## 1benea2020001

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### Mission overview and participants
- Technical assistance mission from the Fiscal Affairs Department (FAD) of the IMF with World Bank experts visited Cotonou from October 19 until November 1, 2017, to conduct a Public Investment Management Assessment (PIMA).
- Mission leader: Mr. Bruno Imbert (Economist, FAD).
- Mission team: Messrs. Mouhamadou Sy (Economist, FAD), Bacari Koné (Advisor, AFRITAC West), Pierre Roumegas and Louis d’Humières (Experts, FAD); Ms. Nicoletta Feruglio and Messrs. Mathias Gogohounga and Angelo Donou (Governance Specialists, World Bank).
- Principal counterpart offices consulted: Ministry of Economy and Finance (MEF) units (CSPEF, DGB, DGTCP, DGPSIP, DNCMP, IGF, CF, DGPED, CAA); Ministry of Planning and Development (MPD) Programming and Forecasting units; line ministries (MEPM, MIT, MEM); local entities (DGCL, CONAFIL, ANCB); regulatory authorities (ARCEP, ARE); technical and financial partners (World Bank, European Union, GIZ, Netherlands cooperation); National Assembly (Finance Commission), Supreme Court (Audit Office), Presidency (BAI).
- Meetings with senior officials: His Excellency, Romuald Wadagni, Minister of Economy and Finance; His Excellency, Abdoulaye Bio Tchane, State Minister for Planning and Development.
- Special acknowledgements: Dieudonne Dahoun and Hermann Takou for mission organization; Karim Barhoumi, IMF Resident Representative in Benin, for support.

### Main conclusions of the mission (PIMA core findings)
- Institutional framework: High-quality and relatively complete institutional framework, outperforming WAEMU and many Sub-Saharan African PIMA peers; effectiveness of the framework is weak.
- Investment sustainability and quality:
  - Benin devotes a larger-than-peer average share of GDP to public investment, but the stock of capital has been deteriorating steadily for the past two decades; infrastructure quality is inferior to neighbors and declining.
- PIMA diagnostic on management stages:
  - Project selection and ex-ante and ex-post assessments are not conducted systematically; procedures require substantial reorganization.
  - Low scores across execution stages, particularly on protection of investments, availability of financing, and implementation management.
  - Low execution rate of investment expenditure observed for several years.
  - Capacity gaps, weak information systems, and marginal consideration of maintenance and maintenance costs exacerbate problems.
- Government Action Program (PAG), 2016:
  - Ambitious investment plan centered on flagship sectors and recourse primarily to new financing mechanisms, such as public-private partnerships (PPPs).
  - Implementation of the PAG is necessary to strengthen PIM framework and close efficiency gap relative to international best practices.
- Tailored recommendations and action plan:
  - Objective: improve management efficiency and help achieve PAG objectives.
  - Four complementary reform areas: (1) improving the institutional framework; (2) availability and sustainability of financing; (3) more effective project preparation and implementation; and (4) more sustainable investments.
  - Specific reforms emphasized: implementation of commitment authorizations and capital appropriations; formalize and disclose project selection and ex-ante assessment methodologies; management of payment deadlines; management of PPP fiscal risks and financial appraisal.

### Summary of assessment (selected institutional ratings and reform priorities)
- Fiscal rules
  - Institutional strength: Medium.
  - Effectiveness: High.
  - Priority of reforms: *
- National and sectoral planning
  - Institutional strength: High.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Central-local coordination
  - Institutional strength: Medium.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Public-private partnerships (PPPs)
  - Institutional strength: Medium.
  - Effectiveness: Low.
  - Priority of reforms: ***
- Regulation of infrastructure enterprises
  - Institutional strength: Medium.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Multiyear programming
  - Institutional strength: Medium.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Budget comprehensiveness
  - Institutional strength: High.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Budget unity
  - Institutional strength: Medium.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Ex-ante project assessment
  - Institutional strength: Low.
  - Effectiveness: Low.
  - Priority of reforms: ***
- Project selection
  - Institutional strength: Medium.
  - Effectiveness: Low.
  - Priority of reforms: ***
- Protection of investments
  - Institutional strength: High.
  - Effectiveness: Medium.
  - Priority of reforms: ***
- Availability of financing
  - Institutional strength: Medium.
  - Effectiveness: Low.
  - Priority of reforms: ***
- Transparency in execution
  - Institutional strength: High.
  - Effectiveness: Medium.
  - Priority of reforms: **
- Implementation management
  - Institutional strength: Medium.
  - Effectiveness: Low.
  - Priority of reforms: ***
- Accounting of public assets
  - Institutional strength: Low.
  - Effectiveness: Low.
  - Priority of reforms: ***

### Key contextual diagnostics and direction of reforms
- Key points:
  - Benin’s average public investment (1990–2015) = 6.5 percent of GDP versus WAEMU = 6.1 percent of GDP; higher volatility (average year-to-year differential = 1.7 percent of GDP for Benin versus 1.2 percent for WAEMU).
  - Total public and private investment increased by only 0.4 percent from 1995–2015.
  - Public investment accounts for an average of 30 percent of total investment.
  - Fixed capital stock ≈ 256 percent of GDP in 2000 and 122 percent of GDP in 2015 — a decline of 134 percentage points.
  - Benin's overall PIE-X efficiency score = 0.5 (WAEMU = 0.65; SSA = 0.64; low-income = 0.61).
  - PIE-X physical component: Benin = 0.47; WAEMU = 0.35; SSA = 0.46; low-income = 0.50.
  - PIE-X quality component: Benin = 0.71; WAEMU = 0.84; SSA = 0.80; low-income = 0.77.
  - Inefficiency stems more from lower infrastructure quality than from volume/coverage.
- Reform pillars:
  - Improve the institutional framework.
  - Strengthen availability and sustainability of financing.
  - Enhance project preparation and implementation effectiveness.
  - Promote more sustainable investments (maintenance and asset accounting).
- Specific priorities:
  - Implement commitment authorizations and capital appropriations.
  - Formalize and disclose project selection and ex-ante assessment methodologies.
  - Improve management of payment deadlines.
  - Establish and operationalize units to assess fiscal risks and financially appraise PPPs.

### Contextual fiscal and PAG data (exact figures)
- PAG overall cost: CFAF 9 trillion (text also states CFAF 9.039 trillion in Box 1).
- PAG flagship projects cost: CFAF 7.086 trillion (Box 1).
- Private sector expected to provide 61 percent of financing for PAG flagship projects.
- Government plans to increase investment rate from 19 percent in 2016 to 45 percent in 2019, with an average of 34 percent over the period.
- Government anticipates average economic growth of 6.5 percent during the period and creation of more than 500,000 jobs.
- Tax revenue estimated at 12.6 percent of GDP in 2016 (WAEMU threshold = 20 percent).
- External financing accounted for just under one-half of total capital expenditure in the budget from 2011–16; externally financed investment increased by 76 percent between 2012 and 2013 (example).
- Initial financing scheme for the PAG, 2016–21 (in billions of CFAF):
  - Public, non-PPP total: 3,530
    - Budget contribution and debenture loan: 2,450
    - Loans: 750
    - Grants: 330
  - PPP total: 5,509
  - Total (2016–21): 9,039
- Annual totals (selected): 2017: 1,149; 2018: 1,694; 2019: 2,638; 2020: 2,645; 2021: 912.

### WAEMU fiscal rules and public debt profile (exact figures)
- Benin established objective of compliance with all WAEMU fiscal rules by 2019.
- WAEMU first ranking convergence criteria (2019 horizon values and Benin outcomes):
  - Budget balance (including grants)/Nominal GDP — Criteria, 2019 Horizon: >= -3 percent
    - 2016: -6.2
    - 2017: -7.9
    - 2018: -4.0
    - 2019: -1.9
  - Annual inflation rate — Criteria, 2019 Horizon: <= 3 percent
    - 2016: -0.3
    - 2017: 2.1
    - 2018: 2.0
    - 2019: 2.0
  - Stock of public debt/Nominal GDP — Criteria, 2019 Horizon: <= 70 percent
    - 2016: 49.5
    - 2017: 54.3
    - 2018: 54.4
    - 2019: 52.3
- Public debt evolution:
  - 2013: 25.3 percent of GDP
  - 2017: 55.6 percent of GDP
- Domestic debt increase:
  - Domestic debt: 8.6 percent of GDP in 2013 → 27.8 percent of GDP in 2016
- Interest rate profile (2016):
  - Average weighted interest rate on domestic debt: 6.3 percent
  - Average weighted interest rate on external debt: 1 percent
- Maturity profile and reimbursement risk:
  - 54 percent of the stock of debt is scheduled to be reimbursed within the next five years; 85 percent of that portion is domestic.

### Stage I — Public Investment Planning: findings and priorities
- Objectives of Stage I: ensure adequate, predictable, sustainable investment levels; align investment with national/sectoral priorities; central-local coordination; PPP transparency; regulation of infrastructure enterprises.
- Strengths:
  - National and sectoral strategies prepared and disclosed; some sectoral policies have outcome and physical indicators.
  - Coordination framework between central and local governments exists.
  - Permanent fiscal rules present.
- Deficiencies:
  - Fiscal rules do not specifically protect capital expenditure.
  - Ex-ante project assessment institutional strength: Low — no sufficiently formalized or publicly disclosed regulatory/methodological framework.
  - PPP legal framework problematic: broad PPP definition; absence of limits on accumulation of explicit or conditional commitments.
  - Ex-ante and ex-post assessments are not systematic.
- Recommendations:
  - Increase scope and quality of planning through realistic cost assessment, definition of sectoral strategies for all ministries, and stronger coordination between national and sectoral strategies.
  - Finalize and adopt a comprehensive high-level regulatory text (at least a decree) encompassing all phases of the public investment management cycle.
  - Publish selection criteria and PIPs; condition PIP inscription on feasibility studies for projects above thresholds.

### Stage II — Allocation of capital expenditure: findings, capacity, and priorities
- Multiyear programming
  - Institutional strength: Medium. Multiyear projections and ceilings prepared taking into account full project costs; PIPs are not published.
  - Effectiveness: Medium. Substantial data discrepancies between programming and implementation exercises.
  - Priority of reforms: **
  - Observations:
    - Three-year PIP submitted to Parliament but not published.
    - Rolling capital expenditure ceilings prepared only for payment appropriations; updated during budget process.
    - Example: capital expenditure executed in 2015 = CFAF 165 billion versus appropriations CFAF 413 billion (execution rate = 40 percent), including TSA 16 percent for externally financed capital expenditure.
    - Strengthening forecasts and external financing data is medium-term priority.
- Budget comprehensiveness and unity
  - Capital expenditure is generally executed as part of the budget; budgeting of external financing problematic; AE/CP not fully implemented; PPP integration unclear.
  - Current and capital budgets prepared by different ministries but submitted jointly to Parliament.
  - Practical limits: coordination between budget exercises limited; budgeting of recurrent expenditure insufficient; software DJRADO not interfaced with SIPIBE.
  - Recommendation: strengthen information exchange protocols and computer interfaces; focus on recurrent costs budgeting including maintenance.
- Project assessment and selection
  - Ex-ante project appraisal:
    - Institutional strength: Low. No formalized public methodological framework; feasibility studies not systematic; cost-benefit analyses rarely conducted outside major externally financed projects.
    - Level of credits for feasibility studies/expert appraisals in 2017 Budget Law: CFAF 15 billion.
    - Projects without prior feasibility studies: 84 projects in 2016 (28 percent of PIP); 59 projects in 2017 (20 percent of PIP).
    - DGPSIP/PIPD staffing: between 10 and 20 persons.
  - Project selection:
    - Institutional strength: Medium. Selection procedure planned based on technical review by MPD using unpublished criteria.
    - Effectiveness: Low. Selection insufficiently transparent; criteria not systematically applied; limited capacity for expert appraisals during preselection.
    - Selection process steps: ministerial validation → technical review by MPD with MEF → preliminary comparative selection by DGPSIP and MPD → government comparative selection chaired by the President during Council of Ministers.
    - Recommendation: define mandatory standard assessment templates (including cost-benefit analysis) above a cost threshold; publish selection criteria on MPD website; strengthen DGPSIP staffing and sectoral units; extend SIAPIP/DJRADO to line ministries with ex-ante module.
- Key allocation figures (exact):
  - PIPs prepared on three-year horizon.
  - Capital expenditure executed in 2015: CFAF 165 billion.
  - Appropriations for 2015: CFAF 413 billion.
  - Execution rate in 2015: 40 percent.
  - TSA share for externally financed capital expenditure in 2015: 16 percent.
  - Level of credits for feasibility studies and expert appraisals in 2017 Budget Law: CFAF 15 billion.
  - Projects without prior feasibility studies: 84 projects in 2016 (28 percent of PIP); 59 projects in 2017 (20 percent of PIP).

### Stage III — Implementation: findings and priorities
- Stage III objectives: ensure implementation delivers productive, sustainable assets via financing, effective management, transparent monitoring.
- Institutional assessments (Table 9 summary):
  - Protection of investments: Institutional strength: High; Effectiveness: Medium; Priority: ***
  - Availability of financing: Institutional strength: Medium; Effectiveness: Low; Priority: ***
  - Transparency in execution: Institutional strength: High; Effectiveness: Medium; Priority: **
  - Implementation management: Institutional strength: Medium; Effectiveness: Low; Priority: ***
  - Accounting of assets: Institutional strength: Low; Effectiveness: Low; Priority: ***
- Protection of investments
  - Legal framework: LOLF prescribes commitment authorizations (AE) and payment appropriations (CP); SIGFIP currently can only manage annual payment appropriations.
  - Draft manual and templates for AE/CP testing in five pilot ministries.
  - Shortcoming: DGB does not systematically check compliance with carryover and transfer rules; absence of integrated information system weakens protection of multiyear projects.
  - Recommendation: continue IT developments, implement integrated SIGFP, develop capacities.
- Availability of financing
  - Regulatory provisions include procurement plans and monthly cash plans; external financing may be kept in commercial bank accounts outside TSA.
  - Practice: funds generally disbursed timely using MATKOSS and prior authorization procedures; mission could not determine payment arrears; external financing held in CAA accounts with BCEAO or commercial banks.
  - Recommendation: correlate programming and management tools; improve procurement plans; extend TSA gradually to donor financing.
- Transparency in implementation and procurement systems
  - Institutional framework provides for openness and ex-post external audits.
  - Practical gaps: SIGMAP database incomplete and not interfaced with SIGFIP; ministries produce quarterly reports; DGPSIP conducts on-site missions.
  - Some major projects have ex-post external audits but scope limited due to resources.
- Management of project implementation and ex-post assessments
  - Ex-post monitoring and auditing of externally financed projects carried out by autonomous project management units; lack of standard rules for adjustments and no systematic ex-post reviews for domestically funded projects.
  - Project implementation plans not systematically prepared before budget approval.
  - Recommendations: clarify and standardize operational framework; strengthen resources and capacities for ex-post assessments; systematically prepare project implementation plans.
- Accounting of public assets
  - Gradual implementation of accrual-basis accounting by 2019 requires operational regulatory framework.
  - Inventories partial; balance sheets lack reliable information on nonfinancial assets; no amortization recorded.
  - Recommendation: carry out comprehensive asset survey before valuation; implement regulatory framework for asset monitoring; include maintenance appropriation in ministry budgets.

### Cross-cutting issues: information systems, procurement, maintenance, and human resources
- Information systems
  - SIAPIP used to prepare PIP; cannot be used for monitoring financial/physical implementation or assessment.
  - DJRADO development described as critical to monitor all phases; migration from SIAPIP to DJRADO suspended due to insufficient financing.
  - SIAPIP not rolled out to line ministries; no interfaces with SIGFIP and SIGMAP.
  - Recommendation: continue DJRADO development and interface with SIGFP and SIGMAP within interdepartmental IT master plan.
- Public procurement
  - New Law 2017-04 establishes Public Procurement Code; Article 63 requires competitive bidding publicly advertised and through electronic media.
  - SIGMAP database incomplete, out of date, and not interfaced with SIGFIP; DNCMP under-resourced.
  - Empirical data (Table 11: status of public procurement mechanisms, in billions):
    - 2016 totals: Nb 329, Amount 892.4638327
      - Public request for tenders: Nb 220, Amount 339.6840376, 38.1%
      - Restricted request for tenders: Nb 59, Amount 264.3521486, 29.6%
      - Quotation request: Nb 6, Amount 0.605478901, 0.1%
      - Public-private partnership contract: Nb 4, Amount 237.3280923, 26.6%
      - Contract by direct agreement: Nb 40, Amount 50.49407531, 5.7%
    - 2017 totals: Nb 392, Amount 999.649371
      - Public request for tenders: Nb 260, Amount 228.5078935, 22.9%
      - Restricted request for tenders: Nb 64, Amount 183.906425, 18.4%
      - Quotation request: Nb 16, Amount 0.236367039, 0.0%
      - Public-private partnership contract: Nb 11, Amount 545.3601596, 54.6%
      - Contract by direct agreement: Nb 41, Amount 41.63852597, 4.2%
  - Observations: open tenders represent about two-thirds of number of contracts but a smaller share of amounts; PPP share doubled from 2016 to 2017 in amount terms though authorities confirmed "there is still no PPP contract concluded."
- Maintenance and depreciation
  - Routine infrastructure maintenance costs not systematically evaluated or clearly reflected in budgets, except specific sectors (e.g., road sector via Road Maintenance Fund).
  - Depreciation costs not included in sectoral or national plans.
  - Transition to accrual-based accounting at horizon 2019–20 expected to facilitate evaluation and inclusion of maintenance costs.
  - Consequence: lack of maintenance appropriations undermines sustainability and may explain deterioration in capital stock; some maintenance appropriations used for vehicle maintenance rather than intended purposes.
- Human resources
  - Skilled human resources exist but quality and number insufficient at all levels; high staff mobility.
  - Capacity deficits undermine effective PIM processes and largely explain frequent under-execution of capital budgets.
  - Need to strengthen capacities in planning, costing, budgeting of AE/CP, monitoring and assessment.

### Action Plan and Recommendation Sheets (select measures and timetables)
- Overarching action-plan focus: efficiency in public activities; expected outputs include availability of assessments, payment deadline monitoring, effective management of commitments via budget documentation (AE/CP).
- Four structuring areas/objectives:
  1. Improve institutional framework, capacities, and information systems.
  2. Ensure availability and sustainability of financing, monitor PPPs, develop TSA.
  3. Upgrade project preparation and implementation.
  4. Ensure sustainability of investments (maintenance and asset accounting).
- Select recommended measures (stakeholders indicated where applicable):
  - Accelerate finalization and adoption of comprehensive high-level regulatory text covering all PIM phases (DGPSIP / DGB / BAI / MS).
  - Prepare and publish guide for earmarked transfers specifying allocation formula, disbursement mechanisms, obligations, and monitoring (CONAFIL).
  - Continue development of interdepartmental IT master plan and extend SIAPIP/DJRADO to sectoral ministries with ex-ante module (MEF / MPD / MS / BAI / PAGE).
  - Establish platform to monitor external financing data and periodic cooperation with donors (MPD / CAA / DGB / MS / TFP / PAGE).
  - Strengthen PPP supervision: require MEF prior opinion for signing PPPs; strengthen capacities for budget risk analysis; use P-FRAM methodology (MEF / BAI / DGB / CAA / MEF Support Unit).
  - Include comprehensive list of contingent liabilities in annex to Finance Law (DGB / CAA / DGPSIP / MS).
  - Define mandatory standard assessment templates (including cost-benefit analysis) above a cost threshold; condition PIP inscription on preliminary feasibility study; publish selection criteria and assessments (DGPSIP / DGB / MS).
  - Strengthen SIGMAP and public procurement management; assess ARMP operating mechanisms for dispute settlement deadlines (DNCMP / MS / IT Services / ARMP).
  - Develop ex-post review culture; increase ex-post external audit capacities and implement coordination framework among DGPSIP / BAI / IGF / MS / CCCS.

- Annex II — Recommendation Sheets (implementation highlights and timetables)
  - Sheet 1: Implement commitment authorization/payment appropriation (AE/CP) approach to improve multiyear programming, include PPPs in budget documents, and specify residual balances payable. Actions 1–5 with Action 3 in 2018; Action 4 beginning March 2018; Action 5 in 2018. Actions 1 and 2: In progress.
  - Sheet 2: Strengthen process of selecting investment projects: make feasibility studies systematic, define mandatory assessment templates and independent external assessment thresholds, update selection manual, strengthen DGPSIP staffing, extend SIAPIP/DJRADO, publish criteria and PIP. Action 1: End 2017–first-quarter 2018; Action 2: First half of 2018; Action 3: 2018; Action 4: Beginning in 2018; Action 5: First half of 2018.
  - Sheet 3: Implementation management and monitoring of delays in budget and accounting stages: create steering and monitoring committee; include automated procedures in SIGFIP/ASTER/SIGFP; define templates for residual balances. Action 1: February 2018; Action 2: Beginning in February 2018; Action 3: 2019.
  - Sheet 4: Control financial costs and budget risks of PPPs: clarify stakeholder roles, require MEF prior opinion, train staff, prepare annex to budget law on PPP liabilities, define policy to limit PPP recourse to suitable projects. Action 1: End 2017–beginning of 2018; Action 2: Beginning January 2018; Action 3: Beginning with the 2018 Budget Law; Action 4: End of 2017–beginning of 2018.

### Priority actions (select)
- Finalize and adopt public investment regulatory framework and budget execution manual for program approach.
- Continue development and financing of DJRADO and interfaces with SIGFP and SIGMAP; roll out SIAPIP/DJRADO modules to line ministries.
- Implement AE/CP budgeting and reflect PPP commitments and residual balances in budget documentation.
- Require feasibility studies and cost-benefit analysis above thresholds; publish selection criteria, PIPs, and external assessments.
- Strengthen DGPSIP staffing and sectoral units; increase ex-post assessment and audit capacities.
- Extend TSA to incorporate donor financing gradually; consolidate project accounts.
- Strengthen PPP fiscal risk management: require MEF prior opinion; list contingent liabilities in annex to Finance Law; train staff on P-FRAM.

*Source: PREFACE and MAIN CONCLUSIONS OF THE MISSION, PIMA mission report for Benin (technical assistance mission, IMF–FAD with World Bank experts), October 19–November 1, 2017.*

### PREFACE __________________________________________________________________________________________ 7

### 1benea2020001 - PREFACE

### Mission overview and participants
- A technical assistance mission from the Fiscal Affairs Department (FAD) of the International Monetary Fund (IMF), including experts from the World Bank, visited Cotonou from October 19 until November 1, 2017, to conduct an evaluation of the public investment management system using the Public Investment Management Assessment (PIMA) methodology.
- Mission leader: Mr. Bruno Imbert (Economist, FAD).
- Mission team: Messrs. Mouhamadou Sy (Economist, FAD), Bacari Koné (Advisor, AFRITAC West), Pierre Roumegas and Louis d’Humières (Experts, FAD); Ms. Nicoletta Feruglio and Messrs. Mathias Gogohounga and Angelo Donou (Governance Specialists, World Bank).
- Principal counterpart offices and units consulted:
  - Ministry of Economy and Finance (MEF): Economic and Financial Program Monitoring Unit (CSPEF), General Directorate of Budget (DGB), General Directorate of Treasury and Public Accounting (DGTCP), General Directorate of the Programming and Monitoring of Public Investment (DGPSIP), National Directorate of Public Procurement Control (DNCMP), General Financial Inspection (IGF), Financial Control Unit (CF), General Directorate of State Holdings and Denationalization (DGPED), Caisse Autonome d’Amortissement (CAA).
  - Ministry of Planning and Development (MPD): Programming and Forecasting (DPP) units.
  - Line ministries: Ministry of Primary and Infant Education (MEPM), Ministry of Infrastructures and Transportation (MIT), Ministry of Energy and Mining (MEM).
  - Local entities and stakeholders: General Directorate of Local Governments (DGCL), National Commission for Local Finance (CONAFIL), National Association of Municipalities of Benin (ANCB).
  - Regulatory authorities: ARCEP (electronic communications and postal service), ARE (electricity).
  - Technical and financial partners: World Bank, European Union, GIZ, Netherlands cooperation offices.
  - Other institutions: National Assembly (Finance Commission), Supreme Court (Audit Office), Presidency (Bureau of Analysis and Investigation—BAI).
- Meetings with senior officials: His Excellency, Romuald Wadagni, Minister of Economy and Finance (presented conclusions twice); His Excellency, Abdoulaye Bio Tchane, State Minister for Planning and Development.
- Special acknowledgements: Dieudonne Dahoun (Central Director for Expenditure Supervision) and Hermann Takou (Technical Secretary, CSPEF) for mission organization; Karim Barhoumi, IMF Resident Representative in Benin, for valuable support.

### Main conclusions of the mission (PIMA core findings)
- 1. Institutional framework: High-quality and relatively complete institutional framework, outperforming WAEMU and many Sub-Saharan African PIMA peers (see Figures 1–2). However, the effectiveness of the framework is weak.
- 2. Investment sustainability and quality: Despite a larger-than-peer average share of GDP devoted to public investment, the stock of capital has been deteriorating steadily for the past two decades; infrastructure quality is inferior to neighbors and declining (see Section I, Context).
- 3. PIMA diagnostic on management stages:
  - Project selection and ex-ante and ex-post assessments are not conducted systematically; procedures require substantial reorganization.
  - Low scores across execution stages, particularly on protection of investments, availability of financing, and implementation management.
  - Results are consistent with a low rate of execution of investment expenditure observed for several years.
  - Capacity gaps, weak information systems, and marginal consideration of maintenance and maintenance costs exacerbate the problems.
- 4. Government Action Program (PAG), 2016: An ambitious investment plan designed to stimulate economic and social development, centered on flagship sectors and recourse primarily to new financing mechanisms, such as public-private partnerships (PPPs). Implementation of the PAG is necessary to strengthen the public investment management framework and close the efficiency gap relative to international best practices.
- 5. Tailored recommendations and action plan:
  - Objective: improve efficiency of management and help achieve PAG objectives.
  - Four complementary reform areas: (1) improving the institutional framework; (2) availability and sustainability of financing; (3) more effective project preparation and implementation; and (4) more sustainable investments.
  - Specific reforms emphasized: implementation of commitment authorizations and capital appropriations; selection process of investment projects; management of payment deadlines; management of risks regarding PPPs.

### Summary of the Assessment (Table 1): selected areas, institutional strength, effectiveness, priority of reforms
- 1 Fiscal rules
  - Institutional strength: Medium. Although fiscal policy is guided by permanent rules, these rules do not specifically protect capital expenditure.
  - Effectiveness: High. Fiscal rules should be respected by 2019. Debt remains below the WAEMU threshold but is rapidly increasing.
  - Priority of reforms: *
- 2 National and sectoral planning
  - Institutional strength: High. National and sectoral strategies have been prepared and disclosed to the public. Some sectoral policies have both outcome and physical indicators.
  - Effectiveness: Medium. Not all line ministries have sectoral policy papers, and investment cost figures are not comprehensive.
  - Priority of reforms: **
- 3 Central-local coordination
  - Institutional strength: Medium. A coordination framework exists, and transfers are allocated objectively, although efforts are in progress to complete the system. Substantial delays were observed for informing beneficiaries.
  - Effectiveness: Medium. In practice, local governments do not resort to borrowing. Earmarked transfers and their distribution by municipality are determined without objective criteria.
  - Priority of reforms: **
- 4 Public-private partnerships (PPPs)
  - Institutional strength: Medium. Legal framework exists, but problematic elements include an excessively broad definition of PPP contracts and absence of limits on accumulation of explicit or conditional commitments.
  - Effectiveness: Low. The unit responsible for assessing fiscal risks and the unit responsible for financial assessment of projects prior to approval have yet to become operational.
  - Priority of reforms: ***
- 5 Regulation of infrastructure enterprises
  - Institutional strength: Medium. Infrastructure contracts are open to competition; independent authorities regulate prices in certain sectors.
  - Effectiveness: Medium. Regulation is effective in some sectors but not others due to insufficient enforcement resources.
  - Priority of reforms: **
- 6 Multiyear programming
  - Institutional strength: Medium. Multiyear projections and ceilings on capital expenditure are prepared taking into account full project costs. PIPs are not published.
  - Effectiveness: Medium. Substantial data discrepancies exist between different programming exercises and between programming and implementation.
  - Priority of reforms: **
- 7 Budget comprehensiveness
  - Institutional strength: High. Capital expenditure is generally executed as part of the budget.
  - Effectiveness: Medium. Budgeting of external financing is problematic, AE/CP are not yet fully implemented, and integration of PPPs into the budget remains to be clarified.
  - Priority of reforms: **
- 8 Budget unity
  - Institutional strength: Medium. Current and capital expenditure budgets are prepared by two different ministries but are submitted jointly to Parliament.
  - Effectiveness: Medium. Coordination between fiscal years is limited, and budgeting of recurrent expenditure remains insufficient.
  - Priority of reforms: **
- 9 Ex-ante project assessment
  - Institutional strength: Low. No sufficiently formalized or publicly disclosed regulatory or methodological framework to assess investment projects.
  - Effectiveness: Low. Outside major externally financed projects, feasibility studies are not systematic and cost-benefit analyses are rarely conducted.
  - Priority of reforms: ***
- 10 Project selection
  - Institutional strength: Medium. A selection procedure is planned based on a technical review by the ministry of planning on the basis of unpublished criteria.
  - Effectiveness: Low. Selection process is insufficiently transparent; criteria are not systematically applied; limited capacity for expert appraisals during preselection.
  - Priority of reforms: ***
- 11 Protection of investments
  - Institutional strength: High. Institutional framework protects investments during budget execution; budget documentation incorporates full project costs.
  - Effectiveness: Medium. Effectiveness of protection mechanisms will not be visible until information systems are fully operational.
  - Priority of reforms: ***
- 12 Availability of financing
  - Institutional strength: Medium. Regulatory texts include programming and management tools but allow domiciliation of external financing in commercial banks.
  - Effectiveness: Low. Although funds are generally disbursed in a timely manner, availability of financing is adversely affected by weaknesses in tools and financing outside the TSA.
  - Priority of reforms: ***
- 13 Transparency in execution
  - Institutional strength: High. Institutional framework provides for open, transparent public procurement operations, physical and financial project monitoring, and ex-post external audits.
  - Effectiveness: Medium. Scope for improvement in public procurement management; lack of coordination among stakeholders of physical-financial and audit follow-up hinders transparent execution.
  - Priority of reforms: **
- 14 Implementation management
  - Institutional strength: Medium. Rules exist on project management and ex-post assessment; adjustments are limited to public procurement contract riders.
  - Effectiveness: Low. Management of project implementation is problematic; ex-post reviews or assessments are not conducted.
  - Priority of reforms: ***
- 15 Accounting of public assets
  - Institutional strength: Low. Gradual implementation of accrual-basis accounting by 2019 requires a more operational institutional framework.
  - Effectiveness: Low. Inventory of public assets is partial; balance sheets lack reliable information on nonfinancial assets; there is no amortization.
  - Priority of reforms: ***

### Key contextual and diagnostic points (from Section I and PIMA findings)
- Benin devotes a larger share of its GDP, on average, to public investment than other WAEMU countries, yet the stock of public capital has deteriorated steadily for the past two decades.
- Quality of infrastructure is inferior to neighboring countries and has been declining in the recent period.
- Low execution rate of investment expenditure has been observed for several years.
- Critical weaknesses identified across PIMA stages include:
  - Lack of systematic ex-ante and ex-post project assessments.
  - Insufficient project selection transparency and application of criteria.
  - Weak protection and availability of financing, including issues with financing domiciled outside the TSA.
  - Incomplete information systems and limited attention to maintenance costs.
  - PPP framework weaknesses and nonoperational assessment units to manage fiscal risks.

### Direction of recommended reforms (overview)
- Four complementary reform pillars:
  - Improve the institutional framework.
  - Strengthen availability and sustainability of financing.
  - Enhance project preparation and implementation effectiveness.
  - Promote more sustainable investments (including maintenance and asset accounting).
- Specific priorities highlighted:
  - Implement commitment authorizations and capital appropriations.
  - Formalize and disclose project selection and ex-ante assessment methodologies.
  - Improve management of payment deadlines.
  - Establish and operationalize units to assess fiscal risks and financially appraise PPPs.

*Source: PREFACE and MAIN CONCLUSIONS OF THE MISSION, PIMA mission report for Benin (technical assistance mission, IMF–FAD with World Bank experts), October 19–November 1, 2017.*

### 6.      Public investment is one of the main tools for the implementation of public

### 1benea2020001 - 6.      Public investment is one of the main tools for the implementation of public

### Overview
- Public investment: public expenditure of the central government, local government, public enterprises, and public agencies for supply of infrastructure and goods of public utility or for improvement of service to users.
- Purpose: support economic and social development, promote human development (schools, hospitals), reduce inequalities, impact economic growth and poverty reduction.
- Requirements: public investment must be effective (maximize infrastructure volume and coverage per franc spent) and productive (generate economic growth); requires rigorous and transparent management to avoid waste and corruption; has multi-year fiscal impacts.

### A. Trends in the Stock of Public Capital and Investment
- Total investment stagnation:
  - Total public and private investment increased by only 0.4 percent from 1995–2015.
  - Public investment represents an average of 30 percent of total investment.
- Public investment relative to GDP:
  - From 1990–2015, average public investment = 6.5 percent of GDP in Benin versus 6.1 percent of GDP in the WAEMU during the same period.
  - Volatility: average year-to-year differential = 1.7 percent of GDP for Benin versus 1.2 percent for other WAEMU countries.
- Relationship to growth:
  - Empirical evidence on public investment impact on growth is mixed; recent period shows rising correlation between public investment and GDP growth.
- Capital expenditure in budget:
  - Share of capital expenditure in total budget expenditure averaged 31 percent for 1990–2015.
  - Share varied between 24 percent in 2006 and 38 percent in 2001.
  - External financing accounted for just under one-half of total capital expenditure in the budget from 2011–16; externally financed investment increased by 76 percent between 2012 and 2013 (example).
- Government Action Program (PAG) and financing:
  - Overall PAG cost estimated at CFAF 9 trillion (text also states CFAF 9.039 trillion in Box 1).
  - Government plans to finance via: (1) concessional loans; (2) mobilization of further domestic resources; (3) mobilization of financing from the private sector for most investments.
  - PAG flagship projects cost: CFAF 7.086 trillion (Box 1).
  - Private sector expected to provide 61 percent of financing for PAG flagship projects.
  - Government plans to increase investment rate from 19 percent in 2016 to 45 percent in 2019, with an average of 34 percent over the period.
  - Government anticipates average economic growth of 6.5 percent during the period and creation of more than 500,000 jobs.
- Domestic resource mobilization and public debt:
  - Tax revenue estimated at 12.6 percent of GDP in 2016, below WAEMU threshold of 20 percent.
  - Increased investment financed with domestic resources was substantially supported by an increase in public debt.
- Stock of fixed capital:
  - Fixed capital stock ≈ 256 percent of GDP in 2000 and 122 percent of GDP in 2015 — a decline of 134 percentage points.
  - Coverage of public debt by fixed capital has deteriorated.
  - Despite deterioration, Benin has higher stock of public capital per capita than many WAEMU countries.

### B. Efficiency and Impact of Public Investment
- Access and quality indicators:
  - Water access: 80 percent of the population (compare 75 percent in Sub-Saharan Africa).
  - Education: ratio of teachers to population = 8.5 per 1,000, which is four times the WAEMU average and 2.6 times the SSA average.
  - Health: ratio of hospital beds to inhabitants comparable to WAEMU average but just under one-third of SSA average.
- Perceived infrastructure quality:
  - Quality index range: 1–7 (World Economic Forum); Benin’s perceived infrastructure quality declined substantially since 2012; WAEMU average improved.
- IMF efficiency measurement (PIE-X methodology):
  - Methodology: ratio between stock of public capital and indicators reflecting access to and quality of infrastructure; scores range 0 to 1; efficiency threshold defined by countries with highest access and quality given stock and income.
- Efficiency scores:
  - Overall Benin PIE-X score = 0.5.
  - Comparative averages: WAEMU = 0.65, SSA = 0.64, low-income countries = 0.61.
  - Physical component:
    - Benin = 0.47; WAEMU = 0.35; SSA = 0.46; low-income = 0.50.
  - Quality component:
    - Benin = 0.71; WAEMU = 0.84; SSA = 0.80; low-income = 0.77.
  - Interpretation: inefficiency stems more from lower infrastructure quality than from volume/coverage.

### II. Public Investment Management Assessment (PIMA) — General Findings
- PIMA framework evaluates 15 institutions across three stages: planning, allocation, implementation.
- Institutional quality vs effectiveness:
  - Institutional framework quality is relatively high and comprehensive (national/sectoral planning, budget comprehensiveness, central-local coordination, implementation performance).
  - Effectiveness of institutions is generally far below institutional quality (except fiscal rules).
  - Notable weaknesses in PPPs (legal framework being finalized), ex-ante and ex-post project assessment, and Stage III institutions.
- Ongoing reforms:
  - Organic Law on Budget Laws (LOLF) — Law 2013-14 of September 27, 2013.
  - Draft regulatory texts on public investment (planning, management, follow-up, assessment).
  - Information systems projects: PAGE/SIGFP; SIAPIP/DRJADO.
  - Law on PPPs adopted and promulgated; implementing decrees to follow.
  - Reforms aim to improve management methods and administrative culture.

- PIMA tool specifics:
  - Evaluates 15 practices/institutions across planning, allocation, implementation stages.
  - For each practice, three indicators are scored; averages yield institutional strength: high, medium, or low.
  - New institutions under PIMA improvement: crosscutting issues, public procurement, and maintenance (results in Annex I).

### B. Stage I: Public Investment Planning — Findings and Priorities
- Objectives of Stage I: ensure adequate, predictable, sustainable investment levels; align investment with national/sectoral priorities; central-local coordination; PPP transparency; regulation of infrastructure enterprises.
- Strengths and deficiencies:
  - Strengths: national and sectoral strategies; regulatory framework encouraging competition; effective central-local coordination framework exists; permanent fiscal rules present.
  - Deficiencies: fiscal rules do not specifically protect capital expenditure; legal framework for PPPs has problematic elements (broad PPP definition, absence of limits on accumulation of explicit or conditional commitments); ex-ante project assessment low institutional score.
- Table 2 (summary of selected institutions, institutional strength, effectiveness, priority of reforms):
  - Fiscal rules
    - Institutional strength: Medium. Although fiscal policy is guided by permanent rules, these rules do not specifically protect capital expenditure.
    - Effectiveness: High. Fiscal rules should be respected by 2019. Debt remains below the WAEMU threshold, but it is rapidly increasing.
    - Priority of reforms: *
  - National and sectoral planning
    - Institutional strength: High. National and sectoral strategies have been prepared and disclosed to the public. Some sectoral policies have both outcome and physical indicators.
    - Effectiveness: Medium. Not all line ministries have sectoral policy papers, and investment cost figures are not comprehensive.
    - Priority of reforms: **
  - Central-local coordination
    - Institutional strength: Medium. A coordination framework exists, and transfers are allocated objectively, although efforts are in progress to complete the system. Substantial delays were observed for informing beneficiaries.
    - Effectiveness: Medium. In practice, local governments do not resort to borrowing. Earmarked transfers and their distribution by municipality are determined without objective criteria.
    - Priority of reforms: **
  - Public-private partnerships
    - Institutional strength: Medium. The legal framework exists, but it has problematic elements, such as an excessively broad definition of the types of contracts that can be designated as PPPs, or the absence of limits on the accumulation of explicit or conditional commitments.
    - Effectiveness: Low. The unit responsible for assessing fiscal risks, and the unit responsible for the financial assessment of projects prior to approval, have yet to become operational.
    - Priority of reforms: ***
  - Regulation of infrastructure enterprises
    - Institutional strength: Medium. Although infrastructure contracts are open to competition, in practice, independent authorities regulate prices for certain sectors.
    - Effectiveness: Medium. Regulation is effective in some sectors but not in others, due to insufficient resources for enforcement.
    - Priority of reforms: **

*Italic line: Source: IMF staff estimates and mission materials.*

### 27.      Fiscal policy in Benin is guided by permanent fiscal rules issued by the WAEMU, and

### 27.      Fiscal policy in Benin is guided by permanent fiscal rules issued by the WAEMU, and

### WAEMU fiscal rules and convergence criteria
- Benin established the objective of compliance with all WAEMU fiscal rules by 2019.
- The convergence criteria within the WAEMU were established under a 1999 directive updated in 2015 (Supplementary Act 01/2015/CCEG/UEMOA).
- All WAEMU member countries are required to comply with the first ranking criteria for 2019.
- The multiyear budget and economic programming document (DPBEP) defines the three-year macroeconomic framework and is used to verify compliance.
- DPBEP (2018–20) data indicate that between 2016 and 2018 Benin is expected to meet the criteria on the stock of debt and inflation and to meet all first ranking criteria by 2019.

- Table: The West African Economic and Monetary Union First Ranking Convergence Criteria (Indicators and values)
  - Budget balance (including grants)/Nominal GDP — Criteria, 2019 Horizon: >= -3 percent
    - 2016: -6.2
    - 2017: -7.9
    - 2018: -4.0
    - 2019: -1.9
  - Annual inflation rate — Criteria, 2019 Horizon: <= 3 percent
    - 2016: -0.3
    - 2017: 2.1
    - 2018: 2.0
    - 2019: 2.0
  - Stock of public debt/Nominal GDP — Criteria, 2019 Horizon: <= 70 percent
    - 2016: 49.5
    - 2017: 54.3
    - 2018: 54.4
    - 2019: 52.3

### Protection of capital expenditure and investment ratios
- No fiscal principle at national or community level specifically protects capital expenditure.
- The 1999 Directive had a second ranking criterion requiring domestically financed investment > 20 percent of fiscal revenue; this was removed in the 2015 Directive, but Benin continues to comply.
- Domestically financed investment as a share of fiscal revenue:
  - 2015: 30.3 percent
  - 2016: 28.7 percent
- The LOLF does not contain any fiscal rules protecting capital expenditure.

### Public debt profile, risks, and fiscal space
- Recommendation: modify the debt profile to create more fiscal space for investment and avoid approaching the 70 percent WAEMU limit.
- Public debt evolution:
  - 2013: 25.3 percent of GDP
  - 2017: 55.6 percent of GDP
- Increase driven by domestic debt:
  - Domestic debt: 8.6 percent of GDP in 2013 → 27.8 percent of GDP in 2016
- Interest rate profile (2016):
  - Average weighted interest rate on domestic debt: 6.3 percent
  - Average weighted interest rate on external debt: 1 percent
- Maturity profile and reimbursement risk:
  - 54 percent of the stock of debt is scheduled to be reimbursed within the next five years; 85 percent of that portion is domestic.
- Figure referenced: Projected Reimbursement Profile of the Public Debt Portfolio at End-December 2017 (in millions of CFAF), 2018–66 (external vs domestic debt by year cohorts).

### National and sectoral planning and public investment (PAG)
- National public investment strategy defined in the PAG; projects broken down by sector and ministry.
- Project classification:
  - Flagship projects: 78 percent (directly prepared/monitored by the presidency; implemented by autonomous agencies)
  - Priority projects: 22 percent (prepared/implemented/monitored by line ministries)
- PAG monitoring and coordination entities:
  - Council of Ministers
  - Flagship Project Monitoring Committee (CSPP)
  - Monitoring and Assessment Committee (CSE)
  - Sectoral monitoring committees
- Coverage and quality issues:
  - PAG provides a list of 277 projects across nine sectors; total cost estimated at CFAF 9.039 trillion.
  - Projects are not systematically subject to feasibility studies, ex-ante or ex-post assessments, or external audits.
  - Some ministries have yet to prepare sectoral policy papers; PAG currently lacks performance and physical project indicators (ministries publish these on their websites).
- Recommendation: increase scope and quality of planning through realistic cost assessment, definition of sectoral strategies for all ministries, and stronger coordination between national and sectoral strategies.

### Coordination between central and local governments; municipal finance
- Decentralized administration: 77 municipalities divided into 12 departments.
- Transfers from central government to local units:
  - Provided via Municipality Development Support Fund (FADEC), consisting of earmarked and non-earmarked transfers.
  - Annual domestically financed transfers defined by the central government; since 2016 domestically-funded transfers supported with tax resources effectively collected during year N-1.
  - Externally-financed amount dependent on donors’ commitments.
  - Non-earmarked transfers allocated using a cross-subsidization formula (base component; population, poverty level, geographic location; performance component).
  - Earmarked transfers related to sectoral investments, allocated during budget conferences since 2016.
  - Transfer amounts communicated each year before March 31 municipal budget adoption deadline.
- Municipal borrowing:
  - Local governments are allowed to borrow only to cover development investments (no amount specified in law).
  - Capital expenditure by local governments defined in coordination with central government; municipalities submit municipal development plan and annual investment plan to be included in the public investment program (PIP).
  - National Local Finance Commission (CONAFIL) steers process and supports capacity development.

- Constraints on municipal investment:
  - Consolidated municipal capital expenditure:
    - 2014: 2.9 percent of the state budget
    - 2015: 3.45 percent of the state budget
  - Transfers are volatile and delayed (2013–15), undermining execution of municipal investment programs.
  - Financial information at central level has had systematic delays historically; improvement observed in 2017 (figures communicated in February).
  - Municipal inability to submit bankable projects reduces effective borrowing capacity.
  - CONAFIL is developing capacities to improve municipal borrowing capability.

- Options to strengthen decentralization:
  - Improve transfer system and publicly disclose criteria, particularly for earmarked transfers.
  - Strengthen coordination between national and municipal plans via reinforcement of coordination authorities.
  - Develop capacities of stakeholders in preparing bankable investment projects to enable effective borrowing.

- Transfers by year and type (Table values, billions of CFAF):
  - YEAR: 2008 2009 2010 2011 2012 2013 2014 2015
  - TOTAL: 8.0 10.0 11.3 21.7 21.5 35.1 28.8 45.3
  - Domestic resources: 8.0 10.0 9.8 16.5 16.5 18.0 15.8 19.8
  - External resources (TFP): 1.5 5.2 5.0 17.1 13.0 25.5
  - Earmarked transfers (sectoral ministries): 3.3 5.9 4.8 8.0 9.2 8.2
  - Non-earmarked transfers, MDGL*: 8.0 10.0 8.0 15.9 16.7 27.1 19.6 37.1

### Public-Private Partnerships (PPPs)
- PPPs are the main financing mechanism proposed to implement the PAG due to limited budget resources; 61 percent of the PAG (projects selected for strategic impact) should be financed through PPPs.
- Legal framework:
  - Law 2016-24 adopted by the National Assembly in October 2016 and promulgated by the president in June 2017.
  - Implementing decrees are being prepared.
  - A PPP support unit (CAPPP) reporting to the Presidency provides technical support at all stages, including review of quality-price ratio.
- Shortcomings relative to international best practices:
  - The law provides many types of contracts under the PPP definition; almost any kind of contract may be designated as a PPP due to absence of an official definition of different standard contract types.
  - The legal framework does not require public disclosure of all PPP contracts signed by the government or commitment authorizations issued by Parliament in connection with them.
  - The legal framework does not require the state to observe ceilings on financial commitments in connection with PPPs (implicit or explicit).
- Role of Ministry of Economy and Finance:
  - Essential to limit fiscal risks from accumulation of explicit and implicit commitments; international experience shows accumulation can be a substantial fiscal risk.
  - Example from South Africa: law stipulates all PPP contracts subject to approval of the Ministry of Economy and Finance.
- Project prioritization:
  - Projects in the PAG should be prioritized to better attract PPP funding; concessional formulas where the government grants usage and revenue rights to users help attract private interest.
  - Infrastructure and energy sectors account for 29 percent of PAG projects (more likely to interest private sector).
- Need to strengthen framework to limit financial risks while gaining efficiencies; implementing decrees offer mechanism to supplement and define the legal framework further.
- Action plan recommendations provided in Section III (referenced).

- Law 2016-24: list of PPP contract types in the law includes 11 forms (e.g., design-construction-financing-operation; construction-operation-transfer; production and marketing; etc.).
- International good-practice PPP features:
  - (1) private structuring and financing of investments;
  - (2) provision of services (operation) by the private sector;
  - (3) transfer of a substantial share of financial, technical, and operational risks to the private sector.

### Regulation of infrastructure enterprises and sector-specific notes
- Markets:
  - Electronic communications: open to competition under Law 2014-14; regulated by ARCEP (independent).
    - Sector comprised of four telephone operators and nine internet access providers.
  - Electricity sector: open to competition in principle under Law 2006-16 (Electricity Code) and Law 2005-001 (Benin-Togo Electricity Agreement ratification), but prices substantially regulated in practice.
    - Regulatory authority for electricity (ARE) created in 2009 under Decree 2009-182; began operating in December 2015.
    - No private enterprises active; four independent energy production enterprises supplement deficits for Société Béninoise d’Energie Electrique (SBEE).
- Tariff setting:
  - Telecommunication rates: objective criteria; interconnection minimum international call termination fee eliminated in May 2016.
    - ARCEP agrees with operators on costs; operators propose competitive tariffs; ARCEP introduced ceiling prices operators cannot exceed.
    - Voice interconnection and SMS ceiling rates (CFAF exclusive of taxes):
      - Mobile to mobile calls: 10 per minute
      - Mobile to fixed calls: 27 per minute
      - Fixed to mobile calls: 10 per minute
      - SMS mobile to mobile: 5 per unit
  - Electricity tariffs: central government sets and approves tariffs, subject to ARE opinion; ARE has not issued any opinion since establishment due to insufficient resources.
    - Prices have not been adjusted to reflect cost of inputs since April 2010, negatively affecting SBEE's financial position.
- Public enterprise investment planning:
  - Central government appoints executive authorities of 197 public enterprises; ministries appoint board representatives.
  - Central government validates public enterprises’ investment plans via boards of directors.
  - Public enterprises submit communication and budget drafts to Council of Ministers for approval; since 2017 accompanied by memorandum justifying convergence with PAG strategic areas.
  - Investment plans are effectively coordinated with the PAG but are not consolidated comprehensively.

*Sources: WAEMU Commission; authorities of Benin (DPBEP, 2018–20).*

### 44.      The allocation of capital expenditure to the most productive sectors and projects

### The allocation of capital expenditure to the most productive sectors and projects

### Overview
- The allocation of capital expenditure requires effective programming and budgeting from a unified, comprehensive perspective, objective criteria, and clear procedures for evaluation and selection of investment projects.
- The Public Expenditure Management Assessment seeks to determine whether the country: (1) carries out multiyear budget exercises; (2) ensures budget comprehensiveness; (3) has a unified budget process; (4) conducts ex-ante project assessments; and (5) has a project selection system.
- In Benin, weaknesses are concentrated in the assessment and selection of investment projects, affecting the entire life cycle of investment projects and their financial execution (Stage III). These shortcomings may help explain the low quality of infrastructure relative to similar countries.

### Summary assessment (Stage 2) — institutional strength, effectiveness, and reform priority
- Multiyear programming
  - Institutional strength: Medium. "Multiyear projections and ceilings on capital expenditure are prepared, taking into account the full costs of the projects. PIPs are not published."
  - Effectiveness: Medium. "Substantial data discrepancies are observed between the different programing exercises and between programing and implementation."
  - Priority of reforms: **
- Budget comprehensiveness
  - Institutional strength: High. "Capital expenditure is generally executed as part of the budget Treasury Single Account."
  - Effectiveness: Medium. "Budgeting of external financing is problematic, AE/CP are not yet fully implemented and the integration of PPPs into the budget remains to be clarified."
  - Priority of reforms: **
- Budget unity
  - Institutional strength: Medium. "Current and capital expenditure budgets are prepared by two different ministries but are submitted jointly to Parliament in the Budget Law."
  - Effectiveness: Medium. "Coordination between fiscal years is limited, and budgeting of recurrent expenditure is still insufficient."
  - Priority of reforms: **
- Ex-ante project appraisal
  - Institutional strength: Low. "There is no regulatory or methodological framework that is sufficiently formalized or disclosed to the public to assess investment projects."
  - Effectiveness: Low. "Outside of major externally financed projects, feasibility studies are not systematic, and cost-benefit analyses are rarely conducted."
  - Priority of reforms: ***
- Project selection
  - Institutional strength: Medium. "A selection procedure is planned based on a technical review by the ministry of planning, on the basis of unpublished criteria."
  - Effectiveness: Low. "The selection process is insufficiently transparent, and the criteria are not systematically applied. The capacity to obtain further expert appraisals during the preselection phase is limited."
  - Priority of reforms: ***

### Multiyear programming — findings and implications
- The government prepares financial assessments and rolling capital expenditure ceilings with a three-year horizon.
- Multiyear expenditure programming papers (DPPD) have been issued for all ministries since the 2017–19 exercise; the MPD prepares an annual and three-year public investment program (PIP) broken down by ministry.
- The three-year PIP, which presents the cost for each major project during its life cycle, is submitted to Parliament but is not published on the government's website.
- Rolling capital expenditure ceilings for the three-year period are prepared only for payment appropriations and reported to line ministries; they are updated as the budget process is carried out.
- In practice, capital expenditure projections and ceilings are regularly subject to substantial revisions, limiting ministries’ visibility on multiyear investment projects.
  - Example: level of capital expenditure executed in 2015 was CFAF 165 billion, against appropriations of CFAF 413 billion, equivalent to an execution rate of 40 percent, including Treasury Single Account (TSA) 16 percent for externally financed capital expenditure.
- Strengthening the quality of forecasts is a medium-term priority, especially for: (1) the overall macroeconomic framework; (2) the sectoral distribution of the overall MTEF investment envelope; and (3) external financing. These developments would strengthen the MEF and the MPD in budget arbitration.

### Budget comprehensiveness — findings and policy points
- The Budget Law incorporates capital expenditure executed from the general budget, annexed budgets, and special accounts; it includes subsidies and transfers to public operators and local governments.
- The Budget Law provides an externally financed capital expenditure ceiling, broken down by ministry and programmed in multiyear expenditure programming papers; each ministry’s public investment program specifies donors and life-cycle financing for major projects.
- For PPP contracts, the LOLF provides use of commitment authorizations for all legal commitments, effective from the signing year.
- Problems and gaps:
  - Budgeting for external financing entails problems: limited visibility on the level and timing of donor contributions.
  - The commitment authorizations/payment appropriations approach is not fully implemented; the budget law does not provide ceilings for commitment authorizations.
  - Accounting mechanisms and presentation of PPPs in budget documentation have not been specified; budget and financial implications remain unclear.
  - “Non-PIP” projects are mentioned without indication of scope or mechanism involved (example: Cotonou north bypass as a "non-PIP" though it is a flagship PAG project at estimated cost of CFAF 345 billion).
- Recommendation: For the PAG, the financial incidences of selected projects should be fully accounted for and reflected in budget documentation. For PPPs, budget impacts should be recorded with the commitment authorizations/payment appropriations approach; liabilities could be listed in budget documents. Risks associated with revenue allocation mechanisms should be borne in mind.

### Budget unity — findings and recommendations
- Current and capital expenditure budgets are prepared by different ministries but are presented jointly in the Budget Law and multiyear expenditure programming papers.
- Coordination between the General Directorate of Budget and the General Directorate of Public Investment Programming and Monitoring (DGPSIP) was strengthened; aggregation is the responsibility of the General Directorate of Budget.
- The budget classification and chart of accounts distinguish clearly between current and capital expenditure.
- Practical limits:
  - Coordination between budget exercises has limits; budgeting of recurrent expenditure is still insufficient, which limits productivity and sustainability of public capital.
  - Recurrent expenditure budgeting varies substantially among ministries; departmental recurrent envelopes are not systematically calculated on a project basis.
  - The software used by DJRADO for capital budget preparation does not interface with SIPIBE used by the General Directorate of Budget.
  - Classification discrepancies: inclusion of institutional support (logistics, training, materials) in capital expenditure under the PIP—"Administration" line estimated at more than CFAF 100 billion in 2017.
- Recommendation: Strengthen information exchange protocols and computer interfaces between ministries, and focus on recurrent costs budgeting (including maintenance) through training and strengthened sectoral methodologies.

### Project assessment — findings, capacity, and priorities
- No regulatory or methodological framework is sufficiently formalized or publicly disclosed for project assessment.
- DGPSIP plays a de facto central support role, but staffing of the PIPD is limited (between 10 and 20 persons), affecting counter-expertise capacity given tight arbitration deadlines.
- DGPSIP disseminates information sheets and analyzes proposals using a table of criteria covering social, economic, and environmental relevance, consistency, and feasibility; this multiple-criteria assessment:
  - Makes no distinction among projects by size or sector.
  - Is not based on a clearly defined methodology.
  - Identifies risks and introduced an indication of anticipated risks and mitigation measures in the template, though this is not reflected in the assessment table.
- Level of credits to the special allocation account devoted to feasibility studies and expert appraisals: CFAF 15 billion in the 2017 Budget Law.
- Feasibility studies and cost-benefit analysis gaps:
  - Number of projects in the PIP without prior feasibility studies: 84 projects in 2016 and 59 projects in 2017; these accounted for 28 and 20 percent, respectively, of projects in the PIP.
  - Feasibility studies are not conducted for medium-scale projects funded only from the national budget.
  - Capacities for cost-benefit analyses vary substantially across ministries; some (e.g., Ministry of Infrastructures and Transportation, MEEM) receive substantial donor support and are more developed; most ministries lack human resources and methodological frameworks.
  - Weaknesses identified in assessment of project investment and maintenance costs.
- Priorities for strengthening ex-ante assessment:
  - Introduce a precise regulatory framework that, beyond a certain threshold, mandates the content of an evaluation file including a cost-benefit analysis.
  - Strengthen capacities of the DGPSIP (staff, sectoral units, sectoral modeling, cost assessment tools, computerized interfacing with ministries).

### Project selection — current process and issues
- Arbitration procedure relies on a technical review by the MPD based on unpublished criteria.
- Selection sequence:
  - Initial ministerial validation.
  - Major projects subject to technical review by MPD in conjunction with MEF.
  - Preliminary comparative selection by DGPSIP and MPD; projects financed fully or partially with national budget must be ranked so national budget resources can be allocated by order of priority.
  - Ranking is based on resource allocation criteria (broad eligibility criteria) communicated to sectoral ministries at the beginning of the year by MPD staff.
  - Selection criteria are not disclosed to the public but transmitted upstream to sectoral ministries.
  - The list of selected projects is subject to a governmental comparative selection process chaired by the President during the Council of Ministers.
- Centralization and data management:
  - Initial PAG selection was conducted by the Analysis and Investigation Bureau, but the conventional process remains centralized with the MPD.
  - An investment project data bank has been established to identify priority projects before budgeting; projects not in this bank could still be incorporated into the budget.
- Transparency and capacity issues:
  - Selection process is insufficiently transparent; criteria are not systematically applied.
  - Capacity to obtain further expert appraisals during preselection is limited.

### Key statistics and figures (exact)
- PIPs are prepared on a three-year horizon.
- Capital expenditure executed in 2015: CFAF 165 billion.
- Appropriations for 2015: CFAF 413 billion.
- Execution rate in 2015: 40 percent.
- TSA share for externally financed capital expenditure in 2015: 16 percent.
- Level of credits for feasibility studies and expert appraisals in 2017 Budget Law: CFAF 15 billion.
- Projects without prior feasibility studies: 84 projects in 2016 (28 percent of PIP); 59 projects in 2017 (20 percent of PIP).
- DGPSIP/PIPD staffing to cover programming and supplementary expert appraisals: between 10 and 20 persons.
- Initial financing scheme for the Government Action Program, 2016–21 (in billions of CFAF):
  - Public, non-PPP total: 3,530
    - Budget contribution and debenture loan: 2,450
    - Loans: 750
    - Grants: 330
  - PPP total: 5,509
  - Total (2016–21): 9,039
- Annual totals (selected): 2017: 1,149; 2018: 1,694; 2019: 2,638; 2020: 2,645; 2021: 912.

*Source: Chapter — The allocation of capital expenditure to the most productive sectors and projects (Benin country report).*

### 59.      The selection procedure is insufficiently transparent, the selection criteria are not

### 1benea2020001 - 59.      The selection procedure is insufficiently transparent, the selection criteria are not

### Selection procedure: transparency, capacity, and information systems
- The selection procedure is "insufficiently transparent," the selection criteria "are not systematically applied," and the capacity for counter-expertise during the preselection phase "is limited."
- The selection and comparative selection procedure (from technical ministries to the government) "does not permit a comprehensive assessment of projects before they are examined by the Council of Ministers."
- The General Directorate of Public Investment Programming and Monitoring is "insufficient"ly staffed to conduct counter-expertise appraisal within the short deadlines, "particularly given the lack of information required for counter-expertise appraisals in many cases."
- Since 2017, directives provided for preparation of annual work plans (PTA) for projects upstream from the comparative selection procedures; "in practice, however, they have not been systematically prepared." The same applies to public procurement plans.
- In the absence of direct computer interfacing with sectoral ministries, because the budget programming software (DJRADO) "has not been deployed," centralization of investment project documentation is time consuming and limits workflow.
- "The absence of publicly disclosed selection criteria for public investment programs and assessments conducted significantly limits the transparency of the procedure," preventing assurance that new selected and registered projects (1) are consistent with government objectives, and (2) "have been adopted as the result of a formal selection procedure."
- Efforts to rehabilitate the public investment program show progress and "have led to a reduction in the number of public investment projects from 291 in 2017 to 227 in 2018."
- Prioritized action: "strengthening of the transparency and flow of the selection process is a priority," alongside "development of capacities for assessment and counter-expertise appraisal."

### Box 4 — Coordination of technical assessments and policy decisions: key principles
- Investment assessment must be based on indicators that can be internalized by public decision makers.
- Financial and socioeconomic indicators may seem expert-driven; absence of standard criteria risks decisions driven by votes or local interests.
- All externalities, positive and negative (e.g., increased longevity from a hospital; time gains from a road), "must be given maximum consideration" and can be quantified using benchmark values even if markets fail to provide measures.
- When economic value cannot be attributed, characterization on a qualitative basis "must be included in the assessment."
- Assessments must be based on specifications shared by ministries and supported with a sectoral roadmap established upstream, so project selection is coordinated with government's strategic outlook rather than immediate social demand.
- For each project, presenting "other options under consideration" and reasons for not selecting alternatives "might facilitate the decision-making process."
- Maintenance costs: importance must be reconsidered; initial assessment of maintenance costs and "definition of the maintenance program for the ministries must precede decisions on new investments," and decision makers might be reminded of "major operating risks deriving from insufficient maintenance."

### Stage III: Implementation of Public Investments — objectives and evaluation framework
- Objective: Ensure implementation delivers productive, sustainable assets via general financing, effective management, and transparent monitoring.
- Stage III (PIMA) evaluates whether authorities: (1) have mechanisms to protect investments; (2) ensure availability of funds; (3) ensure transparency in project implementation; (4) effectively manage implementation; (5) monitor public assets.
- "In the evaluation of the effectiveness of the five institutions of the investment implementation stage, three received a low score (Table 9)."

### Table 9 summary (Stage 3 assessments and priorities)
- Protection of investments
  - Institutional strength: "High. The institutional framework protects investments during budget execution, and the budget documentation clearly incorporates the full costs of the projects Treasury Single Account."
  - Effectiveness: "Medium. The effectiveness of investment protection mechanisms will not be visible until the information systems are fully operational."
  - Priority of reforms: ***
- Availability of financing
  - Institutional strength: "Medium. The regulatory texts include the different programming and management tools but leave the possibility of domiciling external financing in commercial banks."
  - Effectiveness: "Low. Although funds are generally disbursed in a timely manner, the availability of financing is adversely affected by the weaknesses in the tools and the financing outside the Treasury Single Account."
  - Priority of reforms: ***
- Transparency in execution
  - Institutional strength: "High. The institutional framework provides for open, transparent public procurement operations, physical and financial project monitoring, and ex-post external audits."
  - Effectiveness: "Medium. There is scope for improvement in public procurement management, and the lack of coordination between the stakeholders of the physical-financial and audit follow-up hinders a transparent execution."
  - Priority of reforms: **
- Implementation management
  - Institutional strength: "Medium. There are rules on project management and ex-post assessment. Adjustments are limited to public procurement contract riders."
  - Effectiveness: "Low. Management of project implementation is problematic, and no ex-post reviews or assessments are conducted."
  - Priority of reforms: ***
- Accounting of assets
  - Institutional strength: "Low. Gradual implementation of accrual-basis accounting by 2019 requires a more operational institutional framework."
  - Effectiveness: "Low. The inventory of public assets is partial, the balance sheets do not contain reliable information on nonfinancial assets, and there is no amortization."
  - Priority of reforms: ***

### Protection of investments: legal framework and information-system constraints
- Legal framework: Organic Law on Budget Laws (LOLF) prescribes budgeting of public investment appropriations under commitment authorizations (AE) at project start and under payment appropriations (CP) adjusted annually. Information on total project cost available via public investment program submitted to Parliament. Transfers from capital to current expenditure require Parliamentary approval. Appropriations not used under capital expenditure "may be carried forward on an unlimited basis," provided resources are available.
- Shortcomings: Current information system affects securing appropriations for multiyear projects. SIGFIP "can only manage annual payment appropriations." Authorities are implementing commitment authorizations/payment appropriations approach; a draft manual and templates were prepared and testing is in progress in five pilot ministries.
- Practice: DGB "does not systematically check" compliance with rules for credit carryovers and transfers. Appropriations unused at year-end "are recommitted for the subsequent fiscal year."
- Consequence: Absence of an information system to budget public capital appropriations under multiyear commitment authorizations and payment appropriations, with control features for carryovers and transfers, "makes efforts to protect multiyear investment projects less effective."
- Recommendation: Continue IT developments, pursue integrated budget and accounting information system (SIGFP) implementation, and develop stakeholders’ capacities to improve protection mechanisms.

### Availability of financing: regulatory provisions and practical weaknesses
- Regulatory provisions: Framework prescribes procurement plans (PPMs) and a monthly projected cash plan for central government budget execution; requirement for sectoral ministries to prepare commitment plans is "only provided for reference." RGCP mentions accounting of commitments, validations, and payment orders; RGCP provides that external financing may be kept in commercial bank accounts outside central government accounts at the BCEAO and the TSA.
- Practice and constraints:
  - Funds "are generally disbursed in a timely manner" using MATKOSS and prior authorization procedures to prevent payment arrears; mission could not determine whether payment arrears exist.
  - No monitoring/follow-up of execution delays during expenditure budget and accounting process.
  - External financing from donors is held either in CAA accounts with the BCEAO (unrelated to the TSA) or with commercial banks. Mission "was unable to analyze the list of accounts involved"; a strategy for TSA deployment is being developed.
- Recommendation: Better correlation and regular exchange among programming and management tools, particularly public procurement plans, to optimize management of available resources. Improve quality and comprehensiveness of procurement plans and consolidate via information system interfaces. Continue works on TSA, "particularly to extend its scope gradually to donor financing."

### Box 5 — Treasury Single Account (TSA): definition, objectives, rollout stages
- Definition: "A treasury single account (TSA) is a unified structure of government bank accounts that provides an overview of government cash resources."
- Objectives and benefits:
  - Primary objective: "to ensure effective aggregate control over all of the government's liquidity."
  - Additional objectives: (1) "to minimize transaction costs during budget execution"; (2) "to facilitate reconciliation between banking and accounting data"; (3) "to ensure more effective supervision and monitoring of appropriations to different administrative bodies"; (4) "to optimize the adaptation to monetary policy implementation."
  - Benefits include: (1) "complete, timely, useful information on the government’s cash resources"; (2) improved supervision of budget allocations and execution; (3) more effective cash management and reduced bank fees; (4) support for effective payment mechanisms; (5) improved reconciliation of bank records and budget data quality; (6) reduced requirements for liquid reserves.
- Rollout stages:
  - A comprehensive survey of all project accounts on the books of different banks
  - Consolidation with the Ministry of Economy and Finance of information on these project accounts
  - Gradual closing of terminated or inactive project accounts
  - Gradual incorporation of project accounts into the BCEAO's books, outside of the TSA, during an initial phase
  - Gradual integration of the project accounts into the TSA, in cooperation with the technical and financial partners.

### Transparency in implementation and procurement information systems
- Institutional framework: Provides for openness and transparency in public procurement, physical and financial monitoring, and ex-post external audits. National and donor rules require physical and financial monitoring during implementation and ex-post external audit.
- Practical gaps:
  - Public procurement management needs improvement; SIGMAP database used by the National Directorate of Public Procurement Control is "incomplete and is not up to date."
  - SIGMAP "does not interface with the Public Financial Management Information System (SIGFIP)."
  - Ministries monitor annual costs and physical progress via project units or Programming and Forecasting Directorates; externally financed projects are monitored by the CAA. Quarterly reports are produced centrally by DGPSIP, which conducts on-site missions.
  - Gaps exist between financial monitoring (incumbent on MEF) and physical monitoring (ministries), despite a method and dedicated information system developed with German cooperation that still "has scope for improvement."
  - Some major projects have been subject to ex-post external auditing and "this information has been publicly disclosed from time to time," but scope of audits is limited given insufficient resources and a cooperation framework among supervisory bodies is being implemented.

*Source: Mission (excerpts from the cited IMF chapter).*

### 71.      Enhanced reliability, sharing of information, and coordination between the

### Enhanced reliability, sharing of information, and coordination between the stakeholders

### Management of project implementation
- Finding: Ex-post monitoring and auditing of externally financed investment projects is carried out by project management units and commissioned auditors who manage them autonomously vis-à-vis their parent ministry, which can undermine appropriation of information at the ministries level.
- Finding: There is a substantial number of stakeholders in execution and monitoring of investment projects and a willingness of the authorities to develop implementing agencies; this increases the importance of reliable, effective coordination between stakeholders responsible for physical and financial monitoring and ex-post auditing.
- Finding: Donor procedures and national regulations provide that a project management team and manager must be systematically appointed for implementation of investment projects (see Circular Letter of January 24, 2017 on the Appointment of Heads of Project Management Units).
- Finding: Outside of the regulations governing public procurement contract riders (see Articles 124 et seq. of Law 2009-02 of August 7, 2009, Establishing the Public Procurement Code), there are currently no standard rules or procedures applicable to adjustments to projects.
- Finding: Donor procedures include the conduct of ex-post reviews for externally financed projects, but ex-post reviews and assessments for domestically funded projects for which the implementation phase has been completed have yet to be carried out.
- Finding: Project implementation plans are not systematically prepared before the budget is approved despite managers being appointed and management based on project specifications.
- Recommendation: Clarify and standardize the operational framework for managing project implementation through the on-going drafting of a regulatory framework for public investment management.
- Recommendation: Strengthen resources and capacities for systematic conduct of ex-post assessments.
- Recommendation (from Action Plan Area 3): 
  - Enhance quality and coordination of stakeholders responsible for physical and financial monitoring of investment projects (tools, information on physical and financial monitoring, coordination, and sharing of information).
  - Make programming and management tools (particularly public procurement plans) more reliable and comprehensive (updating, consolidation, monitoring, and sharing of information).
  - Strengthen implementation of investment projects by systematically preparing project implementation plans.
  - Develop ex-post project supervision and assessment activities and increase ex-post external audit capacities by strengthening capacities and implementing a framework for coordination among stakeholders (DGPSIP / BAI / IGF / MS identified as stakeholders).

### Accounting of public assets
- Finding: Gradual introduction of accrual-basis accounting (CDCP) by 2019 (see Article 105 of the LOLF) is expected to enable more effective monitoring of public assets but requires a more detailed and operational regulatory framework.
- Finding: The General Directorate of Materials and Logistics (DGML) has recent regulations (see Decree 2017-108 of February 27, 2017, Establishing Materials Accounting in the Republic of Benin) that need to be specified.
- Finding: The general principle of tangible asset depreciation is mentioned in regulatory texts (see Decree 0410 of February 2, 2015, Establishing the Government Chart of Accounts) and the relevant accounts are provided in the government chart of accounts, but the framework must be made more operational in partnership with stakeholders responsible for standardizing the accounting system.
- Finding: Inventories of public assets are partial; balance sheets do not contain reliable information on nonfinancial assets, and there is no depreciation recorded in operating accounts.
  - Some administrations maintain lists of nonfinancial assets that are not confirmed to be comprehensive or current.
  - Partial inventories do not include valuations of assets due to absence of specifically defined valuation methods.
  - There is no method for national consolidation of existing inventories.
- Recommendation: Carry out a comprehensive survey of assets before valuation according to specifically defined rules; preparatory work for implementation of asset monitoring planned for 2019 should be undertaken now.
- Recommendation (from Action Plan Area 4): 
  - Implement the regulatory framework for monitoring and management of state assets (guide to the operation of accounts, accounting standards, technical specifications, and fixed asset registers).
  - Continue development of the accounting information system to include changes regarding accrual-based accounting (DGTCP / DGML / CCCS and IT Services listed as stakeholders).
  - Ensure maintenance and include specific appropriation for maintenance of infrastructure and technical equipment in eligible ministries' budgets; require assessment and identification of maintenance costs in connection with investments in the budget.

### Key elements of the Recommendations and Action Plan
- Context: Action plan reflects weaknesses identified during the PIMA assessment and the specific context characterized by implementation of the PAG.
- Strategic focus: Efficiency in public activities, focusing on expected outputs such as availability of assessments, existence of payment deadline monitoring, and effective management of commitments through budget documentation (commitment authorizations and payment appropriations).
- Four structuring areas / objectives identified:
  1. Improvement of the institutional framework, including development of capacities and information systems.
  2. Availability and sustainability of financing, targeting monitoring of PPPs and development of the TSA.
  3. Upgrading project preparation and implementation.
  4. Consideration of the sustainability of investments.
- Implementation guidance: Specific action proposals in the plan identify (1) implementation period, (2) responsibilities, and (3) need for technical assistance.
- Select recommended measures (as reflected in the Action Plan tables):
  - Accelerate finalization and adoption of a comprehensive high-level regulatory text (at least a decree) that encompasses all phases of the public investment management cycle (DGPSIP / DGB / BAI / MS).
  - Prepare and publish a guide for earmarked transfers specifying allocation formula, disbursement mechanisms, financial obligations, and monitoring and assessment mechanisms (CONAFIL).
  - Continue development of interdepartmental IT master plan for networks, applications, and interfaces for planning, programming, budgeting, monitoring and assessment processes, and implementation of investment projects (MEF / MPD / MS / BAI / PAGE).
  - Extend the SIAPIP/DJRADO to sectoral ministries and incorporate an ex-ante project assessment and prioritization module (MPD / MS).
  - Establish framework for periodic cooperation with donors and develop a platform to monitor data on external financing to make them more reliable (MPD / CAA / DGB / MS / TFP / PAGE).
  - Strengthen supervision of PPPs: require MEF prior opinion for signing PPP projects; strengthen capacities for budget risk analysis for PPPs and use P-FRAM methodology (MEF / BAI / DGB / CAA / MEF Support Unit).
  - Include a comprehensive list of contingent liabilities in a document annexed to the Finance Law (DGB / CAA / DGPSIP / MS).
  - For project selection and ex-ante assessment: define mandatory standard assessment templates (including cost-benefit analysis) above a cost threshold; condition inscription to the PIP on the existence of a preliminary feasibility study; publish selection criteria on MPD website; improve comprehensive assessment of project costs and emphasize risks and mitigation measures in assessment templates (DGPSIP / DGB / MS).
  - Improve management and control over public procurement through strengthening SIGMAP and periodic production of reliable, comprehensive statistics; assess and streamline ARMP operating mechanisms to meet statutory deadlines for dispute settlement (DNCMP / MS / IT Services / ARMP).
  - Develop the culture of ex-post review and assessment including stakeholders, mechanisms, capacities, and publication of results; increase ex-post external audit capacities and implement coordination framework among stakeholders (DGPSIP / BAI / IGF / MS / CCCS).

*Source: Public Investment Management Assessment (PIMA) content as provided.*

### 81.      These new institutions are still in the process of validation; however, in light of their

### 1benea2020001 - 81.      These new institutions are still in the process of validation; however, in light of their

### Summary of the Assessment for the New PIMA Institutions
- Cross-cutting issues
  - Institutional strength: Medium. "The information systems and regulatory framework, which are in the process of improvement, reflect public investment requirements in a context characterized by a fairly adequate level of human capacities but which would still benefits from strengthening."
  - Effectiveness: Low. "The existing information systems and the legal framework for public investment management make it impossible to obtain an overview of projects from programming to implementation. There are no plans for capacity need assessment or training."
  - Priority of reforms: ***
- Public procurement
  - Institutional strength: High. "According to the texts, the procurement process is open and transparent, and requests for tenders are properly disclosed to the public and managed though an information system. However, the institutional framework could be strengthened. An independent body is responsible for settling disputes."
  - Effectiveness: Low. "Delays in dispute settlements can undermine transparency and efficacy. Information technology resources and capacities must be strengthened because the monitoring tools are inadequate."
  - Priority of reforms: ***
- Maintenance
  - Institutional strength: Medium. "Costs are evaluated and reflected for certain sectors and infrastructure. Budget appropriations for maintenance and repairs exist, but they are not clearly identified or widely used."
  - Effectiveness: Low. "Maintenance costs are not explicitly evaluated or included in the budget for most infrastructure projects."
  - Priority of reforms: ***

### Cross-Cutting Issues — Financial Information System
- SIAPIP (integrated public investment analysis and programming system)
  - Used to prepare the public investment program and to program projects and facilitate analysis according to project assessment and selection criteria.
  - Cannot be used to conduct other phases of public investment management, including monitoring of financial and physical implementation, or to assess public investment programs and projects.
- DJRADO
  - Authorities are developing DJRADO as a "real integrated information system" that will include all phases of public investment management, including capacity to monitor indicators and dates of completion of project progress reports.
  - Migration from SIAPIP to DJRADO is described as "a critical change for the effective monitoring of public investment management."
  - Development of DJRADO has been suspended due to insufficient financing.
- Interfacing and rollout issues
  - SIAPIP "does not yet include all of the planned modules" and "has not been rolled out to the line ministries."
  - Interfacing with SIGFIP (integrated public financial management system) and SIGMAP (public procurement management system) "have yet to be established."
  - As a result, "it cannot be used for real-time physical or financial monitoring or for project assessment." Financial and physical execution data are "collected manually and periodically uploaded into the system."
- Recommendation
  - "The mission strongly recommends that the development of DJRADO be continued and that its interface with the SIGFP and SIGMAP be developed in connection with a master plan for interdepartmental IT system."

### Cross-Cutting Issues — Legal and Regulatory Framework
- Current legal basis
  - Organic Law 2013-14 on Budget Laws of September 27, 2013 (LOLF), deriving from the WAEMU Directives of 2009, defines the general framework for programming and budgeting of public expenditure, including public investment.
  - Articles 49, 56, and 57 prescribe the medium-term budget and expenditure framework (multiyear budget and economic programming paper—DPBEP and multiyear expenditure programming paper—DPPD) exercise.
  - Implementing texts listed include: Decree Establishing the Code of Transparency in Public Financial Management; Decree on the General Regulation on Public Accounting (RGCP); Decree on the Government Budget Nomenclature (NBE); Decree on the Table of Government Financial Operations (TOFE); Order on the Government Chart of Accounts (PCE).
- Gaps
  - "There is still no legislative or regulatory framework specifically designed for public investment that encompasses all phases of management."
  - Such a framework should cover definition, planning, accounting in state assets, ex-ante assessment, selection, programming, budgeting, implementation, physical and financial monitoring, and ex-post assessment or auditing.
- Draft regulatory text
  - "A draft regulatory text specifically designed to govern public investment management is now being prepared." Authorities indicated it "covers all phases of the public investment management cycle" and "might be adopted by end-2017."
  - A budget execution manual using the program approach (including capital expenditure) is in development "with a view to migrating to the program budget procedure beginning in January 2019."
  - "The mission strongly encourages the completion and adoption of these two structuring texts."

### Cross-Cutting Issues — Human Resource Capacities
- Strengths
  - "Benin has skilled human resources in the areas of public investment and public financial management."
  - Benin prepared early multiyear budget and economic programming papers and organized annual budget strategy discussions in Parliament based on multiyear papers.
  - A 2007 needs assessment led to large recruitment of statisticians, planners, and project managers and development of a staff training plan.
- Weaknesses
  - "The quality and number of staff are insufficient at all levels of the public investment management process, partly a result of the high level of staff mobility."
  - Capacity deficits exist at central level (MPD and MEF) and line ministry level (DPP); field project coordinators also need capacity development in financial management procedures and project monitoring.
  - These deficits "undermine effective public investment management in all phases," especially programming and budgeting, and "largely explain the frequent under execution of capital budgets."
- Capacity building needs
  - "There is a substantial need to strengthen capacities, particularly in the areas of planning, costing, budgeting of commitment authorizations, and payment appropriations and monitoring and assessment of projects."

### Public Procurement System — Key Findings and Statistics
- Legal framework
  - New Law 2017-04 of October 19, 2017, establishing the Public Procurement Code; Article 31 (second paragraph) makes public requests for tenders the standard procedure when amounts (net of taxes) exceed thresholds established by decree.
  - Article 63 requires competitive bidding publicly advertised and through electronic media; disclosures must be on the website of the National Directorate of Public Procurement Control.
  - Article 18 establishes the public procurement regulatory authority (ARMP) with powers including out-of-court settlement of disputes; Article 138 requires decisions within seven business days from closing date of appeal review.
- Data quality and database issues
  - The public procurement database is "incomplete and insufficiently reliable." SIGMAP exists but "its database is incomplete and out of date" and "is not interfaced with SIGFIP."
  - DNCMP is under-resourced and "not able to supervise procurement contracting procedures below the its threshold of control and does not control their procedure of execution."
  - SIGMAP databases are "unreliable and cannot be used to produce useful standardized analytical requests."
  - Adoption of the new public procurement code will provide for nomination of DNCMP representatives at line ministries.
- Dispute settlement timing
  - New code modifies period for settlement: now "seven days from the closing date of the appeal review" (Article 31) rather than "seven business days from the notification" under the old Code.
  - In practice, "the ARMP is generally unable to meet this deadline" due to institutional problems and delays; authorities advised to update implementation text and strictly supervise litigation stakeholders to control and shorten dispute settlement time.
- Empirical data (Table 11: Status of Public Procurement Mechanisms, In Billions)
  - 2016
    - Public request for tenders: Nb 220, Amount 339.6840376, 38.1%
    - Restricted request for tenders: Nb 59, Amount 264.3521486, 29.6%
    - Quotation request: Nb 6, Amount 0.605478901, 0.1%
    - Public-private partnership contract: Nb 4, Amount 237.3280923, 26.6%
    - Contract by direct agreement: Nb 40, Amount 50.49407531, 5.7%
    - Total: 329, 892.4638327, 100.0%
  - 2017
    - Public request for tenders: Nb 260, Amount 228.5078935, 22.9%
    - Restricted request for tenders: Nb 64, Amount 183.906425, 18.4%
    - Quotation request: Nb 16, Amount 0.236367039, 0.0%
    - Public-private partnership contract: Nb 11, Amount 545.3601596, 54.6%
    - Contract by direct agreement: Nb 41, Amount 41.63852597, 4.2%
    - Total: 392, 999.649371, 100.0%
  - Observations on table and PPPs
    - In 2016 open tenders represented 66.9 percent of the total number of contracts awarded but only 38.1 percent of the amount of these contracts. In 2017 they represented 66.3 percent of the number and 22.8 percent of the amount.
    - The share of direct contract contracts is described as "only 12.1 percent of the total and 5.6 percent of the total contracts awarded in 2016. It decreases further in 2017 to show at 10, 4, and 4.2, respectively, is well below the maximum limit set by law." (table and narrative present inconsistencies).
    - The share of PPP doubled from 2016 to 2017 from 1.2 to 2.8 percent of the total number of contracts awarded and 26.6 to 54.5 percent of the total amount, although authorities confirmed "there is still no PPP contract concluded" and PPPs "should not, in principle, constitute a public procurement method."

### Project Maintenance Costs
- Coverage and budgeting
  - "Routine infrastructure maintenance costs are not systematically evaluated or clearly reflected in the budget for most investment projects, with the exception of certain sectors and projects."
  - Example: road sector maintenance included via the Road Maintenance Fund; administrative building maintenance allocated to DGML through a global budget appropriation.
  - Outside specific cases, "the mission was unable to identify appropriations for recurrent maintenance costs in other areas of the budget."
- Depreciation and accounting
  - "Depreciation costs of investments are not included in the sectoral or national plans."
  - Transition to accrual-based accounting "at the horizon 2019—20" and implementation of the chart of accounts from WAEMU directives "should facilitate the evaluation and inclusion of these costs in the sectoral PIPs and plans."
- Consequences and misuse
  - Lack of systematic maintenance appropriations "has undermined the sustainability of the infrastructure" and may explain deterioration in capital stock.
  - "Budget appropriations for maintenance and repairs allocated to units of the sectoral ministries are, in practice, used for vehicle maintenance rather than for their intended purposes."

*Source: 1benea2020001 - 81.*

### Annex II. Recommendation Sheets

### Annex II. Recommendation Sheets

### Sheet 1: Implementation of the Commitment Authorization/Payment Appropriation Approach for More Effective Programming and Tracking of Capital Expenditure (Including Public-Private Partnerships)

- Description of the recommendation:
  - Relates to PIMA Institutions 4, 6, and 7.
  - Implementation of fiscal accounting using the commitment authorization/payment appropriation approach to improve budgeting and execution of investments and to support budget sustainability analysis for PPPs.

- Context:
  - Article 64 of the Organic Law on Budget Laws (LOLF) provides that general budget appropriations are subject to a vote by program, and that these votes involve both the commitment authorizations and payment appropriations.
  - Under Article 49, annual performance projects must specify the schedule of payment appropriations associated with the commitment authorizations.
  - Article 21 of the LOLF provides that, for PPP arrangements, commitment authorizations must cover all commitments under the law, effective from the year during which the contracts were concluded.
  - Benin is transitioning to program-based budgeting during an intermediate phase. Some ministries (Ministry of Infrastructures and Transportation (MIT) and Ministry of the Environment and Sustainable Development (MCVDD)) produce multiyear programming papers (DPPD) and annual performance projects (PAP) presenting program appropriations with the commitment authorization/payment appropriation approach, but these papers have inconsistencies during the transition phase.
  - Payment schedules for the three-year period are integrated into the annual performance projects but do not provide the total residual balances payable under the program.
  - The 2017 Budget Law provides only a ceiling for payment appropriations for capital expenditure, broken down into domestic and external financing.
  - Current non-implementation of commitment authorization/payment appropriations limits the quality of multiyear programming and Parliament's control of budget commitments; the mechanism may be strategically valuable for monitoring PPPs.

- Stakeholders involved:
  - General Directorate of Budget (DGB)
  - General Directorate of Public Investment Programming and Monitoring (DGPIP)
  - Line ministries

- Expected outputs:
  - The quality of the expenditure commitment projections in the budget documents is strengthened and the exercise is extended to all ministries.
  - Investments in connection with PPPs are included in the budget documents.
  - The total level of residual balances payable for each program will be specified in the budget documents.
  - The 2019 budget will be prepared in a format to enable Parliament to vote on appropriations by program with a commitment authorization/payment appropriation approach.

- Practical mechanisms for implementation:
  - Internalize budget and execution mechanisms as multiyear commitment authorizations and payment appropriations; provide training for staff of the MPD and MEF, as well as sectoral ministries.
  - Train staff on budget impacts and risks in PPPs.
  - Extend testing of the future integrated information system developed under the economic governance support project (PAGE) to all ministries for budget preparation and execution.
  - Technical expert review of budget document templates (DPPD-PAP) to ensure comprehensiveness, reliability, and clarity of information on multiyear commitments, including PPPs.

- Description of the actions:
  - Action 1: Continue the training workshops for multiyear budgeting, using the expenditure authorization/payment appropriation approach.
  - Action 2: Prepare a timetable for the gradual transition of the ministries in accordance with the migration to the program-based budget approach.
  - Action 3: Ensure that commitments authorization and payment appropriations are effectively reflected in the information system, and extend the testing activities for budget preparation and execution.
  - Action 4: Provide for a review of the budget documents to ensure that the recording of commitments and pending residual balances payments is clear and comprehensive.
  - Action 5: Provide for a thorough evaluation of information on PPPs (explicit and implicit commitments) with the ministries and institutions.

- Implementation timetable:
  - Actions 1 and 2: In progress
  - Action 3: 2018
  - Action 4: Beginning in March 2018
  - Action 5: 2018

- Problems and risks:
  - Articulating this work with the agenda for the transition to the program-based budget is a major challenge.
  - Beginning next year, the budget should be prepared on a commitment authorization/payment appropriation basis (the 2019 budget prepared in 2018), along with the information systems reform focusing on the execution component.
  - Extension of training activities to all staff of the ministries and institutions is required to ensure effective, sustainable appropriation of the reform.

### Sheet 2: Strengthening of the Process of Selecting Investment Projects

- Description of the recommendation:
  - Relates to PIMA Institution 10 on the selection of investment projects.
  - Aim to identify and program projects that are priorities and mature, improving project life-cycle efficiency.

- Context:
  - Selection and comparative selection procedure stages: (i) initial validation at the ministerial level; (ii) technical review by the MPD, with the MEF, leading to pre-selection activities at the DGPSIP and MPD. Projects are ranked based on eligibility criteria communicated by the MPD.
  - Obstacles limiting quality of selection: (1) gaps in project documents submitted to the MPD; (2) shortage of staff in the DGPSIP; (3) absence of interfacing of the MPD's programming information system with the line ministries.
  - Transparency is limited because selection criteria, PIPs, and assessments are not officially published.
  - A new regulatory framework for public investment management is being finalized and could strengthen assessment and selection rules.

- Stakeholders involved:
  - Line ministries
  - DGPSIP

- Expected outputs:
  - Only projects that have been subject to prior assessment are eligible for selection.
  - The comparative selection procedure is specified in a detailed manual that is regularly updated.
  - The DGPSIP, the unit responsible for technical review, has the requisite resources to take stock of the ministries' projects and to conduct counter-expertise evaluations.
  - For more complex, large-scale projects, an independent external assessment is conducted.
  - Decisionmakers select projects based on technical staff reviews and internalize the adopted indicators and criteria.
  - Mature projects are selected in order of priority to facilitate implementation.

- Practical mechanisms for implementation:
  - Regulatory updates to: (1) make feasibility studies a systematic requirement for inclusion in the PIP; (2) define a mandatory standard assessment application, including a cost-benefit analysis, for projects exceeding a threshold; (3) require independent external assessment for complex or large-scale projects.
  - Updated comparative selection manual.
  - Capacity development in DGPSIP: increased staffing and creation of specialized sectoral units.
  - Extend the SIAPIP/DJRADO information system to line ministries and integrate an ex-ante assessment module for project prioritization.
  - Increase transparency by publicly disclosing sectoral strategies, selection criteria, public investment program (PIP), and external assessments and reviews.

- Description of the actions:
  - Action 1: Prepare and quickly adopt the regulatory provisions relating to the mandatory nature of feasibility studies and the minimum thresholds beyond which projects cannot be selected in the absence of external evaluation and review.
  - Action 2: Update the PIP comparative selection manual.
  - Action 3: Strengthen the staffing of the DGPSIP, and create sectoral units within it.
  - Action 4: Extend the SIAPIP/DJRADO system to the line ministries and institutions and incorporate an ex-ante project assessment and prioritization module into the system.
  - Action 5: Publish the selection criteria, PIPs, and external reviews and evaluations.

- Implementation timetable:
  - Action 1: End 2017-first-quarter 2018 (to be coordinated with the decree on management of public investments being validated)
  - Action 2: First half of 2018
  - Action 3: 2018
  - Action 4: Beginning in 2018
  - Action 5: First half of 2018 for the 2019–21 PIP criteria, and for the 2018 PIP, as the assessments are conducted.

- Problems and risks:
  - Effective selection requires high-quality assessments and widespread assessment culture in Programming and Forecasting Directorates of ministries and training of dedicated staff.
  - Balancing technical choices and policy decisions is complex.
  - Quality and transparency of selection will be strengthened by providing decisionmakers with objective indicators, defining sectoral investment strategies at the government level, and online publication of selection criteria, assessments, reviews, and the PIP.

### Sheet 3: Implementation Management and Overall Monitoring of Delays of Both the Budget and Accounting Stages of the Expenditure Process

- Description of the recommendation:
  - Relates to PIMA Institution 12 on the availability of financing.
  - Provides Benin authorities a framework and tools to optimize financing of public investment projects.

- Context:
  - Authorities have taken steps to transpose the decree establishing the TOFE from WAEMU Community Directives. Article 24 of this Decree defines residual balances payable as all balances validated and not paid; validation should be the starting point of the 90-day period.
  - Annex II of the Circular on notification of appropriations defines rules on expenditure payment periods. Timeframes established for each major phase (beginning from the date the request for payment is received from the government's creditor):
    - Validation and establishment of documentation: 5 days
    - Approval from the financial controller: 6 days
    - Payment order: 4 days
    - Payment: 10 days
  - Total timeframe equals 25 days. Authorities recommend reducing this period to 15 days.
  - To date, there has been no effective mechanism to manage and implement general monitoring of the execution periods for the expenditure budget and accounting process.

- Stakeholders involved:
  - DGB
  - Financial Control Unit
  - DGTCP
  - Various staff within these directorates responsible for information systems

- Expected outputs:
  - Framework and tools to follow-up, monitor, and control the execution process at both budget and accounting stages.
  - Detailed status of residual balances payable available at all times.
  - Various stakeholders involved in the budget and accounting process are accountable for delays.
  - Monthly execution of the annual cash plan is more reliable.
  - Financing of capital expenditure is optimized.

- Practical mechanisms implemented:
  - Establish a regulatory text to create a steering and monitoring committee for expenditure execution reporting directly to the Ministry of Economy and Finance.
  - Include automated procedures in budget (SIGFIP), accounting (ASTER), and future integrated system (SIGFP) to produce statistics on execution delays.
  - Define templates for reporting status of residual balances payable classified by type of expenditure and age, and provide assessments of intermediate and general implementation delays by type of expenditure.

- Description of the actions:
  - Action 1: Introduce a steering and monitoring committee for expenditure execution that reports directly to the Minister of Economy and Finance.
  - Action 2: Report information broadly and regularly on the status of residual balances payable and execution periods in the expenditure budget and accounting process, in cooperation with the cash committee.
  - Action 3: In the long term, adopt the approach of optimizing expenditure execution periods in the expenditure process.

- Implementation timetable:
  - Action 1: February 2018
  - Action 2: Beginning in February 2018
  - Action 3: 2019

- Problems and risks:
  - Ensuring statistics produced by the information system or other mechanisms are reliable and comprehensive.
  - Effective pooling of information among all stakeholders in the budget and accounting process is essential.

### Sheet 4: Control the Financial Costs and Budget Risks Associated with Public-Private Partnership Contracts

- Description of the recommendation:
  - Relates to PIMA Institution 4 on the existence of a transparent mechanism for the evaluation, selection, and supervision of PPP projects.
  - Aim to establish a sound legal framework and develop tools to control financial costs and budget risks related to PPP financing.

- Context:
  - In 2016, the government launched an investment plan of more than CFAF 9 trillion, the Government Action Program (PAG), under which the use of PPPs was provided to finance 61 percent of the project costs.
  - The legal framework applicable to PPPs is being formally established. In October 2016, the National Assembly adopted a law, promulgated in June 2017, giving a broad definition of projects that can be designated as PPPs and providing for establishment of a PPP support unit (CA-PPP) reporting to the Presidency, responsible for technical support at all PPP stages, including review of cost-benefit ratio. Relevant implementing decrees are being prepared.
  - Problems exist in the current legal framework relative to international best practices; mechanisms to prevent fiscal risks are not clearly specified. Draft implementing decrees present an opportunity to strengthen the framework.

- Stakeholders involved:
  - Analysis and Investigation Bureau (BAI)
  - Ministry of Economy and Finance (MEF)
  - Caisse Autonome d’Amortissement (CAA)
  - Autonomous implementing agencies
  - Sectoral ministries

- Expected outputs:
  - Clarified roles of stakeholders at all stages in the PPP life cycle (CAA, CAPPP, MEF, BAI, sectoral ministries, implementing agencies).
  - PPP projects are systematically subject to an opinion from the Minister of Economy and Finance, based on analysis of budget sustainability and all financial risks.
  - Use of PPPs targeted to projects suitable for these tools to avoid slippages for public finance.
  - Costs associated with explicit and implicit commitments of PPPs are comprehensively identified and liabilities are outlined in the annex to the budget law.
  - Staff involved in PPP projects is trained to assess costs and risks and to anticipate rigidity and crowding-out effects on the budget of public entities.

- Practical mechanisms implemented:
  - Clarification of stakeholder roles and requirement for prior opinion of the MEF may be provided in the implementing decrees.
  - Comprehensive identification of explicit and implicit PPP commitment costs requires: (1) strengthening expertise of staff involved; (2) proper involvement of implementing agencies and ministries in assessment processes by the DGB.
  - Training sessions required to ensure staff gain skills to address financial costs and fiscal risks in connection with PPPs. Technical assistance from the IMF might be arranged, for example, to train staff to use the PPPs Fiscal Risk Assessment Model (P-FRAM).

- Description of the actions:
  - Action 1: Take regulatory steps clarifying the role of stakeholders and making the prior opinion of the Ministry of Economy and Finance mandatory for the signing of PPPs.
  - Action 2: Provide training for the staff involved (CAPPP, support unit within the MEF, DGB, CAA, and sectoral ministries).
  - Action 3: Prepare an annex to the budget law that takes stock of the liabilities of PPPs.
  - Action 4: Define a policy to limit recourse to PPPs for unsuitable projects to avoid fiscal slippage.

- Implementation timetable:
  - Action 1: End 2017-beginning of 2018
  - Action 2: Beginning January 2018
  - Action 3: Beginning with the 2018 Budget Law
  - Action 4: End of 2017-beginning of 2018

- Problems and risks:
  - Proper implementation requires clarification of stakeholder roles and precise definition of the concept of PPPs in the regulatory framework.
  - PPPs are often considered "budget icebergs" due to multiple financial implications (direct costs and explicit or implicit contingent liabilities) that emerge as projects progress.
  - Stringent management mechanisms should be defined and recourse to PPPs targeted to appropriate projects to avoid fiscal risks.

*Annex II. Recommendation Sheets*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1benea2020001.pdf_