priority linkages should be with the IFMIS and the PBS. - The IBP design requires a clear definition of the different roles played by government entities for project tracking and M&E. In Uganda, monitoring is done by: - implementing MDAs, the Office of the Prime Minister and of the President, the BMAU and the Auditor General; - BPED, PAP, ISSD and PAD also require project information. - IBP Phase II can operationalize an annual project review at the start of the budget cycle and can red-flag projects needing reappraisal or updated information to continue receiving funding. - The system can inform budget authorities when a project exceeds defined thresholds during implementation and should be reappraised before re-entering the PIP on a yearly basis. Example triggers include: - cost deviation percentage; - misalignments between financial cash flows and physical execution; - time overruns. - Phase II should include safeguards to prevent project updates that could modify project purpose and other key characteristics. - Strong reporting functionality is essential for user acceptance and will incentivize data accuracy and timely updates. ### Data migration into the IBP — stock-take and migration planning - The stock-take database provides improved information on current projects but requires additional work to populate the IBP: - Project descriptions (project log frames) required by DC guidelines and IBP Phase I are not complete because most ongoing projects were prepared before current DC guidelines. - At least one component of the log frame is incorrectly defined in half the PIP projects. - Costing information must be restructured and expanded from line item presentation to the performance-based structure required by the IBP; not worthwhile for projects ending soon. - Migration acceleration: - Projects should be entered into the IBP database faster by preparing reappraised projects and all new projects on the IBP Phase I template. - Current transition plans cover only new projects formulated for FY 20/21 and onward; entering all reappraised and new projects into IBP Phase I from now on would significantly improve PIP quality. - Migration prioritization: - Migration plans should concentrate on high priority projects such as those subject to specific monitoring by OPM (90 projects) or the largest projects representing 80 percent of the budget as per the March 2019 multi-annual commitment statement for FY19/20 (65 projects). - Other categories the authorities could consider: projects executed by more than one vote (8 projects); entered the PIP before FY17/18, when the new DC guidelines were applied (279 projects); have cash flow estimates beyond FY20/21, excluding new FY19/20 projects (163 projects); and have external funding (143). - Sectoral migration plans: - Transition could be facilitated by sectoral migration plans agreed between MoFPED and ministries. - For ongoing projects, a three-year transition plan into IBP Phase I could be agreed to determine actions and scope of work before the next two budget cycles (FY20/21 and FY21/22). - Sector plans should consider contractual commitments, institutional capacity to restructure the PIP, and the capacity of appraisal teams for project analysis. - Plans can state at the sector level the road map of projects exiting, entering, merging or reformulating in the PIP for the next two to three years. - Costing structure challenge: - The stock-take uses mostly line item cost structures, different from the IBP’s performance-oriented structure; migration requires analysis to transition project portfolios from line item to performance-oriented costing, a significant technical effort. - Migration design should review alignment of project cost structures between the IBP and government budgeting and accounting systems (PBS and IFMIS). - Using two different cost structures between appraisal and implementation makes it challenging to track implementation against the original design. ### Scope of the IBP/PIP and project typology - IBP design and workflow rules will be impacted by which types of initiatives (“projects”) are included in the IBP and PIP and by permissible internal structures (e.g., hierarchical structure: projects and subprojects, programs and subprograms). - Clarity is needed on how the adopted PIP structure relates to the government’s Program-based budgeting system. - The stock-take shows the PIP has a more complex structure than implied by DC Guidelines: - DC guidelines aim to limit PIP projects to those with a capital investment purpose and stipulate a minimum percentage share of capital expenses in total project cost. - Productive and social programs with mostly recurrent spending are also included in the PIP; many, but not all, such projects are development partner funded. - Participants at a workshop agreed that most of the identified project types will continue to be included in the PIP, and that purely recurrent expenditures should not be part of the investment budget. - Project preparation and appraisal methodologies (e.g., economic efficiency and cost benefit-analysis) would need to be differentiated by project type; additional data like productive and social indicators would be relevant for preparation and monitoring. - Table 5.5 typology for project classification in Uganda (as presented): - Capital Intensive Initiatives - Investment Projects - Investment Programs - Retooling Programs - Economic and Social Development - Productive Programs - Social Programs - Appraisal Studies - Basic Studies - The IBP should be set up to identify different project types to facilitate reporting and monitoring and to allow distinct reporting of capital-intensive projects, retooling projects, and other productive and social programs. *Source: IMF mission team analysis and report excerpts.* ### 76. Adopting a hierarchical typology of programs and projects could make the ### 1ugaea2019003 - 76. Adopting a hierarchical typology of programs and projects could make the ### Hierarchical typology of programs and projects — appraisal and management - Adopting a hierarchical typology could make the appraisal stage of projects more efficient by distinguishing repetitive initiatives from complex ones (paragraph 76). - Repetitive initiatives (example: rebuilding of the hospital infrastructure) could be grouped into a single program and appraised as one project, reducing the number of reviews and approvals (paragraph 76). - Retooling projects could use a streamlined approval process based on an asset register rather than a full appraisal process, facilitating planning of future resource needs and monitoring of expenses (paragraph 76). - The DC Guidelines currently treat all initiatives as investment projects subject to specific appraisal requirements throughout approval stages; a hierarchical approach would differ from this uniform treatment (paragraph 76). - Management and budget presentation differ for projects and programs: - Projects are fully specified from the outset and have their own project code in the national budget (paragraph 78). - Programs require program managers to develop and manage specific projects within the program and receive a global budget allocation that is further broken down to projects (paragraph 78). ### Project classification, indicators, and lifecycle boundaries - Improved project classification helps determine how initiatives should be tracked, monitored, and evaluated; indicators vary by type of activity (paragraph 77). - Capital-intensive projects: monitoring focuses on progress in construction/acquisition of the asset; time boundaries are useful mainly to identify projects facing problems (paragraph 77). - Social development projects: the end of execution period might be linked to achievement of an objective within a specific timeframe (paragraph 77). - Current PIM practices do not differentiate project types adequately, making it difficult to determine project completion (paragraph 77). - Recommendation: adopt a rule that all initiatives in the PIP are time-bound, or alternatively bound by the achievement of a measurable indicator (paragraph 79). - Possible delineation of the PIP: the set of all special and well delineated initiatives intended to stimulate progress in achieving Uganda’s development objectives (consistent with the NDP) (paragraph 79). - To avoid gradual shift of expenditure into the PIP, all initiatives in the PIP should have a well-defined end-point upon which they exit the PIP and achievement of intended objectives is assessed (paragraph 79). - Even with hierarchical structure, projects or programs may have interlinkages; IBP should identify projects to be implemented in a coordinated sequence (paragraph 80). ### IT system linkages, current platforms, and consolidation (IBP role) - The Government of Uganda (GoU) has developed at least eight platforms that capture project data across stages of the project cycle, with limited communication between systems; consolidating information in a single place would improve understanding (paragraph 81). - Figure 5.4 (described) maps platform coverage across Appraisal, Programming, Implementation, Financial and Physical Monitoring, Monitoring and Evaluation – Govt Goals, and notes platform ownership and operational status (paragraph 81). - The IBP Phase II provides an opportunity to design interconnections to consolidate project information and capture project information from initial conception through implementation (paragraph 82). - Consolidation is more efficient if information is captured directly from other systems, avoiding multiple entries and providing data in real time (paragraph 82). ### Project coding: current weaknesses and required characteristics - Current IBP coding follows PIP practices and has three parts: sequential number – sector code – vote formulator code (paragraph 83). - Risks of current coding: - Government restructuring with rearrangement of votes could change project codes and cause loss of project traceability (paragraph 83). - Retaining original structured project code after restructuring could mislead interpretations of project nature (paragraph 83). - Essential characteristics of robust project coding: - Project-specific codes that do not change throughout the project lifecycle to preserve the complete project history and enable tracking across systems (paragraph 84). - A robust coding structure is essential where information systems were developed independently to ensure consistency across the full project cycle and strengthen data integration (paragraph 84). ### Managing project registration and the IBP as an authoritative register - Challenges in identifying the set of current and future investment projects: - PBS includes only projects currently receiving budget funding; temporarily stalled projects are removed (paragraph 85). - Different versions of the stock-take database cover different sets of projects; some projects known to officials are not included in any database for systematic follow-up (paragraph 85). - OPM has reportedly requested MoFPED to provide a list of all ongoing projects (paragraph 85). - MoFPED steps taken: - Publication of the DC Guidelines and setup of the DC enable MoFPED to track new initiatives requesting budget resources and identify a pipeline of projects under preparation (paragraph 86). - IBP design and coverage: - The IBP is designed to keep track of all initiatives presented for consideration of the DC, independently of approval status; mandating inclusion in IBP Phase I would allow an overview of current, future, stalled and exited projects (paragraph 87). - IBP should assign a unique code to each project for lifecycle and cross-system tracking (paragraph 87). - Limitations to IBP becoming the authoritative register: - Projects not formally presented to PAP and the DC (e.g., not yet requiring budget funding, pursued as PPP, or circumventing the process) cannot be included (paragraph 88). - Data migration of ongoing projects, including PIP and stock-take projects, will take several years; exiting projects will not be registered on the IBP (paragraph 88). - IBP data categorization and integrity: - Projects entered for “public awareness” should be clearly distinguished from those complying with DC guidelines; public awareness projects cannot provide full expected information and should be flagged as ineligible for budget funding (paragraph 89). - Special accommodation in IBP design may permit uploading such projects, but permissiveness should not be used to circumvent DC information requirements or co-mingle with compliant projects (paragraph 89). - Rules for inclusion in the register when projects are not presented to the DC should be defined; criteria to include: - All serious proposals for a PPP project (paragraph 90). - A fairly high likelihood of future budget needs including operating and maintenance expenditure (paragraph 90). - Projects that during their existence substitute for GoU expenditure (example: development partner funded vaccination programs) (paragraph 90). - Staff and data quality: - Staff should be assigned to manage registration; data checks and quality control are needed (paragraph 91). - Migration of stock-take data: - If a distinct project registration function is activated in the IBP, MoFPED should upload stock-take data into the IBP to centralize data for GoU-funded projects that received budget support since FY17/18 (paragraph 92). - The stock-take database has less comprehensive information than DC Guidelines, but provides basic data useful for managing the public investment budget; because of many outstanding commitments from ongoing projects, the stock-take will remain a main reference for several years (paragraph 92). - Lower quality stock-take information could negatively impact user perception of IBP data (paragraph 92). - Development partner-funded projects: - Known development partner-funded projects should be included in the project register; limited information was collected in the stock-take (paragraph 93). - When counterpart funding is not required for disbursement of external funds, MoFPED cannot use budget documents to identify the implementing vote; priority should be given to initiatives that will deliver an asset and require government resources for maintenance or operation (paragraph 93). ### Summary of Recommendations (Section H) - Recommendation 5.1: Develop a vision and design of the IBP to support all stages of the project cycle: planning, allocation, implementation and M&E (paragraph H). - For Phase II, undertake a thorough assessment of user requirements, and carefully design workflows and interlinkages with other IT systems, prioritizing the link with IFMIS and PBS (paragraph H). - Develop an integrated vision of the IBP and PIM systems that includes clear roles and responsibilities of all stakeholders, including for the M&E (paragraph H). - Ensure that the IBP has strong reporting functionality (paragraph H). - Recommendation 5.2: Increase public investment information quality and accessibility by accelerating the transition of projects into IBP Phase I, with explicit and prioritized migration plans (paragraph H). - Recommendation 5.3: Decide on specific PIM definitions and procedures required for further implementation of the IBP (paragraph H). - Develop a project coding structure that allows information exchange between different information systems and project tracking during the life-cycle (paragraph H). - Define coverage of the PIP (only capital investment or also social/development projects) and articulate the project classification or typology, recognizing the reality of the composition of the PIP (paragraph H). - Require that projects in the PIP should be bound by a time limit or a measurable objective indicator (paragraph H). - Utilize the typology for designing workflows that increase efficiency and effectiveness of project management in all phases of the life-cycle (paragraph H). - Consider how to keep track of all projects and their key information by developing rules for project registration, including for relevant projects that are yet to come to the DC (paragraph H). - Ensure that key information for all projects– ongoing, under appraisal, stalled, exited - is easily accessible to all stakeholders (paragraph H). ### Legal and institutional framework — gaps and options - Reforms since about 2014 produced the DC Guidelines and the PPP Act; MoFPED developed a 1 page PIM framework and adopted a PIM Action Plan (paragraph 94). - The PFM Act provides limited public investment regulation: public investment is mentioned only in articles 8 and 13, and articles 19 and 22 refer to guarantees and multi-annual commitments but do not provide a comprehensive PIM framework or provisions regarding project appraisal studies or institutional roles during planning (paragraph 95). - The PPP Act (2015) provides a detailed legal framework for PPPs, with clearly stated roles, responsibilities, full project cycle description, and procurement rules; complemented by PPP Regulations (most recent dated April 12, 2019) (paragraph 96). - Public Procurement and Disposal of Public Assets Act: - Regulates acquisition of public assets and contracts for project implementation (paragraph 97). - Does not require reappraisal of a project when the minimum value offered by bidders exceeds the feasibility-stage investment cost estimate, weakening financial and social benefits (paragraph 97). - The draft National Investment Policy (NIP) calls for strengthening processes to promote private and public investments and proposes “strengthening public investment management for competitiveness”; guiding principles relevant to PIMS include return on investment, risk management, equity and fairness, and sustainable development, but the draft policy does not fill existing regulatory gaps (paragraph 98). - Current legal support for PIM practices is weak: - PIM cycle and roles were clarified and published in the Framework for PIMS and are used in practice, but the only specific regulation for PIMS operation are the DC Guidelines which are not backed by higher level legislation (paragraph 99). - No official document could be provided regarding creation of the DC and publishing the DC Guidelines; continuation of practices depends on individual office holders, posing a danger of PIM system dismantlement without replacement (paragraph 99). - Improving the legal framework will require close coordination with existing law; options include modifying the PFM Act or creating a new PIM-specific Act, with the best way forward to be determined by MoFPED (paragraph 100). - Box 6.1 (Jamaica experience) summarized legislative actions taken in Jamaica to strengthen PIM within existing legal architecture, including amendments and Financial Instructions that set out norms such as: - Authority to commit to undertake a public investment project - A single-entry point for all public investment project proposals - Full disclosure on all expenditure related to the public investment project - The established process for inclusion in the Public Sector Investment Program - The justification for continued inclusion in the Public Sector Investment Program - The responsibility of MDAs to provide timely and credible information (Box 6.1). *Source: Excerpts from the supplied IMF chapter/section content unit 1ugaea2019003.* ### 101. The option that is selected for strengthening the legal framework should be based ### 1ugaea2019003 - 101. The option that is selected for strengthening the legal framework should be based ### Legal framework structure and required contents for a PIMS - The legal framework selected for strengthening the PIM system should be based on a clearly articulated PIM policy and include the following sections/topics: - General aspects, including object of the law, definitions, scope of application, principles that should guide public investments, and definition of the PIMS and its objective. - Organization and operation of the PIMS and institutional responsibilities. - Definition of other components of the PIMS, namely methodologies, capacity building and the IBP. - Monitoring and evaluation institutional roles and responsibilities. - Final Provisions like date of entry into force, regulation and repeal of other provisions. - Box 6.2: Three main international approaches to legally supporting PIM Systems: 1. PIM framework regulated in a specific PIM Law — a Law creates the PIM System, defines institutional roles and regulates its operation; provides strong support to continued operation of the PIM System. 2. PIM framework regulated in the PFM Law or Act (organic or framework law) — special provisions are included in a Financial Management Law, the PFM Act. 3. PIM framework based on the role of institutions — no special provisions for PIM management, task is mentioned in institutional structure and role definitions; this is the weakest framework because institutional change could end or significantly modify the PIM System. - Annex V presents a list of countries that have adopted one of the three approaches mentioned before. ### Role, capacity and operational issues of the Development Committee (DC) - Key functions and constraints: - The DC plays a key role in PIMS implementation, responsible for ensuring that all MDAs comply with the DC guidelines through timely review and approval of project submissions and for reviewing all four levels of study of all public sector projects. - The DC is overloaded and has limited authority; its members are high-level officials with limited time, making timely fulfilment of duties difficult. - The only authority the DC has stems from the support of the PS/ST; MDAs sometimes circumvent DC decisions by obtaining direct approval at higher government levels. - DC Subcommittee: - A DC Subcommittee was created to facilitate work, but its functions are not clearly defined. - Members are lower level officials designated by DC members. - Mission requested documentation supporting creation and roles of the DC and its subcommittee; none could be provided. - Visibility and control after approval: - The DC has limited visibility of a project’s costs after approval for inclusion in the PIP. - The Guidelines do not specify when a project should be reviewed by the DC due to change in scope, cost or duration. - Example: if bids in procurement are above estimated project investment cost, there is no explicit requirement for the implementing MDA to resubmit the project to the DC; the DC will only learn of higher cost during the annual PIP implementation review and has no authority to act on it. - This lack of ex-post authority undermines the appraisal process and should be addressed. ### Suggested updates to DC Guidelines (Box 6.3) and appraisal roles - Suggested updates to the DC Guidelines: - Incorporate the option of Cost Efficiency Analysis (CEA) into the Guidelines for certain types of projects (mainly from social sectors) where CEA may be preferable to cost-benefit analysis. - Request estimated yearly operation and maintenance costs in all study templates. - Publish key national parameters in the Guidelines; shadow (social) prices required for economic appraisal should be calculated, updated regularly and published in the DC Guidelines. - Allow a simplified pre-feasibility study to be sufficient to approve small and simple projects; define an indicative threshold and authorize simplified elements when approving project concept or profile. - Require project documents to analyze if project cost fits into the ceiling specified in the medium-term framework; assess project financial requirement before making projects immediately eligible for funding. - Update Guidelines to fully reflect procedures with the IBP (e.g., project submissions via the IBP, not hard copy). - Distinguishing appraisal roles: - Distinguish appraisal roles between sector and central government appraisal teams (DC, PAP) to smooth analysis and limit scope of work. - Ideal roles: sectors review project scope and cost; central planning team plays a peer review role. - System workflow questions should inform project preparation teams which issues need deeper treatment; sector inputs will determine level of central peer review involvement. ### Harmonizing Traditional Public Investment (TPI) projects and PPPs - Current divergence and consequences: - From inception, PPP projects follow a different path than TPI projects. - DC Guidelines establish four levels of approval before admission into the PIP: Project Concept, Profile, Prefeasibility and Feasibility; after each study is completed it should be submitted to MoFPED for consideration and approval by the DC. - The PPP Act requires new PPP candidate projects be registered with the PPP Unit, backed by a Project Concept Note (PCN) including a preliminary cost-benefit analysis. - After PPP Unit review the project goes to the PPP Committee which approves or rejects it; projects are registered in different databases at PAP (IBP soon) and at the PPP unit. - Neither PAP nor the PPP unit have a complete picture of the project pipeline; projects sent to the PPP unit have not been subjected to the initial screening of a Project Concept and Profile. - Alignment opportunities: - The content of a PCN as detailed in the PPP guidelines surpasses the content of a prefeasibility study in the DC Guidelines; a prefeasibility study following DC Guidelines would provide a good base to prepare a PCN. - Requiring MDAs to follow Project Concept, Profile and Prefeasibility would help complete a PCN as required by the PPP Unit and would not contradict the PPP Act. - Not only is the legal framework for PPP projects stronger than for TPI projects, but guidelines and supporting tools for PPPs are more advanced (e.g., Sixth draft dated April 26, 2019, National PPP Guidelines; Excel-based Project Screening Tool). - Harmonizing workflows would: - Improve coordination, increase efficiency and effectiveness of the appraisal stage. - Require all projects to follow study stages up to prefeasibility, creating a common pipeline for TPI or PPP implementation. - Allow prefeasibility to include option analysis to determine best implementation modality; if PPP is best, project branches to PPP Unit and proposing MDA to prepare PCN without necessarily contradicting the PPP Act. - Sharing experience and tools between PAP and the PPP unit would be mutually beneficial: DC Guidelines can be improved based on PPP unit guidelines; Project Screening Tool can be used by PAP, DC, and MDAs; PPP unit could access IBP and the Public Investment Manual for Project Preparation and Appraisal. - Table 6.1 overview (methodologies, guidelines and tools available for TPI and PPP projects) (topics include Framework, Appraisal, Implementation, M&E during implementation, Evaluation of outcome Ex-post evaluation) — available instruments span DC Guidelines, PPP act and Regulations, National PPP Guidelines (draft), Public Investment Manual for Project Preparation and Appraisal, DC Guidelines and templates, IBP, Project Concept Note template, Project Screening Tool, Model for Assessment of Fiscal Commitments, Manual for Project Implementation and M&E (to be developed), IBP Phase II (to be developed), BMAU reports, OPM Monitoring System, Evaluation platforms and tools. ### Key considerations for the planned PIM policy - Draft NIP considerations: - The draft NIP states that one key focus is increasing productivity of public investments to improve productivity and competitiveness of enterprises. - This should be achieved by improving efficiency and impact (effectiveness) of public investments prioritized in the NDP and Uganda’s Vision 2040 through improved prioritization and management of public investments for maximizing returns. - The NIP focus is on creating an enabling environment for private investments. - Recommended PIM policy content (as stated): - The guiding principles for public investment management (efficiency, effectiveness, socio-economic worth, sustainability, transparency and equity). - The objective and desired outcome of implementing a PIMS. - The relevance of the PIMS for achieving NDP III goals. - The identification of the institutions participating and their roles and responsibilities, covering the entire project life cycle. - The committees and working groups that should implement the policy (DC, PPP Committee, SWGs, Project Preparation Committees). - Principles/ overarching approach to public financial management for public investment projects. - The tools to be used for achieving the expected objective (guidelines, methodologies, IBP). - Link with specific issues like PPPs, government asset management, government management of its participation in state-owned enterprises and the public investment conducted by them. - The need for a public sector culture of efficient and effective public investment by creating capacities in public officials and main sources and providers of training, including the intention to build a Center of Excellence in PIM at Makerere University. - Guidance for developing the legal framework (see Chapter VI section A above). ### Summary of Recommendations - Recommendation 6.1: Strengthen the framework supporting PIM to ensure buy-in from all stakeholders and limit the risk that new procedures are dismantled. - Develop a Public Investment Management Policy to create buy-in from all stakeholders into the new PIM processes and procedures, specifying roles and responsibilities. - Improve the legal framework for PIMS to address at least two key issues: (i) formalize roles and responsibilities of key stakeholders in the PIMS, and (ii) address the imbalance between the strength of the PPP Act and the lack of legal basis for the DC guidelines. - Formalize the DC as a high-level committee, including representatives of key line ministries. Formalize the DC Subcommittee to decrease DC workload; clearly define roles, tasks and attributions of both. - Recommendation 6.2: Strengthen the appraisal stage by creating a single approval process up to pre-feasibility studies for all public investment initiatives. - Modify the workflow for potential PPPs and TPIs so all projects complete the same three initial appraisal stages (concept, profile and pre-feasibility). At pre-feasibility the DC should decide if the project should be pursued as a PPP and transfer it to the PPP Unit for further assessment. - Adopt the project screening tool to guide the project preparation process for all initiatives. - Recommendation 6.3: Extend the gatekeeping role of the DC beyond the appraisal stage by giving it the authority to review projects that have deviated from plans during the early stages of execution. - Create the requirement that at the procurement stage, if a project value as per the lowest bid surpasses the investment costs estimated at the feasibility stage by a certain margin it should be re-appraised and submitted again to the DC for re-approval; this provision would create a powerful incentive to more precise estimation of project investment costs by MDAs. *Source: IMF mission team material in the provided content unit.* ### Annex I. Status of Previous CD Recommendations ### Annex I. Status of Previous CD Recommendations ### Background and chronology - With the diagnostic study of August 2016, MoFPED adopted and published its PIM Action Plan. - IMF CD support prior to the current mission: - Headquarters-led CD missions: March 2017 and March 2018. - Follow-on expert visits: July 2017 and November 2018. - Authorities’ diagnostic study: - “Strengthening Public Investment Management in Uganda: A Diagnostic Study;” Projects and Public-Private Partnerships Department, Ministry of Finance, Planning and Economic Development, The Republic of Uganda, August 2016. - IMF CD mission reports (titles and dates as provided by the source): - March 2017 mission: “Uganda: Enhancing the Performance of Public Investment Management;” C. Roehler, J. Charaoui, M. Darcy, K. Khasiani, A. Navarro; May 2017. - July 2017 expert visit: “Uganda: Aide Memoire – Initiating the Stock-taking of the Public Investment Program;” A. Navarro, M. Darcy; September 2017. - March 2018 mission: “Uganda: Public Investment Management Reforms – Next Steps;” C. Roehler, E. Aldunate, A. Navarro; May 2018. - November 2018 expert visit: “Uganda: Public Investment Program Analysis – Suggested Clean-up Criteria;” E. Aldunate, M. Rosas; November 2018. - The authorities’ original PIM System Action Plan of 2016 is reproduced in the source. ### Status update: Recommendations from the March 2017 CD Mission - Context: IMF CD recommendations largely relate to the authorities’ PIM Action Areas 1, 2, 5, 6, and 7. - Rec 1 - Recommendation: Undertake stock-take of the PIP and overhaul PIP database, updating all multi-year commitment and cash flow estimates based on a close review of project financials, physical and contractual milestones - Original Proposed Timeline: September 2017 - Action Undertaken: The stock take, including an initial data collection and a data validation exercise, were completed for the projects in the FY16/17 PIP. - Progress: Achieved - Rec 2 - Recommendation: Strengthen elements and realign the appraisal process to make the DC a more effective gatekeeper, assessment against the MTEF takes place, and financing is decided only after the pre-feasibility study - Original Proposed Timeline: December 2018 - Action Undertaken: The DC is operating as a gatekeeper for public investment projects and an appraisal manual has been published. Link with the MTEF has not been strengthened. Financing, especially if donor-sourced, continues to be decided before project appraisal. Need to harmonize TPI and PPP processes recognized by PAP, PPP Unit and LMs. - Progress: Partly Achieved - Rec 3 - Recommendation: Develop a brief manual on fiscal risks of projects and, in particular, of PPPs - Original Proposed Timeline: December 2017 - Action Undertaken: The PPP Unit is in the process of adopting a FCCL Tool that is based on the IMF/ WB PFRAM tool. Macro scenario analysis is possible with the FCCL, while the fiscal risk module of the PFRAM has been removed. No action has been taken regarding TPIs. - Progress: In Progress - Rec 4 - Recommendation: Develop specific guidance on financial appraisal (capital and recurrent) and implementation plans - Original Proposed Timeline: December 2017 - Action Undertaken: Responsibility for guidance on project financial information, and assessment of readiness of projects for implementation and full budget funding needs to be assigned to BPED or PAP - Progress: Not Done - Rec 5 - Recommendation: Introduce a comprehensive review of the PIP by sector in September/October of each year between MoFPED, NPA and the sector, ascertaining status and phasing for existing projects, and agreeing a sector strategy for developing new projects – against the likely MTEF envelope for the sector - Original Proposed Timeline: Pilot: October 2017; Adopt: October 2018 - Action Undertaken: A PIP clean-up exercise was undertaken in FY18/19. On 432 projects recommendations were presented to the DC. 45 projects exited, 83 can reapply, 1 was transferred to recurrent. A next annual review is anticipated in Sept – Nov 2019. - Progress: Done, an annual review of the PIP/ red-flagged projects to start in FY19/20. - Rec 6 - Recommendation: Put an annual decision paper on the PIP to Cabinet and obtain endorsement on (i) medium-term expenditure envelope and shares for each sector, (ii) any projects to add and offsetting ones to remove/suspend to stay, and (iii) a list of well-defined priority areas for development of new projects. - Original Proposed Timeline: October 2017 - Action Undertaken: 432 existing projects were reviewed by DC by sector in FY18/19. However, decisions on projects continue to be taken individually rather than as a portfolio and in the context of the medium-term resources. - Progress: In Progress. - Rec 7 - Recommendation: Develop realistic multi-year commitments and cash flow projections (bottom-up projections). - Original Proposed Timeline: December 2017 - Action Undertaken: A Multi-annual Commitments Statement was submitted to parliament in March 2019 in accordance with the PFM Act, while the cash flow forecasts continue to appear to be weak. - Progress: Partly Achieved. - Rec 8 - Recommendation: Develop summary information for decision makers and monitoring (PAP/ BPED) - Original Proposed Timeline: December 2017 - Action Undertaken: The March 2018 mission provided guidance, and some such information is now being prepared, e.g. in the draft Stock-take Report - Progress: Partly Achieved. - Rec 9 - Recommendation: Set up a project management team for the IBP - Original Proposed Timeline: June 2017 - Action Undertaken: IBP Phase I is being commissioned; IBP Phase II to be designed. - Progress: Phase I: Achieved Phase II: TBD - Rec 10 - Recommendation: Develop carefully the conceptual design of the IBP - Original Proposed Timeline: December 2017 - Action Undertaken: MoFPED with support from World Bank procured services of CRI. User needs and option analysis for the IBP II to be developed. - Progress: Phase I: Achieved Phase II: TBD - Rec 11 - Recommendation: Design work processes to keep information in the PIP/ IPD up to date and reliable - Original Proposed Timeline: December 2017 - Action Undertaken: An annual project review process is being initiated for the first time in Aug – Nov 2019, following up on the PIP clean-up exercise - Progress: In Progress - Rec 12 - Recommendation: Develop the capacity to monitor the whole project portfolio - Original Proposed Timeline: December 2018 - Action Undertaken: The stock-take database was used to present information on the whole project portfolio. A compendium of indicators for monitoring and evaluation of programs for the PBS has been used, which is applicable to projects as well. Actual implementation of reviews of the portfolio, of indicators, and alignment of indicators between PBS and IBP to be verified. - Progress: Partly Achieved - Rec 13 - Recommendation: Continue to identify partners for PIM capacity building; find support for curriculum development - Original Proposed Timeline: December 2017 - Action Undertaken: An MoU with Makerere University’s School of Economics on establishing a PIM Centre of Excellence was signed, and efforts continue to set it up, including with World Bank support. - Progress: In Progress ### Status update: Recommendations from the March 2018 CD Mission - Validating data and carrying the stock-take to conclusion - Rec 1 - Recommendation: Conduct a thorough data validation exercise for the stock-take data, including completing missing information, and re-validating information that can be challenged based on other information. Conduct the data validation exercise in four phases (review experiences of the stock-take, design and organize the data validation, complete and update project templates, analyze data and prepare decisions). For a draft action plan with milestones see Annex II [of March 2018 CD mission report]. - Original Proposed Timeline: April - October 2018 - Action Undertaken: The data validation exercise was completed through November 2018. Information gaps and inconsistencies were corrected to acceptable levels. - Progress: Achieved. - Rec 2 - Recommendation: Encourage and train MoFPED teams to exercise their peer review and challenge role in the interaction with the MDAs to obtain good quality data. - Original Proposed Timeline: May 2018 and continuous - Action Undertaken: PAP reports that during the PIP clean-up and the budget process for FY19/20 LMs were confronted with the stock-take information, and discussions became more substantive. - Progress: In Progress. - Rec 3 - Recommendation: Develop draft reporting templates for the information from the stock-take and on the PIP, which can guide prioritization of information gathering, and – once data are available - be used in a Cabinet paper on the PIP and in regular reports. - Original Proposed Timeline: Drafts in April/ May 2018, continuous refinement - Action Undertaken: Previous IMF CD has provided various templates that the authorities are now able to prepare, but a formal document to present to Cabinet does not exist. The feedback received after the completion of the Cabinet paper on the stock-take (Action 4) will provide a good starting point to develop these templates. - Progress: In progress - Rec 4 - Recommendation: Prepare a Cabinet paper on the PIP, presenting the structure of the PIP from the stock-take information, key decision points on the PIP from the stock-take and for FY 19/20, and possibly an outlook on the re-application process. - Original Proposed Timeline: October 2018 - Action Undertaken: A draft report on the results of the stock-take exercise has been prepared and is currently under revision by the authorities. It will be presented to high-level officials as part of the “closing the stock-take” exercise. - Progress: In Progress. - Cleaning the PIP and validating the project/program design through a re-application process - Rec 5 - Recommendation: Decide on the scope and criteria for projects to be included the PIP in the future. Properly classify initiatives, distinguishing between projects and programs, and expenditure types. Decide on whether to handle productive and social programs under a “National Development and Investment Program” or as programs in the recurrent budget under the PBB. Identify other criteria for re-admittance to the PIP. - Original Proposed Timeline: Iterative to October 2018 - Action Undertaken: PIP classification continues to be based on votes and individual projects, failing to recognize activities that can be part of a larger initiative. Nor has this issue been considered yet in conjunction with the development of the IBP. - Progress: Not Done. - Rec 6 - Recommendation: Conduct a re-application process for all PIP projects, requesting MDAs to submit all essential project information, including a basic logical framework matrix as a reference tool for assessing alignment with the NDP and future monitoring. Initiate Apr/ May 2018 Conduct Sept - Dec 2018 - Action Undertaken: A PIP clean-up was conducted, and projects with insufficient information or other red flags requested to reapply. 83 projects are currently frozen subject to completing the reapplication. During FY19/20, at least the 200 projects that are slated end will be reviewed. - Progress: Largely Achieved. - Rec 7 - Recommendation: In the mid-term review of the NDP, update guidance on prioritization of NDP, SDP and SDG goals. - Original Proposed Timeline: December 2018 - Action Undertaken: The mid-term review is underway and should be completed in the first half of 2020. - Progress: In Progress. - Establishing project registration - Rec 8 - Recommendation: Set up procedures for comprehensive project registration, and identify an interim IT solution for registration. - Original Proposed Timeline: September 2018 - Action Undertaken: New projects will start to be registered in the IBP. MoFPED has not decided if the information in the stock-take will be uploaded into the IBP. - Progress: In Progress. - Rec 9 - Recommendation: Start the IBP development with a careful design phase, and make the project registration module an early deliverable. - Original Proposed Timeline: June 2019 - Action Undertaken: A trial version of the project module for project registration and appraisal tracking has been delivered and the final version will be completed before the end of FY 18/19. - Progress: In Progress. - Improving the Multi-Year Commitment Statement (MYCS) - Rec 10 - Recommendation: Strengthen the MYCS by including summary and analytical information on the approved project portfolio and the forward commitments. Put financial estimates in the context of the medium-term fiscal framework. - Original Proposed Timeline: March 2019 for FY 19/20 - Action Undertaken: The MYCS was presented on schedule and has been strengthened but it still fails to be address appropriately the MTEF and has some inconsistencies with the PIP portfolio. - Progress: In Progress. - Rec 11 - Recommendation: Enforce timely registration of contracts in the IFMIS and include information on signed contracts in the MYCS. - Original Proposed Timeline: March 2019 for FY 19/20 - Action Undertaken: Contract registration in the IFMIS not completed, not included in the MYCS. - Progress: Not done. ### Annex II. Authorities Supplemental PIM Action Plan (summary of key items) - Institutional setting and roles - Action 1.1: Do the Processing Re‐engineering — Unify Project Review Process with PPPs up to Pre‐feasibility Stage. - IMF proposed adjustment (6.5): Integrate potential PPP projects to the PIM until prefeasibility has been completed. - Action 1.2: Institutionalize the PIMS role in the Project Analysis and PPP Department as Home to the PIM System. - IMF proposed adjustment (5.2): Clearly define roles and responsibilities within PIM, including the monitoring and evaluation stage; develop an integrated vision of the PIM and PIM systems that includes a complete vision of roles and responsibilities of all stakeholders. - Improve the entire project cycle - Develop PIMS framework documents, simplified project selection criteria, and methodologies/templates for project appraisal. - IMF proposed adjustment (6.4): Make the project appraisal process more effective by developing sectorial appraisal guidelines, and distinguishing the roles of the sector and the central appraisal units more clearly. - Operationalize an annual project review to update project information and formalize a process to update project information yearly before IBP-II implementation. - Improve project classification - IMF proposed adjustment (5.6): Define coverage of the PIP and articulate project classification/typology. - DC project oversight - IMF proposed adjustment (6.6): Create requirement to re-appraise and resubmit projects to the DC if lowest bid surpasses feasibility estimates by a certain margin. - Capacity building - Implement training programs at Basic, Intermediate and Advanced levels. - National parameters and cost databases - Establish national parameters and economic opportunity costs; obtain conversion factor calculation software; develop a unit prices database. - Integrated Bank of Projects (IBP) - Further development of the IBP with phased design and stakeholder consultation. - IMF proposed actions (5.1): For IBP Phase II undertake a thorough assessment of user requirements, design workflows and interlinkages with other IT systems, initially focusing on the link with the IFMIS and PBS; constitute a multi-sector and multi-unit team. - IMF proposed actions (5.5): Develop a robust project coding structure that allows information exchange between different information systems. - IMF proposed actions (5.7): Develop rules and procedures for project registration, including for relevant projects that have not (yet) come to the DC. - IMF proposed actions (5.4): Accelerate transition of projects into IBP Phase I through migration plans based on priority projects and sectorial migration plans. - IMF proposed actions (5.3): Ensure IBP has strong reporting functionality and develop capacity building in IBP operations. - Legal and regulatory framework - Develop a Public Investment Management Policy to create buy-in and improve supporting legal framework. - IMF proposed adjustments (6.1, 6.2, 6.3): Improve legal framework to formalize roles and responsibilities, address imbalance between PPP Act strength and lack of DC guidelines legal basis, and consider formalizing the DC as a high-level committee. - Project implementation and monitoring - Define a standardized set of key performance indicators; upgrade quality of financial information; strengthen link between project tracking and budgeting. - IMF proposed adjustments: Publish a report on the stock-take and archive the stock-take database; design DC approval forms that convey project costs and medium-term fiscal envelope; use medium-term forecasts as starting point for project review and budget discussion; review assignment of responsibility within MoFPED for consolidating project planning and budgeting information; distinguish in IBP design feasibility approval from budget eligibility; use the MYCS to communicate existing fiscal commitment against medium-term constraints. - Strengthen commitment control - IMF proposed adjustment (4.2): Operationalize and enforce timely registration of contracts and certificates of works in the IFMIS and include this information in the MYCS. - Ex-post monitoring and evaluation - Develop a monitoring and ex-post evaluation framework and capacity building to undertake M&E. ### Annex III. Potential structure for a Multi-Year Commitment Statement (MYCS) — key guidance - Preamble - State the legal requirement for the report and elaborate on its purpose as defined by MoFPED. - Define scope — how commitments are defined relative to other government spending plans. - Cover: Who is the report for? Why are you communicating with them? What do you expect them to do with the report? - Introduction - Provide an overview of the development budget (historical and medium-term projections). - Summarize the commitment outcomes for the past year and an update on current year. - Identify key trends and dynamics in project commitments going forward. - Explain how commitments have been limited/prioritized to fit within the budget framework. - Development spending, forward-looking - Provide elaboration of historical trends and budget projections for committed spending: - Trends in the development budget and its financing. - Analysis of the commitments that make up the development budget. - Draw on the draft Stock-take Report’s analysis (e.g., “Findings of the Stock Take Exercise”) for composition of the PIP. - Include tables and graphs giving broad information (e.g., development budget as a share of the budget; changes in financing structure; value of commitments vs. medium-term development budget ceilings). - Sectoral overview - Provide narrative on main trends in sectoral allocations and how sectors are investing in physical infrastructure. - Include consolidated table of commitment by sector, performance information (previous allocations, outcomes, revised estimates), medium-term allocation profile and alignment with commitments. - Identify factors driving changes in commitment cash flow values (e.g., changes to cost base, poor planning, limited implementation capacity). - Progress of main infrastructure projects - Identify a set of projects for detailed reporting (e.g., 10 largest projects or 10 strategic/APEX Projects). - Report on government progress in implementing these projects, including measures to ensure timely and cost-effective delivery. - Suggested template fields (as presented): - Project details: Name; Implementing agency; Main project objective/indicator; Total project cost; Remaining project cost; Medium-term forecast table (Total project cost Remaining costs 2019/20 2020/21 2021/22 2022/23 2023/24); Budget 2019/20; Budget 2020/21. - Project developments, including comment on cashflow deviations and revisions. *Annex I. Status of Previous CD Recommendations (1ugaea2019003) – source PDF content provided.* ### Annex IV. Types of Expenditures Included in the Current ### Annex IV. Types of Expenditures Included in the Current PIP ### Classification of initiatives in the PIP - A review of the 350 initiatives currently included in the PIP and for which data was collected in the stock taking exercise, shows that they can be classified as: - Investment projects: Clearly defined initiatives generating physical capital and having a defined completion date. - Investment programs: Made up of a set of investment projects aimed at a common objective. Currently no clear identification of projects in this program is provided and no completion date is foreseeable - Retooling projects or programs: Aimed at replacing cars, furniture and equipment, i.e. “property, plants and equipment.” Some current projects include creation of infrastructure or acquisition of major machinery or equipment; this component should be presented as a separate investment project. - Appraisal studies: Feasibility studies of investment projects. These studies should be considered as part of a project life cycle. - Productive programs: Aimed at creating or improving productive capacity and facilitating marketing of goods often without defined completion date. Example: seed programs. While in support of NDP objectives, they don’t necessarily create physical capital. Where creation of infrastructure is included, it should be presented as a separate investment project. Other components should be monitored and evaluated for results. - Social programs: Program objective is to satisfy a social need by providing goods or services. These should not be considered investment but are key for achieving some of the NDP goals and should be monitored and evaluated for results on a regular basis. - Basic Studies: These are major research activities that may give rise to future investment projects. Example: Geological mapping. Still, they cannot be classified as investment. ### Monitoring and presentation guidance (implicit in classifications) - Treat infrastructure or major machinery acquisition components within broader initiatives as separate investment projects. - Consider appraisal studies as part of the project life cycle rather than standalone investments. - Monitor and evaluate non-capital programs (productive programs, social programs) for results on a regular basis. ### Annex V. Country Examples of PIM Laws - Type 1. PIM Framework based on a specific PIM Law - Argentina: Law N° 24354 (1994)) - Bolivia (Law N° 1178 (1990)) - Peru (Law N° 27293 (2000)) - Uruguay (Law N° 18.996 (2011)). - Draft PIMS laws are under discussion in Paraguay and Mozambique. - Type 2. PIM framework is regulated under another Law or Act - Chile: Organic Law of Financial Administration of the State (1975) Art. 19 bis - El Salvador: Organic Law of Financial Administration of the State (1966), Art. 34 and 85. - Nicaragua: Law of Financial Administration and the Budgetary Regime, Law 550 (2005) Title IX. - Jamaica: Financial Administration and Audit Act, Financial Instructions (2017) Chapter 6 Public Investment Management. - Type 3. PIM framework is based on the role of institutions - Honduras: - Legislative Decree N ° 218-96: Under secretariat of Credit and Public Investment of the SEFIN responsible for Programming functions of public investments - Legislative Decree Number 83-04: DGIP Technical Body Coordinator of the Public Investment Program. - Panama: - Law No. 97 of 1998: Creation of the Ministry of Economy and Finance - Ministerial Resolution No. 131 of 1999: Creation of the Investment Programming Directorate, its structure and functions *Fiscal Affairs Department International Monetary Fund 700 19th Street NW Washington, DC 20431 USA http://www.imf.org/capacitydevelopment* --- _Source: https://www.imf.org/-/media/files/publications/cr/2019/1ugaea2019003.pdf_