## 1codea2023001 — INTRODUCTION ## Source details **Canonical URL:** [1codea2023001 — INTRODUCTION](https://www.imf.org/-/media/files/publications/cr/2023/english/1codea2023001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2023/english/1codea2023001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2023/english/1codea2023001.pdf.json) --- ### Mission, scope, and stakeholders - IMF Fiscal Affairs Department remote mission held from February 28 through March 24, 2022 to carry out a Public Investment Management Assessment (PIMA). - Mission team: Fabien Gonguet (economist, FAD), Laura Gores (technical assistance adviser, FAD), Hoda Selim (senior economist, FAD), Nicolas Hengy, Pierre Roumegas (experts, FAD), and Ephrem Ghonda Makiadi (public financial management advisor, AFRITAC Central). - Mission financed by the Government of Japan and by AFRITAC Central. - Score validation meetings held March 15–18; findings submitted to the Minister of Finance on March 24; technical meeting chaired by the COREF followed; meeting with technical and financial partners organized March 24. - Consultations and working meetings held with a wide range of central government ministries, agencies, oversight bodies, the Court of Accounts, and the Provincial Ministry for the Budget of the City-Province of Kinshasa. ### Public investment levels, financing, and capital stock — key statistics and targets - General government investment has fluctuated around 4 percent of GDP since 2003. - This level is almost 50 percent lower than the averages for Sub-Saharan African countries and for low-income countries. - Public capital stock reached 46 percent of GDP in 2 019. - Public capital stock per capita was ≈ US$200 in 2 019. - Additional investment activity: - Investments by public corporations in the energy and mining sectors account for ≈ 2 percentage points of GDP a year in recent years. - Public-private partnerships (PPPs) in the transport sector account for a stock of at least 4 percent of GDP. - Policy target: General government investment should reach 6 percent of GDP in 2026 (government objective). - Financing composition and constraints: - Over the past five years, almost two thirds of general government investment has been externally-financed. - Government aim: reach a level of 70 percent of domestic financing in 2026. - Central government capital spending: 0.3 percent of GDP in 2020 and 1.2 percent in 2021 (budget execution statements). - Public capital stock comparator groups: over 100 percent of GDP for low-income countries and sub-Saharan Africa. - Public corporations planned investment estimated at 2 percent of GDP a year (Ministry of the Portfolio estimate). - Example PPP/large projects: ACGT road concessions total contract amount over US$2 billion (about 4 percent of GDP); Banana deep-water port concession cost US$1.3 billion, concession length 30 years. ### Infrastructure access, quality, and risks - Access and quality described as very poor, with major risks of deterioration. - Since end of 1990s: - Access per capita to electricity, health services, and drinking water have fallen. - Gains in access to education observed. - Selected indicators: - Electricity: 20 percent of population connected in 2018. - Health centers with access to electricity: 32 percent in 2019. - Line losses in electricity: 40 percent. - Hospital beds per 1000 inhabitants: fell by one third over two decades and was less than 1 in 2019. - Health specialists: in 2019 only 40 percent of provincial health divisions had at least one specialist doctor and 47 percent had a general practitioner. - Drinking water access: 45 percent of population versus 70 percent for comparator groups. - REGIDESO production: decreased by 21 percent between 2006 and 2013. - Paved roads: 2.3 percent of total network at beginning of 2019–2023 PNSD period. - Contributing deterioration risks: - COVID-19 stalled investment. - Infrastructure development not keeping pace with demographic growth. - Lack of maintenance leading to dilapidation and network losses. - Increasing prevalence of natural disasters and climate change. ### Need to increase and improve investment; role of PIMA - Authorities aim to create fiscal space, mobilize a greater proportion of revenues, and make greater use of PPPs. - Emphasis: increasing investment is necessary but not sufficient — must also "invest better" by strengthening public investment management (PIM) practices. - IMF’s PIMA evaluation framework applied to measure strengths, weaknesses, and reform priorities. ### Key PIM findings — high-level - PIM in the DRC exhibits weaknesses across the whole project cycle—planning, allocation, and implementation—in institutional design and in practice. - Legal/regulatory situation: - Advanced legal framework exists for budget processes (Law on Public Finance (LOFIP)), procurement, and public accounting. - Gaps: lack of clear laws/regulations for appraisal, selection, and monitoring of investment projects. - Most notable operational weaknesses: - Lack of information on investment needs in national and sectoral strategies. - Absence of standard project appraisal methodologies. - Partial information on investment projects in budget documentation. - Absence of clear project selection criteria. - Large share of direct agreements in procurement. - Lack of credibility of commitment ceilings communicated to line ministries. - Scarcity of reports on physical and financial execution of projects. - Administrative fragmentation: - Legal uncertainty on roles; multiplicity of entities involved. - Creation of ad hoc committees/agencies has weakened technical capacity, especially for externally financed projects. - Fragmented/redundant information flows and suboptimal use of human and IT resources. ### Climate change considerations (C-PIMA) — summary - Commitments on climate change beginning to be incorporated into PIM but integration is limited. - Emerging practices: - Role of Ministry of the Environment and Sustainable Development in inter-ministerial coordination. - Institutional and financial framework for natural disaster risk management emerging. - Legal obligation to conduct environmental and social impact assessments recognized. - Main C-PIMA weaknesses: - Lack of alignment of national/sectoral strategies with climate considerations. - Absence of legal framework and land management/ planning strategy. - Lack of methodologies to assess climate risks and impacts on infrastructure. ### Centrality of budget credibility - Strengthening budget credibility is key condition for successful PIM reforms. - Issues: - Lack of credibility of budget laws leads to circumvention of expenditure chain; projects implemented based on available cash rather than budget priorities. - Very low budget execution rates discourage stakeholders. - Policy implication: ensure investment envelopes voted by parliament are realistic to restore the budget law as reference for project implementation. ### Reform priorities (overview) - Report "puts forward seven high-priority recommendations" to improve PIM in short to medium term (details in report tables and Priority Action Plan). - Cross-cutting priorities include: - Strengthen legal/regulatory frameworks for appraisal, selection, monitoring, and maintenance. - Improve coordination and clarify roles/responsibilities. - Enhance information systems and consolidate project data. - Increase budget realism and credibility. - Integrate climate risk assessment and disaster risk management into PIM. --- ### National and Sectoral Planning, Allocation, and Implementation — Key findings and priorities ### Planning: institutional design, effectiveness, and priorities (selected PIMA scores) - Fiscal targets and rules - Institutional design: Medium. Golden rule in LOFIP; no rule on debt. Three-year MTFF prepared annually. - Effectiveness: Medium. IMF program disciplines debt; MTFF guides expenditure ceilings. - Priority: Low - National and sectoral planning - Institutional design: Medium. PNSD and sectoral strategies published but provide little information on projects/costs. - Effectiveness: Weak. Absence of project lists and cost information; limited M&E. - Priority: High - Coordination between entities - Institutional design: Weak. Planned coordination between provinces and central government not effectively implemented. - Effectiveness: Weak. Harmonization conferences not held; transfers deviate from forecasts. - Priority: Medium - Project appraisal - Institutional design: Weak. No legal compulsion for rigorous appraisal using a standard methodology. - Effectiveness: Weak. Appraisal rare for domestic projects; central committee support limited. - Priority: High - Alternative infrastructure financing (PPP, SOEs, competition) - Institutional design: Medium. Law on PPPs exists but no policy; SOE investment plan reviews not required. - Effectiveness: Weak. Only telecommunications shows effective competition; oversight of PPPs not centralized. - Priority: High ### Allocation: multiyear budgeting, budget unity, and project selection - Multiyear budgeting - Institutional design: Medium. Three-year capital expenditure projections and indicative ceilings published; three-year PIP not published. - Effectiveness: Weak. Significant discrepancies between projections and expenditure ceilings; PIP incomplete and not regularly updated. - Priority: High - Budget comprehensiveness and unity - Institutional design: Weak. Considerable investment spending allowed without parliamentary authorization or inclusion in budget law. - Effectiveness: Weak. Extrabudgetary entities and PPPs partially included in budget; Ministry of Budget lacks verification procedures. - Priority: High - Budgeting for investment - Institutional design: Medium. LOFIP provides for AE-CP budgeting but does not protect ongoing projects. - Effectiveness: Medium. AE-CP budgeting not effective in practice; ongoing projects often supplanted by new ones. - Priority: Medium - Maintenance funding - Institutional design: Medium. Standard rules for maintenance forecasts exist only in road sector; budget nomenclature identifies maintenance. - Effectiveness: Weak. Financing too low to preserve asset value and durability. - Priority: Medium - Project selection - Institutional design: Medium. Legal framework provides for appraisal review but lacks standard selection criteria. - Effectiveness: Weak. Selection criteria not relevant; many projects selected from outside appraised list. - Priority: High ### Implementation: procurement, funding availability, portfolio management, asset monitoring - Procurement - Institutional design: High. Public procurement law aligns with best practice. - Effectiveness: Medium. Significant exemptions/distortions; many direct awards. - Priority: High - Availability of funding - Institutional design: Medium. Monthly cash flow forecasts prepared; commitment plan quarterly; donor funds should be in TSA. - Effectiveness: Weak. Commitment ceilings inconsistent with cash flow forecasts; donor funds held in commercial banks. - Priority: High - Portfolio management and oversight - Institutional design: Weak. No legal requirement for systematic ex post reviews; reallocations allowed without oversight. - Effectiveness: Weak. Reports do not systematically provide delays/cost overruns; ex post reviews rare. - Priority: High - Management of project implementation - Institutional design: Medium. No robust framework for project management or standard rules for adjustments. - Effectiveness: Weak. Project staff appointed in practice; Court of Accounts does not audit large-scale projects. - Priority: Medium - Monitoring of public assets - Institutional design: Medium. Lack of comprehensive, up-to-date asset registers. - Effectiveness: Weak. Asset and inventory accounting not performed; depreciations not applied. - Priority: Low ### C-PIMA scores and priorities (selected) - C1 Climate-aware Planning: Weak — Priority: High - C2 Coordination across Public Sector: Weak — Priority: Medium - C3 Project Appraisal and Selection: Weak — Priority: High - C4 Budgeting and Portfolio Management: Weak — Priority: Medium - C5 Risk Management: Medium — Priority: Low --- ### Priority Action Plan — selected medium- and high-priority recommendations and timelines ### High-priority cross-cutting actions (2022–2024 highlights) - Adopt a decree on public investment management covering all stages of the project cycle and structuring the institutional framework for project management. - Set up a single office for coordination and oversight of externally financed projects (public institution under Ministry of Finance) to streamline functions, pool skills, and centralize information. - Improve oversight over PPPs and associated fiscal risks by fully implementing legal framework, resolving conflicting norms, and building fiscal risk analysis capacity within the General Directorate of Public Debt (DGDP). - Include quantified investment needs and envisaged investment costs in strategic planning documents (PNSD, sectoral strategies) and align them cross-cuttingly with climate objectives. - Systematize preliminary appraisal by developing standard methodologies, including climate impact assessment, and set up a central support agency at the Ministry of Planning. - Produce, maintain, and publish a comprehensive, realistic three-year Public Investment Program (PIP) as main vehicle for reporting to parliament. - Develop an integrated bank of projects with an IT system and unique project code for life-cycle monitoring. ### Selected actionable items and timelines (examples) - Action 1.2.3: Improve oversight of PPPs and associated fiscal risks (2022–2023) - Signature of implementing decrees, register of guarantees at DGDP, comprehensive PPP register by ARMP and UC-PPP, procedures manual including climate risk assessment, decree on procedures manual, operationalization of Standing Committee on Project Validation, national PPP policy (2022–2023). Responsible: ARMP, MINPLAN, MINFIN, MINBUD, UC-PPP. Priority: High - Action 3.7.1: Adopt a decree on public investment management (2022–2024) - Adoption of decree (2022); implementing regulations and procedures manuals (2023–24). Responsible: MINPLAN, MINBUD, MINFIN. Priority: High - Action 3.7.2: Set up a single office for coordination and oversight of externally financed projects (2022–2023) - Define institutional form; create single office replacing current committees/agencies (2022); prepare templates for agreements; formalize relationships and data use (2022–23). Responsible: MINFIN, MINBUD, Sectoral ministries. Priority: High - Action 3.7.4: Strengthen preliminary appraisal including climate assessment (2022–2023) - Survey methodologies and prepare standard appraisal methodologies (2022); analyze preinvestment fund execution and optimize allocations (2022); establish central support structure in MINPLAN (2023); adopt standard methodology for environmental and social impact studies including climate change (2023). Responsible: MINPLAN, MINBUD, BCECO, Sectoral ministries, ACE. Priority: High - Action 3.7.6: Produce, maintain, and publish a comprehensive, realistic three-year PIP (2022–2023) - Establish selection criteria (2022); clean-up MINPLAN database (2022); automate sharing of project database with MB and MF (2022); publish PIP aligned with budget as annex to 2023 LFI (2022); include climate selection criteria (2023). Responsible: MINPLAN, MINBUDIN, BCECO, Sectoral ministries, ACE. Priority: High ### Medium-priority recommendations (selected) - Strengthen budget unity by improving integration of capital and current budget preparation (2022–2029). - Ensure better coverage of maintenance needs by adopting standard methodologies and evaluating additional maintenance needs linked to climate change. - Coordinate capital spending between central government and provinces in accordance with decentralization process. --- ### Project Appraisal, Selection, and Procurement — diagnostics and reforms ### Project appraisal — diagnosis and recommendations - Institutional design: Weak; Effectiveness: Weak; Priority: High - Current situation: - No legal/documentary framework mandating systematic rigorous appraisals for all major projects. - Externally financed projects generally assessed per donor procedures; domestically financed projects rarely appraised. - Prefinancing (preinvestment) fund exists but actual execution of appropriations for appraisals 2018–2022 is very low or zero. - No standard appraisal methodology or central support structure; BCECO methodology applies to its portfolio only. - Risk analysis at appraisal stage is limited. - Recommended actions: - Establish legal/documentary framework requiring systematic, published appraisals using standard methodologies covering financial, economic, technical, and risk analysis. - Strengthen and resource the preinvestment fund (reference target: capacity for 10 appraisals/year). - Create or empower a central support agency (ideally at MINPLAN) to provide standardized appraisal methodology and technical advice. - Require publication and single entry point for appraisal studies. ### Project selection — gaps and recommendations - Institutional design: Medium; Effectiveness: Weak; Priority: High - Issues: - CISPIP exists on paper (2019 order) but not fully operational; review processes superficial. - No published standard selection criteria; an unpublished 2018 manual not evidently used. - Projects often selected outside appraised pipelines. - Recommendations: - Future PIM decree to require objective, transparent selection criteria and selection only from appraised projects. - Publish selection criteria in annual circulars. - Develop integrated bank of projects and project coding to support selection and lifecycle monitoring. ### Procurement — status and reform actions - Institutional design: High; Effectiveness: Medium; Priority: High - Legal framework: - Law 10/010 of April 27, 2010 establishes tendering as basic procedure; direct awards allowed as exceptions. - Publication requirements, minimum bidding deadlines, and ARMP publication channels set out. - Practice and weaknesses: - MAPS II 2020: 48 percent compliance with procurement law. - Significant use of direct awards, especially in ACGT portfolio. - Monitoring relies on incomplete databases; SIGMAP not yet operational. - Reform priorities: - Reduce special authorizations enabling direct awards. - Implement unified procurement database for automated analytical reports. - Give DGCMP access to budget information system to check appropriations. - Interface procurement systems with budget execution systems (target Q4 2024). ### Dispute resolution (procurement) - Dispute Settlement Committee (CRD) within ARMP issues decisions within 15 days (or 30 days exceptional). - MAPS II findings: 57 percent decisions in favor of plaintiff; private sector satisfied but notes non-compliance by contracting authorities. --- ### Budget Credibility, Cash Management, TSA, and Portfolio Oversight ### Availability of funding and cash management — issues and actions - Institutional design: Medium; Effectiveness: Weak; Priority: High - Problems: - Cash flow forecasts monthly; commitment plan quarterly — inconsistency in periodicity and alignment. - Donor funds held in commercial banks rather than TSA. - Cumulative domestic procurement arrears as at end-2021: US$187 million (0.3 percent of GDP). - Investment files rationed by cash availability; settlement priorities set without regard to contractual deadlines. - Recommended reforms: - Adopt methodological guides for cash flow and commitment plan preparation. - Prepare commitment plan before fiscal year start and communicate ceilings in advance. - Strengthen TSA coverage and limits on exemptions; survey government accounts and plan transfers to TSA. ### Budget comprehensiveness and unity — findings and recommendations - Institutional design: Weak; Effectiveness: Weak; Priority: High - Extrabudgetary entities: - Legal framework allows significant capital spending by extrabudgetary entities without parliamentary authorization. - Mission estimate: over 75 percent of extrabudgetary entities’ domestically-funded capital expenditures are presented in the budget. - ACGT claims to manage a budget of US$2.3 billion; 2022 LF capital expenditures total US$3.6 billion. - Externally financed projects and PPPs: - Some externally financed projects and PPPs do not appear in LF; DRB includes partial PPP list. - Integration issues: - Budget documentation does not present total multiyear costs/multiyear commitments (AE-CP) for projects to parliament. - PIP internal version incomplete and not used systematically in budget formulation. - Recommended actions: - Include all capital expenditure and projects in budget documentation, regardless of management entity. - Publish PIP aligned with budget and MTFF; automate sharing of PIP data with MINBUD and MINFIN. - Implement AE-CP budgeting fully by 2024; require AE consumption reporting by project. ### Portfolio management, ex post review, and asset monitoring - Portfolio management: Institutional design: Weak; Effectiveness: Weak; Priority: High - Fragmented oversight; reports do not systematically report delays/cost overruns. - Reallocations between projects occur without systematic oversight. - Ex post reviews not systematic; IGF and Court of Accounts capacity limited. - Recommendation: create integrated bank of projects with unique codes and life-cycle monitoring; institutionalize periodic monitoring and systematic ex post evaluations. - Monitoring of public assets: Institutional design: Medium; Effectiveness: Weak; Priority: Low - No comprehensive asset registers; inventory accounting not implemented; depreciation not recorded. - Recommendation: phased full inventory, asset valuation methodology, information system to link inventory accounting with general accounts. --- ### Maintenance, Digitization, Staff Capacity, and Institutional Reform ### Maintenance funding and methodologies - Institutional design: Medium; Effectiveness: Weak; Priority: Medium - Road sector: - FONER estimate of routine road maintenance needs: US$340,000,000 per year. - Annual Road Maintenance Program for 2020: US$108,849,157 (32 percent of needs); resources allocated: US$79,002,945 (73 percent of program). - Table 3.C (selected rows reproduced exactly as presented in source): - Total | 340,000,000 | 108,849,157 | 79,002,945 - Road agencies’ needs vs allocations shown in source table. - General recommendations: - Provide standard methodologies to estimate routine maintenance and renovation needs across sectors. - Require sectoral ministries to identify and prioritize maintenance needs in budget circulars. - Future PIM decree to require systematic inclusion of maintenance at design, budgeting, and implementation. ### Digitization — integrated bank of projects and IT priorities - Strategic pillar 8: Develop an integrated IT system (bank) of investment projects. - Expected outcomes: - Enhanced oversight of physical and financial execution. - Comprehensive, frequent, pooled project portfolio monitoring and reporting. - Planned steps and timeline: - Consultation framework between MINPLAN and Interministerial IT Coordination unit of Budget and Finance (2022). - Inclusion in project fiches of physical/financial monitoring for domestically-funded projects and consolidation in MINPLAN database (2022). - Formalize simplified reporting structure with PTFs for externally financed projects (2022). - Validate functional specification schedule and mobilize financing (2023). - Develop and test software applications for project life-cycle monitoring (2023). - Key principles for project bank (Annex 7): - Unique project codes; life-cycle tracking; interfaces with budgeting, procurement, accounting; standardized project fiches; shared access among stakeholders. ### Staff capacity and institutional fragmentation - Constraints: - Administrative fragmentation dilutes PIM capacities; multiplicity of parties and ad hoc committees reduces technical capacity. - IT functions lack coordination, staff capacity, and an IT master plan. - Capacity needs: - Training across PIM stages: planning, appraisal, selection, budgeting, monitoring, ex post evaluation. - Specific capacity building for PPP fiscal risk analysis and climate integration. - Training plan: - A training and technical assistance plan to be developed and implemented as part of Strategic Public Finance Reform Plan (PSRFP) 2022–2028. ### Legal framework: need for PIM decree - Legal framework fragmented across LOFIP, PPP law, procurement law, and environmental law. - Gaps: - No single high-level law/regulation covering the full project cycle (appraisal, selection, monitoring, ex post evaluation). - Conflicts between laws (e.g., PPP law vs procurement law vs UC-PPP decree). - Priority recommendation: adopt a decree on PIM covering all stages of project cycle to define responsibilities, institutional structure, and tools. --- ### Climate-aware PIM (C-PIMA) — findings and recommendations ### C1 Climate-aware Planning (Institutional design: Weak; Priority: High) - National/sectoral strategies not aligned with NDC climate targets except forestry sector. - PNSD and Government Program include environment/climate pillars but lack cross-referencing with NDC targets. - Land use/construction regulation outdated (Law 73-021 of July 20, 1973); new land management law and strategy under preparation. - No dedicated technical support unit to cost climate-aware investments; MEDD and ACE concentrate expertise but MEDD lacks explicit mandate to support sectoral ministries. - Recommendations: - Align PNSD and sectoral strategies with NDC; provide sectoral breakdown of climate objectives, targets, outcomes. - Train sectoral ministries via MEDD and ACE and adopt national strategy for combating climate change; adopt new land management law and strategy. ### C2 Coordination across the Public Sector (Institutional design: Weak; Priority: Medium) - Thematic groups exist (one dedicated to climate/environment/water/sanitation) but do not yet include extrabudgetary entities and PPPs. - Central–provincial coordination mechanisms emerging (PDL-145T, REDD+) but not yet operational; provincial investment plans not published. - Recommendations: - Amend decree on sectoral thematic groups to include public corporations. - Operationalize PDL-145T mechanisms and provincial thematic groups for climate integration. ### C3 Project Appraisal and Selection (Institutional design: Weak; Priority: Medium) - Environmental impact studies are required by law but do not explicitly require climate change coverage. - ACE conducts environmental reviews (300+ in 2021) and publishes assessments; no standard methodology for climate assessment. - BCECO draft environmental/social procedures manual includes climate vulnerability analysis (draft). - Recommendations: - Future PIM decree to require systematic climate-related analysis in preliminary appraisal using standard methodology supported by MEDD. - Include climate-linked factors in project selection criteria and PPP contracts. ### C4 Budgeting and Portfolio Management (Institutional design: Weak; Priority: Medium) - No identification of climate-related public investment spending in the budget. - No legal basis for ex post audits assessing climate mitigation/adaptation outcomes. - Asset management and maintenance policies do not account for climate risks. - Recommendations: - Establish legal foundations for monitoring and ex post assessment of climate impacts; require measurable monitoring targets from planning stage. - Use program-based budgeting transition to establish monitoring indicators. - Assess climate change impacts on maintenance needs and set up climate budget tagging (medium term). ### C5 Risk Management (Institutional design: Medium; Priority: Low) - ORSEC plan (2012) exists for disaster response but does not identify infrastructure exposure to climate change. - Draft national disaster risk management strategy under update; CSNGHC (National Solidarity Fund) created for disaster financing. - Ex ante financing mechanisms exist: MAAH “reserve for accidents and disasters” CGF 65 million in 2021 LFI and CGF 90 million in 2022 draft budget law. - Fiscal risk statement (September 2021) mentions climate risks qualitatively; does not assess infrastructure impacts. - Recommendation (low priority): operationalize CSNGHC, finalize/publish disaster strategy and resource plan, analyze climate risks affecting infrastructure and include in fiscal risk statement. --- ### Governance, Institutional Reform, and Sequencing (selected elements) ### Governance and reclassification actions (2022–2023 highlights) - Publication of presidential order to confer powers on the ministries (2022). - Completion of reclassification and streamlining of government organizations (QIV 2022). - Enhance information on objectives in Priority Action Plans, particularly climate-related (2023). - Finalize fiscal program models and indicators for monitoring investments related to climate change (2023). ### Public financial management reform sequencing (selected targets) - Strengthen macro-fiscal function and MTFF presentation (2022–2023). - Develop fiscal risk management function and expand DRB coverage to include PPP guarantees, provincial investment projects, and climate change scenarios (by 2024). - Transition to program-based budgeting and full AE-CP budgeting implementation (targeted actions spanning 2022–2029). - Strengthen independence and capacity of Court of Accounts and inventory accounting (2022–2025). --- *IMF | Technical Assistance Report – Democratic Republic of the Congo (INTRODUCTION).* ### INTRODUCTION ........................................................................................................... ### 1codea2023001 - INTRODUCTION ### Mission, scope, and stakeholders - IMF Fiscal Affairs Department remote mission held from February 28 through March 24, 2022 to carry out a Public Investment Management Assessment (PIMA). - Mission team: Fabien Gonguet (economist, FAD), Laura Gores (technical assistance adviser, FAD), Hoda Selim (senior economist, FAD), Nicolas Hengy, Pierre Roumegas (experts, FAD), and Ephrem Ghonda Makiadi (public financial management advisor, AFRITAC Central). - Mission financed by the Government of Japan and by AFRITAC Central. - Score validation meetings held March 15–18; findings submitted to the Minister of Finance on March 24; technical meeting chaired by the COREF followed; meeting with technical and financial partners organized March 24. - Consultations and working meetings held with a wide range of central government ministries, agencies, oversight bodies, the Court of Accounts, and the Provincial Ministry for the Budget of the City-Province of Kinshasa. ### Public investment levels, financing, and capital stock - General government investment has fluctuated around 4 percent of GDP since 2003. - This level is almost 50 percent lower than the averages for Sub-Saharan African countries and for low-income countries. - Public capital stock reached 46 percent of GDP in 2 019. - Public capital stock per capita was ≈ US$200 in 2 019. - Additional investment activity: - Investments by public corporations in the energy and mining sectors account for ≈ 2 percentage points of GDP a year in recent years. - Public-private partnerships (PPPs) in the transport sector account for a stock of at least 4 percent of GDP. - A significant share of central government investment is financed by external resources (figure references within source). ### Infrastructure access, quality, and risks - Access and quality of infrastructure resulting from investments are described as very poor, with major risks of deterioration. - Since the end of the 1990s: - Access per capita to electricity, health services, and drinking water have fallen. - Gains were observed in access to education, but overall infrastructure performance remains weak. - Perception of infrastructure quality by business leaders has deteriorated slightly over the past decade. - Contributing factors to deterioration risk: - COVID-19 pandemic stalled investment. - Infrastructure development is not keeping pace with demographic growth. - Lack of adequate maintenance has led to dilapidation and network losses in road, electricity, and water networks. - Increasing prevalence of natural disasters and climate change expose infrastructure to accelerated deterioration. ### Need to increase and improve investment; role of PIMA - Authorities aim to create fiscal space and mobilize a greater proportion of revenues to invest in priority sectors, and to make greater use of PPPs. - Emphasis in the report: increasing investment is necessary but not sufficient — it is also essential to "invest better" by strengthening public investment management (PIM) practices. - The IMF’s PIMA evaluation framework is applied to measure strengths and weaknesses and to identify reform priorities. ### Key findings on public investment management weaknesses - PIM in the DRC exhibits weaknesses across the whole project cycle, both in institutional design and in practice. - Legal and regulatory situation: - Advanced legal framework exists for budget processes (Law on Public Finance (LOFIP)), procurement, and public accounting. - Gaps: lack of clear laws and regulations for appraisal, selection, and monitoring of investment projects. - Weak effectiveness of practices, notably in budgeting and implementation phases. - Most notable operational weaknesses identified: - Lack of information on investment needs in national and sectoral strategies. - Absence of standard project appraisal methodologies. - Partial information on investment projects in budget documentation. - Absence of clear project selection criteria. - Large share of direct agreements in public procurement. - Lack of credibility of commitment ceilings communicated to line ministries. - Scarcity of reports on physical and financial execution of projects. ### Administrative fragmentation, capacity, and information flows - Administrative and legal fragmentation produces unclear project management responsibilities and dilutes capacity. - Causes and effects: - Legal uncertainty on roles of various parties; multiplicity of entities involved. - Lack of coordination and absence of comprehensive and consistent information-sharing processes. - Creation of ad hoc committees and agencies—often to circumvent ineffective procedures or at donors’ behest—has weakened technical capacity for sound project management, especially for externally financed projects. - Fragmented and/or redundant information flows lead to suboptimal use of human and IT resources. ### Climate change considerations and C-PIMA findings - The DRC’s commitments on climate change are beginning to be incorporated into PIM practices, but integration is limited. - Emerging good practices (still being operationalized): - Role of the Ministry of the Environment and Sustainable Development in inter-ministerial coordination of investment decisions. - Emergence of an institutional and financial framework for natural disaster risk management. - Legal obligation to conduct environmental and social impact assessments recognized by stakeholders. - Main C-PIMA weaknesses: - Lack of alignment and cross-cutting recognition of climate considerations in national and sectoral strategies. - Absence of a legal framework and land management and planning strategy. - Lack of methodologies to assess climate risks and impacts on infrastructure. - Figures and detailed C-PIMA scores referenced in the report (figures and Annex 3). ### Budget credibility and its centrality for reform - Strengthening budget credibility is identified as a key condition for successful PIM reforms. - Issues: - Lack of credibility of budget laws leads to circumvention of the traditional expenditure chain; projects are implemented based on available cash rather than on budget priorities. - Very low budget execution rates discourage stakeholders involved in project budgeting and implementation. - Critical policy implication: ensure investment envelopes voted by parliament are realistic to restore the budget law as the reference for project implementation. ### Reform priorities identified - The PIMA evaluation supports a set of high-priority actions: - The report "puts forward seven high-priority recommendations" expected to improve public investment management in the short to medium term (details provided in report tables and the Priority Action Plan referenced in the source). - The report highlights the need for: - Strengthening legal and regulatory frameworks for appraisal, selection, monitoring, and maintenance. - Improving coordination among institutions and clarifying roles and responsibilities. - Enhancing information systems and consolidation of project data. - Increasing budget realism and credibility to improve execution and oversight. - Integrating climate risk assessment and disaster risk management into PIM processes. *Source: IMF Technical Assistance Report – Democratic Republic of the Congo (INTRODUCTION).* ### 2. National and Sectoral ### 2. National and Sectoral ### Planning: institutional design, effectiveness, and priority findings - Fiscal targets and rules - Institutional design: Medium. A golden rule is included in the LOFIP, but there is no rule on debt. A three-year MTFF is prepared every year, distinguishing current expenditure from investment spending. - Effectiveness: Medium. The program with the IMF instills de facto discipline on debt levels. The investment envelopes set out in the MTFF guide the expenditure ceilings adopted in the budget. - Priority: Low - National and sectoral planning - Institutional design: Medium. The PNSD and a number of sectoral strategies are published, but provide little information on investment projects and costs. A few sectoral strategies include targets on outputs. - Effectiveness: Weak. The absence of a list of projects in the strategies and lack of information on their costs hinder measurement. Monitoring and evaluation have been limited. - Priority: High - Coordination between entities - Institutional design: Weak. Coordination of projects between provinces and central government is planned on paper. Calculation of transfer amounts is not transparent. Analysis of contingent liabilities remains to be institutionalized. - Effectiveness: Weak. Harmonization conferences are no longer held. Transfers deviate considerably from forecasts. The first fiscal risk statement (2021) provides analyses of some contingent liabilities. - Priority: Medium - Project appraisal - Institutional design: Weak. The legal framework does not compel rigorous appraisal according to a standard methodology, with central committee/agency support and risk analysis. - Effectiveness: Weak. Apart from external financing, appraisal is rare; absence of a standard methodology and central committee compromises selection, with limited risk analysis. - Priority: High - Alternative infrastructure financing (PPP, SOEs, competition) - Institutional design: Medium. Majority of infrastructure sectors are competitive on paper. There is a law on PPPs, but not yet any policy. Legal framework does not require review of SOE investment plans. - Effectiveness: Weak. Only telecommunications is subject to effective competition. Oversight of PPPs is not centralized. No consolidated report on SOE financial statements or investment plans. - Priority: High ### Allocation: multiyear budgeting, budget unity, and project selection - Multiyear budgeting - Institutional design: Medium. Three-year capital expenditure projections, broken down by ministry, are published, and indicative three-year ceilings are applied. The three-year Public Investment Program (PIP) is not published. - Effectiveness: Weak. Significant discrepancies exist between capital expenditure projections and expenditure ceilings, and the budget laws. The PIP does not cover all projects and is not regularly updated. - Priority: High - Budget comprehensiveness and unity - Institutional design: Weak. Considerable investment spending is allowed without parliamentary authorization or information in the budget law. Capital and current budgets are presented in a single document. - Effectiveness: Weak. Investments of extrabudgetary entities and PPPs are partially included in the budget. The Ministry of Budget has no procedure to verify consistency of current and capital budgets. - Priority: High - Budgeting for investment - Institutional design: Medium. LOFIP provides for budgeting in AE-CP but does not protect ongoing projects to completion. Transfers from capital to current appropriations are possible. - Effectiveness: Medium. Budgeting in AE-CP is not effective and ongoing projects are often supplanted by new ones. Transfers of capital appropriations to current expenditure are effectively prevented in the system. - Priority: Medium - Maintenance funding - Institutional design: Medium. Standard rules for forecasts of current maintenance or renovation of nonfinancial assets exist only in the road sector. Budget nomenclature clearly identifies maintenance activities. - Effectiveness: Weak. Financing required to deal with maintenance needs is clearly too low to preserve value and ensure durability of infrastructure assets. - Priority: Medium - Project selection - Institutional design: Medium. Legal framework provides for review of appraisals, but does not provide standard selection criteria. The Plan has a list of appraised projects, but no formal obligation to use it. - Effectiveness: Weak. Review is only applied to project fiches; selection criteria used for budgeting are not relevant and many projects seem selected from outside the list of appraised projects. - Priority: High ### Implementation: procurement, funding availability, portfolio management, and asset monitoring - Procurement - Institutional design: High. Public procurement law aligns with best practice in terms of competition, transparency, and handling complaints, but public procurement oversight is deficient in several ways. - Effectiveness: Medium. Significant exemptions distort competition and transparency; the system for handling complaints is satisfactory in time limits and fairness. - Priority: High - Availability of funding - Institutional design: Medium. Annual month-by-month cash flow forecasts are prepared, but the commitment plan is quarterly. Law stipulates donor funds should be deposited at the Central Bank in the TSA. - Effectiveness: Weak. Quarterly commitment ceilings are not consistent with cash flow forecasts. Donor funds are placed in commercial bank accounts unrelated to the TSA. - Priority: High - Portfolio management and oversight - Institutional design: Weak. Legal framework does not require systematic ex post review of projects; reallocations between projects are allowed without systematic oversight and transparent procedures. - Effectiveness: Weak. Reports do not systematically provide information on delays and cost overruns; ex post reviews by the Government are rare. - Priority: High - Management of project implementation - Institutional design: Medium. Arrangements for project management are not set in a robust framework; no standard rules about project adjustments. The Court of Accounts has mandate to audit projects. - Effectiveness: Weak. Project implementation staff appointed, but no information on adjustments made. Court of Accounts does not audit large-scale projects. - Priority: Medium - Monitoring of public assets - Institutional design: Medium. Government lacks comprehensive, up-to-date asset registers. Legal framework provides for asset and inventory accounting rules in line with international standards. - Effectiveness: Weak. Asset and inventory accounting are not performed. Asset inventories are not implemented. Depreciations are not applied. - Priority: Low ### Climate-aware planning (C-PIMA) assessment and priorities - C1 Climate-aware Planning: Weak. Public investment planning and land management/construction regulations do not take climate change into account. - Priority: High - C2 Coordination across Public Sector: Weak. Public investment decisions relating to climate change are not coordinated over the whole public sphere despite thematic groups. - Priority: Medium - C3 Project Appraisal and Selection: Weak. Legal framework does not explicitly take into account climate change in environmental impact studies, PPPs, or selection criteria for budget projects. - Priority: High - C4 Budgeting and Portfolio Management: Weak. No specific practices in budgeting, audits/ex post reviews, or asset management that account for climate risks and objectives. - Priority: Medium - C5 Risk Management: Medium. Risks associated with infrastructure exposure to climate change are not covered in publications or analyses of budget implications. Ex ante financing mechanisms for such risks exist. - Priority: Low ### Priority Action Plan: medium- and high-priority recommendations (selected actions) - High-priority cross-cutting recommendations (action plan highlights for 2022-2024) - Adopt a decree on public investment management covering all stages of the project cycle and structuring the institutional framework for project management (Annex 5). - Set up a single office for coordination and oversight of externally financed projects, a public institution under the auspices of the Ministry of Finance, to streamline functions, pool skills, centralize information (Annex 4). - Improve oversight over PPPs and associated fiscal risks by ensuring full implementation of the legal framework, resolving conflicting norms quickly, and building capacity for fiscal risk analysis within the General Directorate of Public Debt at the Ministry of Finance. - Include quantified investment needs and envisaged investment costs in strategic planning documents (National Development Strategy Plan, sectoral strategies) and align them in a cross-cutting way with the country’s climate objectives. - Systematize preliminary appraisal of projects by developing standard methodologies, including climate impact assessment, and by setting up a central support agency at the Ministry of Planning. - Produce, maintain, and publish a comprehensive, realistic three-year Public Investment Program (PIP) supporting a more transparent project selection process and serving as the main vehicle for reporting to parliament on current and future projects (Annex 6). - Develop an integrated bank of projects, supported by an IT system to monitor projects, to be identified by a single code lasting the whole of their life-cycle (Annex 7). - Three medium-priority recommendations - Strengthen budget unity by improving integration of capital and current budget preparation. - Ensure better coverage of maintenance needs by adopting standard methodologies and evaluating additional maintenance needs linked to climate change. - Coordinate capital spending between central government and the provinces, in accordance with the decentralization process. - Selected actions from the Priority Action Plan with timelines and responsibilities - Action 1.2.3: Improve oversight of PPPs and associated fiscal risks (2022–2023) - 1. Signature of all implementing decrees of the PPP law and clarification of roles (2022). - 2. Establishment of a register of guarantees at the Ministry of Finance - DGDP (2022). - 3. Establishment and updating of a comprehensive register of PPPs by ARMP and UC-PPP and drafting of procedures manual and project appraisal guide including climate risk assessment (2022-23). - 4. Signature of decree on procedures manual for PPP law (2023). - 5. Operationalization of the Standing Committee on Project Validation with Ministry of Finance veto over financial viability (2023). - 6. Adoption of a national policy relating to PPPs (2023). - Responsible entities: ARMP, MINPLAN, MINFIN, MINBUD, UC-PPP. - Priority: High - Action 3.7.1: Adopt a decree on public investment management (2022–2024) - 1. Adoption of the decree on public investment management (2022). - 2. Preparation of implementing regulations and procedures manuals (2023-24). - Responsible entities: MINPLAN, MINBUD, MINFIN. - Priority: High - Action 3.7.2: Set up a single office for coordination and oversight of externally financed projects (2022–2023) - 1. Definition of institutional form of the single office. - 2. Creation of the single office replacing current committees and agencies (2022). - 3. Preparation of templates for agreements between the single office and sectoral ministries. - 4. Preparation of regulations formalizing relationships and data use (2022-23). - Responsible entities: MINFIN, MINBUD, Sectoral ministries. - Priority: High - Action 3.7.3: Include quantified investment needs and envisaged investment costs in strategic planning documents (2022–2024) - 1. Addition to the reframed PNSD of estimate of investment needs, list of major projects with total costs and by year, and target indicators (2022). - 2. Alignment of reframed PNSD with climate objectives of DRC national contribution (2022). - 3. Adoption of the new law on land management and planning (2022). - 4. Publication of sectoral strategies integrating climate objectives and a land management strategy (2023-24). - 5. Alignment of each sectoral pillar of the 2024-28 PNSD with climate objectives (2024). - Responsible entities: MINPLAN, Sectoral ministries, MEDD, ACE. - Priority: High - Action 3.7.4: Strengthen preliminary appraisal of projects including climate assessment (2022–2023) - 1. Survey existing methodologies and prepare standard appraisal methodologies (2022). - 2. Analyze rate of execution of preinvestment fund and optimize or increase allocations if necessary (2022). - 3. Establish a central support structure for project appraisal within the Ministry of Planning (2023). - 4. Adopt a standard methodology for environmental and social impact studies, including systematic assessment of climate change impacts (2023). - Responsible entities: MINPLAN, MINBUD, BCECO, Sectoral ministries, ACE. - Priority: High - Action 3.7.5: Strengthen budget unity by improving integration of capital and current budget preparation processes (2022–2029) - 1. Introduce mechanisms for communication between parties responsible for preparation of current budgets and DEPs (2022). - 2. Establish procedures for verifying consistency by DGPPB during budget formulation (2022). - 3. Present operational classification crosschecked against financial classification (capital/current) in the LFI for 2023 (2022). - 4. Unify procedures for preparing capital and current budgets (2029). - Responsible entities: MINPLAN, MINBUD, Sectoral ministries. - Priority: Medium - Action 3.7.6: Produce, maintain, and publish a comprehensive, realistic three-year Public Investment Program (PIP) (2022–2023) - 1. Establish list of selection criteria and publish in annual circulars for PIP preparation and budget (2022). - 2. Clean-up of Ministry of Planning’s database of projects to be financed (2022). - 3. Establish systematic, frequent feedback mechanisms on cost of projects underway and automated sharing of project database with MB and MF (2022). - 4. Incorporate review of the PIP in the budget formulation process and publish a PIP aligned with the budget as an annex to the 2023 LFI (2022). - 5. Include selection criteria to prioritize projects combating climate change and asset rehabilitation (2023). - Responsible entities: MINPLAN, MINBUDIN, BCECO, Sectoral ministries, ACE. - Priority: High - Action 3.7.7: Ensure better coverage of ongoing maintenance and renovation needs - Objective: The sustainability of financial assets is assured. - Relevant PIMA indicators: 9a, 9b, 9c - C-PIMA link: C4c *IMF | Technical Assistance Report – Democratic Republic of the Congo — Chapter 2: National and Sectoral* ### 1. Preparation of standard methodologies for ### 1. Preparation of standard methodologies for forecasting maintenance and renovation needs for all categories of nonfinancial assets (2023) ### Key actions and institutional responsibilities - Action: Preparation of standard methodologies for forecasting maintenance and renovation needs for all categories of nonfinancial assets (2023). - Responsible: MINBUD; MITPR (Ministry for Infrastructure, Public Works and Reconstruction); MINPLAN. - Priority/Timeline: Medium; Yes (2023). - Action: Completion of an assessment of the additional asset maintenance requirements arising from climate change (2023). - Responsible: MINBUD; MITPR; MINPLAN. - Priority/Timeline: Medium; Yes (2023). - Action: Formal request in the budget circular for identification and prioritization of maintenance needs by the sectoral ministries (2023). - Responsible: MINBUD; MITPR; MINPLAN. - Priority/Timeline: Medium; Yes (2023). ### Coordination and provincial integration (Strategic pillar 6 & related actions) - Strategic pillar 6: Local and provincial financial management - Specific target 6.3: Strengthen the budget preparation process - Action 6.3.2: Improve coordination of capital spending between central government and the provinces. - Expected outcomes: - Provincial investment budgets are more credible. - The overview of provincial project portfolios is available. - Related tools/indicators: PIMA 3a, 3b; C-PIMA C2b - Complementary actions (2022–2023) to improve harmonization and climate integration: - Reestablishment of annual capital spending harmonization conferences between the provinces and central government, covering all sources of financing and the aspect of climate change (2022). - Notification of the preliminary envelopes to provinces in June or July after the compilation of the MTFF (2022). - Operationalize coordination mechanisms provided for in the PDL-145T, the REDD+ program, and the sectoral thematic groups to integrate the climate change aspect in planning at the provincial level (2022-23). - Principal actors: MINPLAN; MINBUD; Sectoral ministries; Provinces; Sectoral thematic groups; MEDD. - Priority/Timeline: Medium. ### Digitization of public investment management (Strategic pillar 8) - Strategic pillar 8: Digitization of the public finance management system - Specific target 8.3: Support public investment management by means of an efficient information system - NEW STRATEGIC OBJECTIVE - Action 8.3.1: Develop an integrated IT system (bank) of investment projects. - Expected outcomes: - Oversight of the physical and financial execution of projects is enhanced. - The steering, monitoring, and reporting of the project portfolio is comprehensive, frequent, and pooled. - Related tools/indicators: PIMA 4, 6, 7, 10, 13, 14 - Planned steps and timeline: - Establishment of a consultation framework between the Ministry of Planning and the Interministerial Information Technology Coordination unit of the Finance and the Budget Ministries (2022). - Inclusion in project fiches of information on physical and financial monitoring of domestically-funded projects, consolidation in the Ministry of Planning database and pooling with all stakeholders (2022). - Formalization with the PTFs of a simplified structure with a standard form enabling periodic feedback on physical and financial implementation of externally financed projects (2022). - Validation of the functional specification schedule of the information system for monitoring projects and mobilization of financing sought (2023). - Development of software applications and tests of the IT system for monitoring projects throughout their life-cycle (2023). - Principal actors: MINPLAN; MINBUD (C2I); MINFIN; Sectoral ministries; Implementing agencies; CRESP. - Priority/Timeline: High; Yes. ### Implementation monitoring - Indicators of enhanced coordination and information pooling: X X (project-level markers as presented). - PIMA and C-PIMA linkages to monitor progress across actions. --- ### I. Public investment trends in the DRC #### A. Trends in general government investment and capital stock - Historical and comparative levels: - Between 1990 and 2001, general government investment did not exceed 0.2 percent of GDP. - Average general government investment was 3.6 percent of GDP between 2002 and 2019, peaking at 6.6 percent in 2014. - Average of 4.1 percent of GDP noted in the DRC between 2015 and 2019. - By comparison, averages are 7.8 percent for low-income countries and 7.1 percent for sub-Saharan Africa. - Central government capital spending was only 0.3 percent of GDP in 2020 and 1.2 percent in 2021 (budget execution statements). - Share of general government investment in total investment: - General government investment represented on average one fifth of total investment in the DRC between 2002 and 2019. - Other sources (private sector, public corporations) tripled between 2002 and 2019 exceeding 20 percent of GDP. - Total investment remains lower than comparator averages of 23.2 percent (sub-Saharan Africa) and 24.7 percent (low-income countries). - Public capital stock: - Public capital stock increased to reach 46 percent of GDP in 2019. - Comparator groups (low-income countries and sub-Saharan Africa) have public capital stocks over 100 percent of GDP. - Public capital stock per capita remains well below that of other resource-rich countries (Figure 1.D data referenced). - Policy target and constraints: - General government investment should reach 6 percent of GDP in 2026 (as stated in government objectives). - Increase in use of public-private partnerships (PPPs) is planned. - Debt considerations: - IMF Debt Sustainability Analysis (DSA) found that despite fairly low external debt, the DRC is at moderate risk of overindebtedness. - Ceiling on non-concessional external loans until 2023 and efforts to mobilize more tax revenues are part of the program under the IMF Extended Credit Facility (ECF). - Part of special drawing rights allocated to public investment projects in the provinces. #### B. Composition of public sector investment - External vs domestic financing: - Over the past five years, almost two thirds of general government investment has been externally-financed (Figure 1.E). - Government aim: reach a level of 70 percent of domestic financing in 2026. - Functional composition (2018 baseline prior to pandemic): - Social sectors (education, health, housing, social welfare) represented about 28 percent of capital spending. - Economic infrastructure construction represented 42 percent of the total. - This breakdown aligns with comparator averages; share of social infrastructure increased temporarily in 2020-2021 due to COVID-19. - Subnational contributions: - Provinces and ETDs may use own resources, fiscal transfers, donor funding, and debt as allowed by LOFIP, and may enter PPPs. - Executed transfers are very low - less than 0.1 percent of GDP. - 2022-24 MTFF estimates 2021 capital spending by provinces and ETDs at 0.8 percent of GDP. - Public corporations: - Government portfolio includes some forty public corporations. - Planned investment by public corporations over recent years is considered to have been in the order of 2 percent of GDP a year (Ministry of the Portfolio estimate). - SNEL’s investment represented one third of public corporations’ investment in 2021 (according to the Ministry of the Portfolio). - Historical SNEL investment example: US$284 million (0.8 percent of GDP) in financial year 2016 (most recent online report cited). - PPP capital stock: - World Bank PPI database: PPP capital stock never exceeded 0.5 percent of GDP in the past two decades. - Fiscal risk statement: ACGT manages at least seven road concessions with a total contract amount of over US$2 billion (about 4 percent of GDP). - Banana deep-water port project: concession agreement signed in 2021 with DP World at a cost of US$1.3 billion; works should get underway in 2022; concession length initially set at 30 years. - Absence of a consolidated database is an obstacle to a comprehensive overview of PPP stock. - Use of PPPs identified in the 2021-2023 Programme du Gouvernement as a key method for financing major projects. ### II. Efficiency and impact of public investment in the DRC #### Access to basic infrastructure and service delivery - Electricity: - Only 20 percent of the population was connected in 2018 (World Bank WDI). - According to a 2019 health map, only 32 percent of health centers had access to electricity in 2019. - Line losses are significant; at a rate of 40 percent, considered twice as high as the average for sub-Saharan Africa. - Health sector: - Number of hospital beds per 1000 inhabitants fell by one third over the past two decades and was less than 1 in 2019. - In 2019, only 40 percent of provincial health divisions had at least one specialist doctor and 47 percent had a general practitioner (health map). - Drinking water: - Percentage of the population with access to drinking water is estimated at 45 percent versus 70 percent for comparator groups. - REGIDESO’s realized production decreased by 21 percent between 2006 and 2013, with production capacity per inhabitant falling by 7 percent over the same period. - Roads: - Road network faces dilapidation and lack of maintenance. - Paved roads accounted for 2.3 percent of the total network at the beginning of the 2019-2023 PNSD period, contributing to high transport costs and delivery delays. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 11. In contrast, access to public education infrastructure has shown positive development ### 11. In contrast, access to public education infrastructure has shown positive development ### Infrastructure access and education outcomes - Number of secondary teachers per 1000 inhabitants nearly tripled in 20 years to 4.2 in 2019, exceeding the ratio for comparator groups. - World Bank Worldwide Development Indicators (2016): - 27 percent of the population (aged at least 25 years) had completed secondary education. - 63 percent had completed primary education. - Rate of illiteracy in those over the age of 15 was 20 percent. - Note on measurement: education infrastructure is measured by number of secondary level teachers per 1000 people. ### Perception of infrastructure quality and private sector impacts - Perception of infrastructure quality has deteriorated slightly since 2010 and remains below that of comparators. - World Economic Forum survey among business leaders: perception score for the DRC in 2017 was 2 on a scale of 1 to 7, worse than comparator countries (average score of 3). - The World Bank’s logistical performance indicators show deterioration in perceived quality of trade-related and transport infrastructure since 2010. - World Bank enterprise survey (August 2013 to May 2014; sample of 529 enterprises): - Almost all enterprises surveyed stated they had suffered electricity outages. - Over half identified electricity as a major constraint on the business climate. - Reported constraints included: subject to electrical outages; perceiving electricity as a major constraint; subject to water insufficiencies; perceiving transport as a major constraint. ### Public capital stock, efficiency, and risks - Public capital stock per capita in the DRC is very low relative to comparators, producing limited results in access to and quality of infrastructure. - IMF staff calculations place the DRC on the efficiency frontier for physical access relative to public capital stock per capita, but this result requires cautious interpretation because: - Public capital stock per capita excludes infrastructure constructed through PPPs or by public corporations. - Access indicators mask serious regional disparities. - Quality of infrastructure is low and not captured by the physical access index. - Risk of regression is high: infrastructure development struggles to follow demographic growth; without regular maintenance, electricity and/or water networks suffer dilapidation and line losses leading to progressive service deterioration. - Conclusion: DRC remains well below regional development standards; meeting needs will require considerable investments while fiscal space is limited, making efficient investment crucial. ### PIMA assessment overview (public investment management) - Assessment covers 15 public investment management institutions across three stages: (I) planning sustainable levels of public investment; (II) allocating resources to sectors and projects; (III) implementing projects to deliver productive and sustainable assets. - Methodology: evaluates institutional design (“on paper”) and effectiveness (“in practice”) using laws, regulations, manuals/guides, meetings, and data/documents gathered during the mission; focuses on central government practices and coordination with subnational governments (SNGs) and public corporations. - Key high-level findings: - Institutional design is stronger in project implementation than in planning and allocation. - Strengths: public procurement (institution 11), cash management and asset management (institutions 12 and 15). - Main weaknesses: national and sectoral planning (institution 2), coordination between public sector entities (institution 3), project appraisal (institution 4), and budget comprehensiveness (institution 7). - In practice, effectiveness is often lower than legal framework suggests—particularly for public procurement (institution 11) and cash/asset management (institutions 12 and 15). - Effectiveness modestly exceeds design in areas like appraisal and oversight of externally-financed projects (institutions 4 and 13) and some budget transparency initiatives (institutions 3 and 7). - Overall, effectiveness is frequently far below comparator groups. ### 1. Fiscal targets and rules (Institutional design: Medium; Effectiveness: Medium; Priority of reform: Low) - Objectives: existence of fiscal targets/rules to enable medium-term planning of public investment and ensure long-term debt sustainability; presence of a medium-term fiscal framework (MTFF). - Regional commitment: as part of SADC membership, DRC must formally avoid having a high percentage of government debt to GDP; SADC high-level macroeconomic convergence criteria include a public debt limit of 60 percent adopted in 2003. - In practice: - Government has no permanent quantitative target or limit for public debt; constrained de facto by the IMF program. - General Directorate of Public Debt (DGDP) sets a medium-term debt strategy with annual debt targets; DGDP has not completed a debt sustainability analysis since 2017. - The IMF Extended Credit Facility program since 2021 imposes discipline via commitments to maintain a moderate level of risk of external debt distress and ceilings on non-concessional external borrowing and total borrowing. - LOFIP (law on public finance) fiscal rule: - Article 15 requires central government and each province and ETD to balance current expenditure with domestic resources (a “golden rule” permitting borrowing solely to finance investment). - This rule was not complied with in 2019 and 2020 with a current balance deviating from equilibrium by 0.5 percentage point of GDP (mission calculations). - MTFF: - Ministry of Budget sets a three-year MTFF (ongoing year plus two following years) covering whole general government (LOFIP Article 13); based on macroeconomic assumptions from Ministry of Planning. - MTFF provides aggregate projections for revenues, expenditure, balance, and debt; distinguishes current and capital spending but not ongoing versus new project expenditures. - In practice, capital appropriations in budget laws over the past three years were on average 4 percent higher than amounts projected a few months earlier in the MTFFs; gap was 1 percent for the 2022 budget, suggesting MTFF investment envelopes have served as effective ceilings. - Recommended actions to strengthen oversight of medium-term public debt (considered low reform priority given IMF program discipline): - Carry out a public debt sustainability analysis with a broad perimeter including debt of public corporations, and alternative scenarios incorporating all debt instruments, natural resource operating profiles, demographic projections, and contingent liabilities. - Explicitly verify, in the MTFF and budget execution reports, compliance of projections with the fiscal rule set by Article 15 of the LOFIP. - Provide in the MTFF an overall distinction between investment spending on ongoing projects and on new projects. ### 2. National and Sectoral Planning (Institutional design: Medium; Effectiveness: Weak; Priority of reform: High) - Institution goal: national/sectoral investment strategies with clear, realistic priorities, cost estimates, and precise sectoral objectives covering all public investment projects regardless of funding source. - Observations: - 2019-2023 National Development Strategy Plan (PNSD) is the main published development strategy; prepared by integrating sector priorities into pillars, programs, subprograms, and actions. - Only two recent sectoral strategies published among major economic and social infrastructure sectors: 2019-2022 National Health Care Development Plan (PNDS) and 2016-2025 sectoral strategy for education and training. - No recent published strategy for economic infrastructure sectors. - Published versions of PNSD and sectoral strategies describe actions by pillar or objective but do not clearly identify a portfolio of investment projects. - 2019-2023 Priority Action Program (PAP) identifies investment projects in some sectors (transport, electricity, housing) but is not published. - 2021-2023 Government Program identifies a list of priority infrastructure projects (transport, electricity, water). - Some major projects from the Government Program or PAP may appear in the 2022 budget law; absence of a comprehensive, published list of projects annexed to strategies prevents in-depth checking. - A standard project fiche that monitors every investment project from identification to implementation requires linkage with the PNSD and sectoral strategies, suggesting projects are linked to planning processes in practice. *Source: IMF staff* ### 23. The majority of the national and sectoral strategies do not present information on ### 23. The majority of the national and sectoral strategies do not present information on ### Investment costs and transparency - The PNSD estimates that the total cost of the strategy over five years would be US$47.6 billion, taking all sources of funding combined (including funding to be identified). - Neither the PNSD nor its underlying PAP present the total cost of investments attached to the strategy in an economic classification distinguishing operating from capital expenditure. - The Government Program does not provide any information on the costs of investment, either at the total or the individual project level. - The 2016-2025 sectoral strategy for education and training is the only sectoral strategy to present annual costs of investment by education cycle, but it does not provide information on costs of individual projects. - As a result, it is not possible to appraise the overall consistency between the total amounts of investment spending in the strategies and those recorded in the successive budget laws. - Recommendation: The PNSD and sectoral strategies should include the total and annual amounts of investment needed, a list of major investment projects regardless of funding source, and their expected costs. Sectoral ministries should identify major-project needs using sectoral planning mechanisms; formulation and publication of sectoral strategies in transport, water, and energy would be helpful. ### Monitoring and evaluation (M&E) of sectoral strategies - Sectoral strategies for health and education include M&E frameworks specifying monitoring indicators, their data sources, and annual target values; they propose measurable indicators for access, fairness, and efficiency. - These strategies provide for surveys and interim reviews to measure progress and assess relevance, with the possibility to review target values. - The 2019-2023 PNSD indicates objectives, outcomes, and indicators linked to sustainable development objectives but does not present any quantified target. - Ongoing reframing of the PNSD aims to strengthen M&E by including quantified targets. - Recommendation: The PNSD should attach quantified targets to its indicators to enable performance monitoring; transition to program-based budgeting provides an opportunity to strengthen links between planning and budgeting by sharing performance indicators. ### Coordination between levels of government (Institutional design: Weak; Effectiveness: Weak; Priority of reform: Medium) - The legal framework envisaged harmonization conferences between central government and provinces, but these conferences are no longer organized in practice and there is no joint publication of investment plans. - The memorandum of understanding of March 29, 2013 sets practical arrangements for joint management of capital appropriations in five sectors under exclusive provincial jurisdiction (health, education, rural development, infrastructure, and other sectors). - Transfer-funded capital spending is budgeted in the budget law, but no multiyear provincial investment plans are published. - Investment harmonization meetings in advance of budget formulation have not been held since 2018 due to lack of financing for organizing them. - New practices emerged in 2021 with preparation of the local development plan in the 145 territories (PDL-145T), but planning meetings focused only on PDL projects. - There is a significant gap between capital transfers approved in the budget and those actually executed, both in projects and amounts (see Table 3.A). - The calculation formula used by the Ministry of the Budget to determine transfers and horizontal distribution among provinces and ETDs is not known to provincial governments. - According to the fiscal calendar, provisional transfer envelopes are communicated in September of year n-1, but in practice communication is made in November, after the vote on the budget law. - The amounts transferred for investment differ significantly from those planned, with an average execution rate of 5.3 percent in 2016-2021. - In 2020 transfers to the provinces had been budgeted for 858 projects, only 13 of which made use of their funds during the year. - In 2020, for the province of Kinshasa, four projects were executed with amounts on average 20 times higher than budgeted. - Although sums were budgeted, the Caisse nationale de péréquation has never been supplied with funds. - Recommendation: Reestablish annual harmonization conferences; provide preliminary notification of envelopes to provinces earlier (for example after MTFF preparation in June); communicate provisional envelopes more in advance of fiscal year. ### Fiscal risks, contingent liabilities, and PPPs - The legal framework does not ensure that contingent liabilities of provinces, public corporations, or PPPs are systematically reported to the Ministries of the Budget and Finance. - A decree operationalizing Article 15 of the 2018 law on PPPs (framework for granting guarantees) is still not available. - In 2021 the General Directorate of Fiscal Policies and Programming (DGPPB) of the Ministry of the Budget prepared and published an initial fiscal risks statement (Déclaration sur les Risques Budgétaires, DRB) covering fiscal risks linked to public corporations and PPPs, but not those related to the provinces. - The DRB analysis remains embryonic and partial: for public corporations it does not state contingent liabilities arising from major investment projects; for PPPs it prepares a partial list of PPPs in progress without analysis of fiscal risks associated with guarantees. - Recommendations: - Urgently adopt the decree operationalizing Article 15 of the law on PPPs. - Empower the Ministry of Finance, through the DGDP, to validate all guarantees before issuance and grant it veto power over PPPs considered too risky during review by the new Standing Committee on Project Validation. - Strengthen Ministry capacity for project risk analysis. - Expand and deepen DRB analyses to include contingent liabilities from major investment projects and public corporations and analysis of guarantees across the PPP portfolio. - Establish mechanisms to transmit risk information from various entities to the DGPPB and strengthen tools for risk analysis and supervision. ### Project appraisal (Institutional design: Weak; Effectiveness: Weak; Priority of reform: High) - Good practice requires rigorous financial, economic, technical, and risk analysis of major investment projects using a standard methodology and central support. - There is no legal or documentary framework making systematic submission of large-scale investment projects to rigorous appraisal and publication mandatory. - The order dated July 19, 2019 establishing the Commission for identification and selection of public investment projects (CISPIP) requires technical subcommittees to analyze feasibility studies but does not stipulate systematic application. - The public investment selection manual of the Directorate of Planning and Budgeting (June 2018) specifies the feasibility study process but does not require it to be systematic or published. - The former procedures manual of November 2002 is obsolete. - In practice, externally financed projects are generally assessed (donor procedures include mandatory appraisals and publication), but domestically funded projects are rarely subjected to rigorous appraisal due to lack of resources. - A preinvestment fund exists (interministerial order of May 20, 2013) intended to finance feasibility studies for major domestically funded projects; the Ministry of Planning indicates the fund could finance 10 appraisals a year, but budget data for 2018-2022 indicate very low execution (or zero execution depending on year) of appropriations allocated to the fund. - The frequent absence or poor quality of appraisals explains part of the delays and cost overruns during implementation. - Very few appraisals are published online and there is no single entry point for externally financed project appraisals; the BCECO expects to publish studies about its projects on its website in the future. - There is no standard appraisal methodology or central support structure for major investment projects: - BCECO has a methodology applied to its own portfolio only. - The Congolese Agency for Major Works (ACGT) does not have a standard appraisal methodology. - The regulatory framework does not explicitly task the technical secretariat of CISPIP or BCECO with providing technical advice about appraisals. - There is no legal framework requiring systematic risk assessment during appraisal; risk analysis remains too limited at the appraisal stage to enable active risk management during implementation. - Apart from externally financed projects, appraisal of domestically funded projects and PPPs does not systematically measure associated risks. - The project identification grid provides a summary appraisal of whether risks and mitigation measures have been identified but does not conduct extensive analysis. - According to the IGF, risks frequently arising at implementation include securing land, timely provision of funds, delays in execution, and cost overruns. - Recommendations: - Establish a legal and documentary framework requiring systematic, published appraisals using a standard methodology covering financial, economic, technical, and risk analysis. - Strengthen and resource the preinvestment fund to finance appraisals (targeting appraisals capacity such as 10 appraisals/year as reference). - Create or empower a central support agency to provide standardized appraisal methodology and technical advice (BCECO/CISPIP roles to be clarified). - Require publication and a single entry point for appraisal studies, including those for externally financed projects. - Institutionalize systematic risk assessment in preliminary studies to improve risk management during implementation. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 35. The strengthening of the preliminary project appraisal process is a high priority of ### 1codea2023001 - 35. The strengthening of the preliminary project appraisal process is a high priority of ### Strengthening the preliminary project appraisal process - Priority: high — reform to support selection of the best projects. - Future decree on public investment management must lay down basic principles: - (i) systematic submission of all major investment projects, regardless of their method of funding, to a rigorous environmental, financial, economic and technical appraisal using a standard methodology; - (ii) publication of the results of the analyses; - (iii) consideration of the risks in the appraisal and the need to provide for mitigation measures. - Short-term actions: - Prepare standard appraisal methodologies based on existing material and ongoing initiatives. - Rationalize financial resources allocated to the prefinancing fund. - Set up a central support committee or agency for project appraisal, ideally at the Ministry of Planning, tasked with producing advice to project managers and to appraisers on the required analysis. ### Alternative infrastructure financing and PPP institutional design - Assessment aims: - Evaluate legal and regulatory framework for mobilizing private investments on economic infrastructure markets, PPPs, and investments by public corporations. - Ascertain that (i) a regulatory framework supports competition on contestable markets for economic infrastructure; (ii) a strategic and legislative framework guides preparation, selection, and management of PPP projects; (iii) there is a framework for oversight of investment plans and financial results of public corporations and autonomous organizations. - Institutional design: Medium; Effectiveness: Weak; Priority of reform: High (PPP). ### Current regulatory and market situation - Sector deregulation: majority of major infrastructure sectors deregulated in law; effective competition exists only in telecommunications. - Regulatory authorities with administrative and financial autonomy: - Electricity Sector Regulatory Authority (ARE). - Post and Telecommunications Regulatory Authority. - Market realities: - Telecommunications: effective competition between several private operators. - Electricity and water: SNEL and REGIDESO remain de facto monopolies; private operators mainly active in poorly served areas (e.g., east of the country) or to overcome production limits. - ARE limited in role: SNEL offers subsidized rates (below cost) making price competition maintenance difficult for ARE and hampering private operators’ pricing. - Transport, especially road transport, dominated by private operators in the informal sector. - Supporting references (laws and dates preserved as in source): - Electricity: Law 14/11 of June 17, 2014; Decree 16/013 of April 12, 2016. - Water: Law 15/026 of December 31, 2015. - Telecommunications: Framework Law 013/2002 of October 16, 2002; Law 014/2002 of October 16, 2002. ### PPP legal framework and institutional fragmentation - Legal basis: - Law 18/016 of July 9, 2018: procedures for identification, selection, validation, and oversight of PPPs; strict separation of management, regulation, approval, and oversight functions; assigns key role to Public Contracts Regulatory Authority (ARMP) for PPP selection, appraisal, and oversight ex ante and ex post. - Decree 21/04 of October 2, 2021: creates PPP Advice and Coordination Unit (UC-PPP) under supervision of the Ministry of Planning; tasks include implementing national PPP policy, maintaining PPP database, assisting project preparation, reporting to Government, and technical secretariat of Standing Committee on Project Validation. - Operational issues: - Decree 21/04 redistributes functions originally assigned to ARMP in Law 18/016 and is in process of operationalization. - Implementing regulations are still needed for full implementation of legal framework (e.g., model project fiche, approval procedures, approval thresholds, response period for clarification requests). - No national PPP policy has been established that the UC-PPP is responsible for applying. - Institutional fragmentation persists among agencies (ARMP, UC-PPP, ACGT); no centralized, consolidated oversight of entire PPP portfolio. - Priority: clarification of PPP legal framework is a high priority for reform. - Recommended actions: - Finalize implementing decrees of PPP law and settle conflicts between legal texts by clarifying distribution of roles among ARMP, UC-PPP, DGCMP. - Ensure Ministry of Finance (DGDP) plays key role as guarantor of financial viability at appraisal and adoption stages. - Establish a national PPP policy specifying markets open to PPPs, risk-sharing principles, financing objectives, list of viable PPP projects, selection and oversight criteria, and role of public authorities. - Enable ARMP and UC-PPP to keep an up-to-date register of entire PPP portfolio, including PPPs managed by other agencies (e.g., ACGT). ### Oversight and transparency of public corporations - Current framework: - Ministry of the Portfolio responsible for financial oversight and monitoring financial performance (in cooperation with line ministries). - Public corporations required to submit annual financial statements to financial oversight authority and to publish them per OHADA rules. - High Council of the Portfolio (CSP) tasked with monitoring, oversight, assessment, and proposing recovery or restructuring plans via COPIREP. - CSP prepares consolidated financial statements and activity reports, but no explicit legal obligation to publish them. - Gaps: - Legal framework does not explicitly require public corporations to submit investment plans to the Ministry of the Portfolio for review, though in practice they submit their plans to CSP. - No consolidated published report on investment plans or financial statements of public corporations. - 2022 statement of fiscal risks includes information on level of debt and financial performance of corporations in the portfolio. - Recommendations: - Increase transparency of financial relationships between public corporations and government. - Publish a consolidated annual report on financial position of public corporations, including amounts invested. - Prepare and publish a portfolio strategy document covering shareholder aims and investment and performance targets. ### Multiyear budgeting and Public Investment Program (PIP) - Rationale: - Major public investment projects have fiscal impacts spread over the medium term; total costs and forecast schedule of payment obligations must be known to ensure sustainability relative to the macro-fiscal framework. - Multiyear forecasts of investment spending should appear in budget documentation despite annual budget system. - Institution dimensions assessed: - Presence and detail of multiyear projections of investment spending. - Notification of multiyear investment spending ceilings to ministries to enable prioritization. - Availability and accessibility of total project costs and annual expenditure schedules for each project. ### Current multiyear budgeting practice and gaps - MTFF and MTEF: - MTFF prepared each year by Government in accordance with Article 76 of the LOFIP contains capital spending envelopes for next three years. - MTEFs break down capital expenditures over three years by section (ministry) and heading. - Significant divergence: - Gaps of up to nearly 40 percent between multiyear capital spending projections in MTFFs and initial budget laws (LFIs) approved by vote for n+1 and n+2. - Three-year capital spending ceilings applied to each ministry on an indicative basis diverge strongly from approved budget laws; comparison for four infrastructure-intensive ministries (budget circular of 2022) shows overshoots with gaps in both directions of over 15 percent. - Exact figures from the comparison (as presented in source; units: billions of CGF, Gap (%)): - Section 42 - Infrastructure and public works: 673, 360, 257, 1,063, 314% - Section 37 - Public health, hygiene and prevention: 373, 822, 1,001, 946, -5% - Section 38 - Primary, secondary, and technical education: 949, 821, 796, 624, -22% - Section 51 - Transport and communication channels: 485, 365, 276, 388, 40% - (Sources: Budget circular for preparation of 2022 budget, 2022 LFI, 2020-2022 MTEF (October 2019), 2021-2023 MTEF (July 2020)) ### Public Investment Program (PIP) weaknesses and reform priorities - Status of PIP: - Managed by Ministry of Planning to link planning and budgeting over rolling three-year horizon. - PIP broken down by ministry and includes total project costs and annual planned expenditures for next three years. - PIP has not been published with budget documentation since the 1990s. - Internal version does not comprehensively encompass all projects and totals amounts well below annual budgeted figures; not kept up to date regularly. - Link between PIP (Ministry of Planning) and budget formulation is weak; Ministry of the Budget only has access to PIP on request and PIP is not used in budget formulation process. - High-priority reforms: - Use PIP as central tool linking planning with budgeting; include PIP role in future decree on public investment management. - Publish a multiyear PIP in budget documentation showing total project costs over multiyear horizon (international good practice). - Introduce systematic and frequent provision of information on total costs and their development from line ministries to Ministry of Planning. - Ensure automated sharing of PIP information with Ministries of the Budget and Finance and incorporate PIP review into budget formulation. - Short-term target: produce and publish a PIP aligned with the budget and the MTFF with the 2023 LFI. - Update current PIP to encompass all ongoing projects and those about to start. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 7. Budget Comprehensiveness and Unity (Institutional design: Weak: Effectiveness: Weak: Priority ### 7. Budget Comprehensiveness and Unity (Institutional design: Weak: Effectiveness: Weak: Priority of reform: High) ### Purpose and overview - Institution purpose: assess the comprehensiveness and unity of the investment budget to ensure optimal budget decisions by presenting all capital spending in the context of the budget and coordinating capital spending with corresponding current expenditures. - Required assurances: - (i) capital spending is carried out for the main part within the budget framework; - (ii) all investment projects, regardless of source of funding, are presented in the budget documentation; - (iii) the capital and current budgets are prepared and presented together in the budget documentation. ### Extrabudgetary entities and budget coverage - Legal framework permits significant capital expenditures by extrabudgetary entities without parliamentary authorization; a large part of their expenditure using Treasury financing is included in the budget. - Types of extrabudgetary entities cited: public establishments (Highways Office (OR), Office of Roads and Drainage (OVD)) and public services (ACGT). - Oversight and authorization: - These entities are not obliged to obtain parliamentary authorization for investment spending financed by the Treasury or to register them in the general budget; oversight ministry approves their budgets (e.g., Ministry of Infrastructure and Public Works). - LOFIP does not require their expenditures to be included in the LFI even for information purposes. - Practical findings: - The mission could not verify annual investment budgets of these entities; likely significant. - In practice, capital expenditures of the OR and the OVD are at least partially included in the budget documentation; ACGT expenditures are not included. - Mission estimate: over 75 percent of the extrabudgetary entities’ domestically-funded capital expenditures are presented in the budget. - Specific numeric comparisons: - ACGT states it manages a budget of US$2.3 billion (website). - Capital expenditures of the annual budget of the DRC in the 2022 LF total US$3.6 billion. - Legal notes: - Law 08/009 on public establishments does not provide for their budgets to be included or annexed to the LFI, or authorized by the National Assembly. - Public services enjoy financial and administrative autonomy pursuant to decrees that established them (e.g., Decree 08/17 of August 26, 2008 on the ACGT). ### Externally financed projects, PPPs, and public corporations - Externally financed projects: - In principle included in the LF, though some projects (in particular ACGT projects financed by Chinese partners and some projects executed by the BCECO) do not appear in the LF. - Often projects are executed without being registered in the budget in advance. - PPPs: - Some PPP projects have appeared in the budget documentation since the 2022 LFI. - The DRB includes a list of the ACGT’s PPPs but omits other PPPs (e.g., supported by the OVD or the Banana deep water port). - Public corporations: - Some projects supported by public corporations are included; oversight ministries supervise capital expenditures and potential recording in the LFI. - LOFIP provisions: - LOFIP sets externally financed capital expenditure as a heading in the budget law, but projects executed by extrabudgetary entities that are exempt from registering budgets in the budget law still may not be captured. - For PPPs and public corporations, LOFIP provides inclusion in budget documentation for information only; no obligation to include their investment projects in the budget law. - Consolidation gap: - No consolidated list exists to ascertain whether the majority of projects across extrabudgetary entities, PPPs, and public corporations are included. ### Gap between projects registered in the budget and those executed (Box 3.A) - Public Expenditure and Financial Accountability report: only 31.6 percent of the projects executed in 2018 had been registered in advance in the budget. - Findings from the latest accounting law for fiscal year 2020: - Overruns of budgetary investment appropriations are significant (with an execution rate of over 120 percent). - A significant number of projects not initially registered in the LF are executed, above all externally financed projects: - 292 projects executed, whereas 153 had been registered. - Conversely, many projects registered in the LF are not executed, particularly projects financed by own funds: - 41 projects executed as opposed to 708 registered. - Source cited: Court of Accounts: Report on fiscal year 2020, Section 3.2.1.2. N.B.: execution rate comparing execution with the supplementary budget. ### Integration of capital and current budgets: practice and limitations - Legal and procedural framework: - Article 77 of the LOFIP: Ministry of the Budget prepares the draft budget law for the year (covering both capital and current budget) as a consolidated document submitted to the National Assembly. - Transition toward program-based budgeting is underway and should be completed in 2024. - Practical limitations: - The budget contains a presentation by functional classification but is not crossed with the economic classification; cannot determine how capital and current budgets complement each other. - Duality in preparation: capital budget coordinated by the Ministry of Planning with specific instructions to sectoral ministries; results presented to Ministry of the Budget at budget conferences. - Project fiches include information on needs for current appropriations flowing from capital projects, but Ministry of the Budget has no procedure to verify reliability or ensure concomitant appropriations are registered in current budgets. - Classification by chapter (titre) not fully adhered to; Chapters VII and VIII (normally capital expenditures) comprise some current expenditure in practice. - Investment project presentation in the budget law lacks coding breaking down project expenditures by economic type; total amounts considered as investment, while PTBAs detail goods and services, operation of project units, etc. - Recommendation technical note: - DRC should move toward coding of projects by type of expenditure to isolate gross fixed capital formation from operating expenditure within each project. ### Reform priorities and recommended actions - High priority: - Inclusion in the budget documentation of all capital expenditure, all types of management, and all sources of financing combined. - Strengthen rules so projects are systematically included in the budget documentation to ensure transparency and enable appropriate fiscal reporting. - The future decree on public investment management should contain the principle that all public investment projects should be included in the budget. - Medium priority: - Better integrate the preparation processes for capital and current budgets. - Strengthen coordination in sectoral ministries via communication mechanisms between Directorates for Research and Programming (DEPs) and staff responsible for preparing current budgets. - Institute procedures for the Ministry of the Budget to check the consistency of capital and current budgets ahead of and during budget conferences. - Transition to program-based budgeting expected to help integration; a commented version of the Government Chart of Accounts would help ensure appropriate economic coding. - Over a seven-year horizon of the Public Financial Management Reform Program, seek more advanced unification of capital and current budget preparation procedures to align DRC with international best practice and ensure optimal coordination of spending. ### Budgeting for investment: commitments, transfers, and prioritization (Institutional design: Medium; Effectiveness: Medium; Priority of reform: Medium) - Multiyear commitments: - Budget procedures should facilitate availability of appropriations over the multiyear construction cycle. - Three dimensions assessed: (i) reflection of future commitments in budget documents; (ii) possibility of reallocating funds from capital to current expenditure during the fiscal year; (iii) prioritization of ongoing projects over new ones. - Commitment authorizations (AE) and payment appropriations (CP): - Articles 42 and 78 of the LOFIP provide for budgeting based on AE-CP and an annex to the draft budget law presenting AEs and their consumption. - In practice, reform is underway; budget documents currently contain only payment appropriations associated with the projects for the first year. - The PIP prepared internally by the Ministry of Planning shows total cost and a projection of payment appropriations for the next three years, but PIP is not fully comprehensive and is not part of the budget documentation submitted to parliament. - Conclusion: budget documentation sent to parliament does not contain information on total or multiyear costs of investment projects. - Transfers from capital to current appropriations: - Article 47 of the LOFIP allows transfers of appropriations between chapters by order of the Minister in charge of the budget; no ceilings specified. - In practice, no transfers of capital appropriations to current appropriations have been applied in recent years. - Verified by ministries and by extract from appropriation transfers produced for the 2021 supplementary budget. - A module was developed in PREPABUD software to apply a “lock” on transfers of appropriations. - Prioritization of ongoing projects: - Annual circular and letters from the Minister of Planning recommend sectoral ministries prioritize ongoing projects. - No stringent mechanism exists to prioritize allocations to guarantee completion of ongoing projects. - Consequence: ongoing projects may be sidelined year-to-year in favor of new projects, prolonging durations and increasing final costs due to implementation interruptions. - Case example: Ministry of Mines (Box 3.B) - From 2019 to 2022, there was a discontinued decrease from six to three in the number of projects budgeted for the Ministry of Mines: - Three of the six projects budgeted in 2019 were not budgeted in 2020. - Two of the three projects budgeted in 2020 were not budgeted in 2021. - One project budgeted in 2019 that was not budgeted in 2020 was revived in 2021. - In 2022, three new projects were budgeted and all the other projects underway were put on hold, one of which was revived in the end with a different coding, with a total cost significantly revised upward, which classified it as a new project. - Source: Mission, using the database of the Ministry of Mines. *Source: IMF | Technical Assistance Report – Democratic Republic of the Congo (Chapter 7).* ### 54. The reform on safeguarding capital appropriations is of medium priority and should be ### 1codea2023001 - 54. The reform on safeguarding capital appropriations is of medium priority and should be ### Safeguarding capital appropriations (transition to program-based budgeting) - Reform priority: Medium. - Key scope for improvement: - Full implementation of AE-CP budgeting by 2024. - Communicating the PIP to parliament to enable better knowledge and monitoring of total cost and multiyear commitments relating to each project (Institution 6). - Procedures guide to AE-CP budgeting should specify that reports on the consumption of AEs contain a breakdown by project. - Information on AEs by project would enable prioritization of ongoing projects before financing new ones; this general principle could be formally established in the future decree on public investment management. ### Maintenance Funding (Institutional design: Medium; Effectiveness: Weak; Priority of reform: Medium) - Objective: Ensure infrastructure assets deliver promised benefits through correct maintenance; assesses methodologies and budget reflection for routine and capital maintenance, and availability of information on maintenance funding in plans and budgets. - Key findings: - Lack of standard methodologies to estimate routine maintenance needs in all sectors except road sector. - ACGT reports a standard methodology supports road maintenance, but the mission did not have access to this methodology. - Road maintenance processes institutionalized (OR, OVD, Office for Farm Roads) and funded by the National Road Maintenance Fund (FONER), but financing falls short of needs. - FONER estimate of financial needs to cover routine maintenance of the DRC's road network: US$340 million a year. - Annual Road Maintenance Program for 2020: US$108 million (32 percent of actual needs); only 73 percent of these amounts were effectively allocated to routine maintenance. - Table 3.C — Comparison between the routine maintenance needs and funding available (in U.S. dollars): - Road management agencies | Actual needs | Needs expressed | Resources allocated - Highways Office | - | 64,109,631 | 27,507,280 - Office of Roads and Drainage | - | 33,323,492 | 42,322,209 - Office for Farm Roads | - | 11,416,034 | 3,000,000 - Infrastructure unit | - | - | 4,673,456 - Protection of road assets | - | - | 500,000 - Other FONER activities | - | - | 1,000,000 - Total | 340,000,000 | 108,849,157 | 79,002,945 - Source: Mission using the database of the 2020 FONER Annual activity report - Renovation and restoration: - Estimation of financing requirements for renovation and restoration not based on standard methodologies except in road sector (ACGT claims a methodology exists, mission did not access it). - Several restoration and renovation projects included in PNSD, Government Program, and budget laws, but unclear if coverage meets needs. - Mission could not verify financial coverage of renovation needs registered in Government budget due to lack of account of budget requests discussed in planning and budgeting conferences. - Classification and transparency: - Government Budget Classification (2015) allows distinguishing routine maintenance (current expenditure) from maintenance that increases asset value (capital expenditure). - Information system can provide detailed data by department and economic type for forecast and execution. - Budget documentation submitted to parliament does not provide the routine vs. capital maintenance distinction, limiting parliament’s ability to discuss asset preservation policy. - Reform recommendations and priority: - Priority of reforms to maintain assets: Medium. - Steps recommended: - Provide infrastructure asset managing authorities with standard methodologies for estimation of routine maintenance, renovation, and restoration needs. - Allocate sufficient resources in the budget by requesting sectoral ministries identify and prioritize routine maintenance and restoration in budget proposals (see Box 3.D example). - Future decree on public investment management should express principle of systematic inclusion of project maintenance at project design, budgeting, and implementation. ### Box 3.D — Example of inclusion of project maintenance costs: South Africa - South Africa established procedures for annual estimation of maintenance costs by type of infrastructure and for needs for renovation or replacement to enable effective budgeting to ensure durability of nonfinancial government assets. - Table of average annual maintenance budgets as % of replacement cost and key assumptions (selected entries preserved exactly): - Bulk water storage: 4-8% — Mostly for periodic repair of electrical and mechanical works, storm damage repair, routine maintenance and periodic maintenance every 30 to 50 years. - Water treatment works: 4-8% — Mostly for electrical and mechanical equipment every 20 to 30 years. - Water reservoirs: 2-3% — Generally low maintenance mostly of telemetry and electrical equipment, storm damage repair, pipe work repair, safety and security, routine maintenance and periodic maintenance every 20 to 30 years. - Water reticulation: 4-8% — Mostly for telemetry and pumping equipment, emergency leak repair and ongoing leak repair due to degradation, storm damage repair every 20 to 30 years. - Sewage treatment works: 4-8% — Mostly for electrical and mechanical equipment, storm damage and periodic maintenance every 20 to 30 years. - Sewer reticulation: 4-8% — Mostly for pumping equipment, emergency leak repair and ongoing leak repair due to degradation, blockage removal, storm damage repair, every 20 to 30 years. - Roads and storm water: 5-10% — Mostly for emergency repair, storm damage repair, and periodic maintenance (resurfacing every 7 to 10 years). every 20 to 30 years. - Public buildings: 4-6% — Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting and cosmetic upgrades every 5 to 10 years). every 30 to 50 years. - Hospitals: 5-8% — Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 3 to 5 years, and cosmetic and operational upgrades every 7 to 10 years). every 20 to 30 years. - Schools: 4-6% — Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 5 to 7 years, ). every 30 to 50 years. - Electricity generation: 5-8% — Mostly for electrical and mechanical equipment and dependent on age and technology of works every 30 to 50 years. - Electricity reticulation: 10-15% — Mostly for emergency repair, storm damage repair, safety and security, routine maintenance and periodic maintenance (e.g. every 7 to 10 years). every 20 to 30 years. ### Project Selection (Institutional design: Medium; Effectiveness: Weak; Priority of reform: High) - Importance: Selection based on objective, transparent criteria and procedures is key to efficient public investment management; PIMA methodology components: review of appraisal before budget inclusion; publication of standard selection criteria and compliance; existence of list of appraised projects pending budget inclusion. - CISPIP and appraisal review: - 2019 order on CISPIP gives it role to analyze/assess feasibility studies before potential inclusion in PIP and budget, with four technical subcommittees for sector planning. - Regulatory framework does not require review of all major projects with independent experts or independent organization. - In practice CISPIP is not in operation; review by Ministry of Planning is superficial (checks whether project fiches are filled in) during CPIP (meets annually in June). - No review of externally financed projects due to difficulty obtaining comprehensive information from PGAI and absence of framework for government–donor consultation. - Review of appraisals of PPP projects: Standing Committee on Project Validation not yet in operation. - Selection criteria and practice: - No published specific criteria for selecting appraised projects for the budget; criteria used in practice are inappropriate. - Budget circular mentions some standard criteria superficially for sectoral ministries but not criteria guiding CPIP or budget conference decisions. - (Unpublished) 2018 project selection manual proposes a grid and scoring template, but no evidence it is used. - In practice, project selection often neglects project benefits and realism of implementation plans. - At budgeting stage, Ministry of Budget prioritizes ongoing projects and those with a nonobjection opinion from the DGCMP. - Project pipeline and database: - Ministry of Planning can draw up a list of appraised projects from its Access database (mission did not have access). - No formal obligation to select projects from this pipeline; many projects appear to be selected from outside the list (reported by sectoral ministries and IGF). - Reform recommendations and priority: - Development of a more transparent project selection process prior to budget inclusion: High priority. - Future decree on public investment management should: - Incorporate basic principles guiding project selection: objective, transparent criteria, and selection only among appraised projects ready to be budgeted. - Require publication of criteria in the annual circular of Ministry of Planning on PIP preparation and in annual budget circular of Ministry of Budget. - Annex 6 (in source) illustrates relevant selection criteria, including climate change criteria. - Effectiveness would benefit from gradual creation of a bank of projects supported by an integrated information system to follow projects through their life-cycle. ### Procurement (Institutional design: High; Effectiveness: Medium; Priority of reform: High) - Objective: Assess the national procurement management system against open, competitive, transparent procedures; contract monitoring; and mechanisms for review of bidders’ claims. - Legal framework and practice: - Law 10/010 of April 27, 2010 on procurement: Article 17 establishes tendering as basic procedure; Articles 42 and 43 allow direct awards as exceptions. - Article 34 requires publication of all tenders where amount >= tendering thresholds; Articles 35 and 36 set publication deadlines; Article 88 of Decree 10/22 of June 2, 2010 supplements. - Minimum bidding deadline: 30 days; can be reduced to 15 days in duly substantiated urgent cases with DGCMP authorization. - Tenders are published on the ARMP website. - Compliance and exemptions: - World Bank MAPS II 2020 assessment: just under half of processes (48 percent) are conducted in compliance with the law. - Almost all high-value public service contract awards in the ACGT portfolio were directly awarded, based on special authorizations to avoid competition. - Publication principle partially applied due to piecemeal communication by contracting authorities and lack of publicity about cases handled in the Minister’s office. - Monitoring and information systems: - Monitoring relies on partially complete databases; analytical monitoring largely manual. - Data entry and management tools of ARMP and DGCMP do not cover all contracts or enable automated analytical monitoring reports; mission did not obtain examples of manual analytical reports or verify periodicity/timeliness. - Authorities have developed an Integrated Procurement Management System (SIGMAP) with support of PROFIT Congo (World Bank) but it is not yet in operation, even in pilot ministries. - Development of e-Procurement is planned with support of World Bank’s ENCORE project to improve procurement efficiency. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 68. The legal framework provides for a swift and fair process of investigation of ### 1codea2023001 - 68. The legal framework provides for a swift and fair process of investigation of ### Dispute resolution in procurement - The laws and regulations organize handling of disputes and nonjudicial appeals about procurement under the jurisdiction of contracting authorities and the ARMP. - Within the ARMP, functions are the responsibility of the Dispute Settlement Committee (CRD), which issues decisions either in a disputes commission or in a disciplinary board. - The CRD jointly represents the government, the private sector, and civil society to ensure fairness of decisions. - Article 158 of the procurement law orders the CRD to issue its decisions within 15 days or, in exceptional cases, within 30 days of a complaint being filed. - In practice, these deadlines are respected, according to private sector operators met by the World Bank during its 2020 assessment. - MAPS II report findings cited: - 57 percent of the decisions were decided in favor of the plaintiff. - 43 percent of the decisions went in favor of the contracting authorities. - In 2016, out of 13 claims, 13 decisions were issued and all were made enforceable. - Private sector recognizes process works well but is not well known; private sector satisfied with CRD's actions but notes contracting authorities do not always comply with enforceable decisions. ### Procurement reforms (priority and objectives) - Procurement reforms are a high priority. - Key reform aims: - Reduce the number of special authorizations that open the way to direct awards. - Encourage competition for major investment projects to improve price and quality of acquisition of nonfinancial assets. - Develop a unified, comprehensive database enabling automatic production of analytical reports. - Ensure DGCMP access to the budget information system so appropriations are available during approval and reserved until completion. - These reforms are included in the Priority Action Plan for public finance reforms (Annex 1). ### Availability of Funding (Institutional design: Medium; Effectiveness: Weak: Priority of reform: High) - Purpose: verify systems, procedures, and tools ensure availability of cash for timely payments for investment expenditure, including: - ministries/agencies plan and commit expenditure for investment projects in advance based on reliable cash flow forecasts; - funds allocated to financing project expenditure are disbursed on time; - external financing (from donors) for investment projects is fully integrated in the main structure of the government bank accounts. - Cash flow forecasting and commitment planning inconsistencies: - Cash flow planning committee prepares cash flow forecasts annually adjusted to monthly rate and updated monthly or weekly. - Commitment plan is prepared quarterly, aligned with appropriations voted in budget laws; at start of year only ceilings for first quarter are known and quarterly updates are not made until start of each quarter. - Commitment plan only partially incorporates provisional procurement plans; plans and nonobjection notices not issued sufficiently early to be taken into account. - Consequences: - Investment project expenditure files are subject to rationing according to cash availability and are not treated as priority. - Cash flow planning committee sets settlement priorities without considering contractual payment deadlines. - Expenditures may fall into arrears or be sent back at year-end for recommitment by ministries. - Cumulative position of domestic debt from budget outlays as at end-2021 includes substantial arrears totaling US$187 million for procurement of works (0.3 percent of GDP). - Treasury Single Account (TSA) and donor funds: - Legal framework (Articles 110 and 124 to 126 of the LOFIP; Articles 156 and 157 of RGCP) requires deposit of all government liquid assets in the TSA at the Central Bank, including donor funds. - In practice, donor funds are held at commercial banks. - Two main flaws: TSA not fully effective due to scattering of government resources and pockets of “idle money”; donor agreements often oblige opening accounts at commercial banks, damaging Treasury’s ability to follow movements of externally financed project funds. - Reform recommendations (medium priority): - Adopt methodological guides for preparation of cash flow plans and commitment plans to strengthen consistency and incorporate provisional procurement plans. - Prepare commitment plan before the start of the fiscal year on an annual basis with a quarterly sequence and communicate commitment ceilings in advance to sectoral ministries. - Strengthen fiscal regulation by having the commitment plan at the beginning of the year based on draft budget law appropriations as presented by the Government. - These reforms are included in the Priority Action Plan for public finance reforms (Annex 1). - Note: Ministerial Order 053/CAB/MIN/FINANCES/2011 of September 25, 2011 establishes organization and operation of the CPT. ### Portfolio Management and Oversight (Institutional design: Weak: Effectiveness: Weak: Priority of reform: High) - Objective: assess management and oversight of entire public investment portfolio via: - system for monitoring physical and financial implementation of major projects; - mechanisms for transferring funds from one project to another during implementation; - procedures for ex post review of completed projects. - Legal and practical gaps: - Legal framework does not provide for systematic, consolidated oversight of project portfolio; reports do not provide information on delays and cost overruns. - Ordinance of March 27, 2020 gives Ministry of Planning oversight role for inter-ministerial projects but does not require systematic oversight. - BCECO, CSPP, and CRESP units have powers over externally financed portfolios, but no single framework requires consolidated progress reporting across funding sources. - Reports produced do not provide systematic data on delays and cost overruns due to fragmentation of parties, weak information systems, and lack of resources for oversight missions. - Oversight of externally financed projects follows donor procedures but periodic collection and centralization of information by PGAI is problematic. - Multiple entities (DCS, BCECO, CFEF, CSPP, DGDP, Directorate for Preparation of the Accounts Settlement Law) produce reports at varying periodicities, sometimes with delays; information is not consolidated. - Reports show significant gaps between physical and financial implementation, and cases of financial over-execution not sufficiently explained. - Reallocation of funds across projects: - LOFIP allows transfers of appropriations during implementation across expenditure chapters and programs (Article 47, Article 48, Article 49). - Legal framework lacks explicit systematic monitoring or formalized transparent procedures for transfers. - In practice, funds are not reallocated across public investment projects during implementation. - IGF noted that funds may be transferred from one investment project to another without monitoring and hidden from sight. - Ex post reviews: - IGF has power to conduct ex post reviews (Article 121 of the Law of 2011; Articles 138 to140 of RGCP) but no formal requirement to do so. - Ex post reviews are not systematically required nor frequently carried out due to limited resources and lack of technical expertise. - Ministry of Budget typically conducts financial evaluations based on budget execution reports without comprehensive approach. - Mission analyzed a single externally financed project completion report submitted by the CFEF, which was of notably high quality. - Reform priorities and steps: - Strengthen project portfolio management and oversight capacities to inform budget decision-making. - Incorporate principles of periodic monitoring of all major projects, centralization of information, and systematic ex post review in the future decree on public investment management. - Establish an integrated bank of projects supported by a project monitoring information system with unique project codes for life-cycle tracking (Annex 7 presents major guiding principles). - Short-term actions: project fiches should include physical and financial monitoring for domestically-financed projects; consolidate fiches in Ministry of Planning database; formalize a simplified liaison form (“fiche-navette”) with donors for externally financed projects. - Prepare future information system by setting up a consultation framework between Ministry of Planning and the C2I and validate operational specifications before software development. ### Management of Project Implementation (Institutional design: Medium; Effectiveness: Weak: Priority of reform: Medium) - Focus: management and control during implementation assessed by: - existence of efficient project management system; - enactment and application of rules/procedures/guidelines on project adjustments; - completion of ex post external audits. - Project management arrangements: - Legal framework is weak and does not provide for appointment of senior responsible officers or preparation of implementation plans, though responsible officers are appointed in practice. - No legal/regulatory basis requires implementing ministries/entities to systematically appoint senior responsible officers for major projects. - In practice, ministries appoint project officers, largely reflecting donor-driven good practice. - Preparation of implementation plans before project start-up is not institutionalized. - IGF observes patchy definition of project outputs and activities contributes to delays and cost overruns. - BCECO has a draft project management manual prescribing preparation of project payment schedules. - Project adjustment procedures: - No standard rules or manual for adjustments of costs, deadlines, or outputs during implementation; adjustments are frequent but not documented. - Weak initial cost estimation and frequent significant adjustments during implementation contribute to budget overruns. - Audits by the Court of Accounts: - Under Organic Law 18/024 of November 13, 2018, Court of Accounts mandated to audit investment projects using judicial review, budget inspection, and management audit. - Due to limited financial independence, Court of Accounts does not perform in-depth audits of major investment projects routinely. - Some audits relate to public investments (e.g., current audits of procurement procedures in national and provincial entities). - Court performs spot inspections on unfinished projects and includes lists in its annual report of projects without physical execution that have received payments; these findings have not been followed up by in-depth audits. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 84. The strengthening of the management of project implementation is a medium priority ### 1codea2023001 - 84. The strengthening of the management of project implementation is a medium priority ### Strengthening management of project implementation (medium priority) - Future decree on public investment management should: - lay down a framework for project management arrangements; - provide for the appointment of project officers; - require systematic preparation of project implementation plans; - provide for the adjustment of projects during implementation. - A guide issued by the Ministry of Planning could establish a procedure for adjustment of projects during implementation. - Greater financial autonomy of the Court of Accounts should be provided under the general reforms covered by the Priority Action Plan for public finance reforms (Annex 1). ### Monitoring of Public Assets (Institutional design: Medium; Effectiveness: Weak; Priority of reform: Low) - Purpose and assessment criteria: - Checks whether government assets are well monitored and their value properly accounted for and reported in financial statements. - Assessment looks at (i) regular updating of asset registers based on an analysis of the stock, their value, and their state; (ii) recording of the value of these nonfinancial assets in government financial accounts; and (iii) recognition in the government’s income statement of depreciation of the fixed assets. - Current shortcomings: - For lack of comprehensive registers, the government does not have detailed information on its nonfinancial assets. - Formats for government asset registers were established in the General Public Accounting Regulations (RGCP) of 1952, but these structures have not been updated since then and are no longer kept or updated. - A small number of administrative entities have registers of their assets, but their format does not document relevant information (identification of the asset, location and responsible organization, date of acquisition, historic cost, current value) and these registers are not regularly updated because no inventories are carried out. - There is no consolidation process to provide government with inventory accounts. - Legal and accounting gaps: - Articles 98 to 100 of the LOFIP, and Articles 118 and 119 of Decree 13/51 of November 8, 2013 on the Government Chart of Accounts (PCE) require production of financial statements (balance sheet, income statement, statement of cash flows, and attached notes) in accordance with international rules and standards, but general accounting as prescribed is not effectively carried out. - Ordinance Law 89/017 of February 18, 1989 on the revaluation of fixed assets applies to nonfinancial assets using coefficients issued each year by the Minister of finance based on a proposal of the Standing Council of Accounting of the Congo (CPCC), but these provisions are not effectively implemented. - Articles 33 and 38 to 44 of the decree on the PCE require depreciation to be recorded, broken down by type of asset, and booked to the income statement in the form of a depreciation charge; however, depreciation is not calculated because the income statement has not yet been set up. - Recommended sequencing and actions: - These are large-scale reforms that will take time; start with the production of a full inventory using a gradual approach based on a clear asset valuation methodology. - Develop an information system to enable inventory accounting to feed into general accounting and ensure that accounting of fixed assets and stocks is of good quality. - Establish the institutional framework of inventory accounting and develop its regulatory framework. - These reforms are included in the Priority Action Plan for public finance reforms (Annex 1). ### PIMA Climate Change Assessment Module (C-PIMA) — overview - C-PIMA assesses five key dimensions of public investment management from the climate change perspective and extends the existing PIMA framework. - C-PIMA institutions resemble corresponding PIMA institutions; some C-PIMA institutions combine several PIMA dimensions; Institution 5 (risk management) has no PIMA equivalent. - Unlike PIMA, C-PIMA formally assesses only institutional design given limited historical evidence on effective practices. ### C1. Climate-aware Planning (Institutional design: Weak; Priority of reform: High) - Scope: - Assesses whether national public investment plans and strategies are consistent with authorities’ objectives and expected outcomes. - Considers whether Government or provinces require that land use and construction rules take climate risk into account. - Covers existence of centralized guidance promoting climate-aware public investment planning. - Key findings: - National and sectoral strategies are not aligned with the climate targets and objectives described in the NDC, except for the forestry sector strategy. - The PNSD and the 2021-2023 Government Program include pillars on protection of the environment and combating climate change but do not allow for easy cross-referencing with NDC targets and objectives. - Majority of reviewed sectoral documents (health, education, and mines) make no reference to climate change. - The REDD+ strategy and its investment plan (PIREDD) are an exception with consistency between actions, draft preliminary budget, and impact/effect indicators and the DRC’s commitments on sustainable forest management. - The NAP (National Adaptation Plan to Climate Change) 2022-2026 was prepared with UNDP support and focuses on four sectors: forest, agriculture, coastal areas, and health. - Forthcoming update of the PNSD is an opportunity to better incorporate climate issues into national public investment planning. - Land use and construction regulation: - Central and provincial regulations relating to spatial planning and construction do not reflect risks linked to climate change; most recent law specifically concerning spatial and urban planning and construction dates from 1973 (Law 73-021 of July 20, 1973). - A draft national law on land management is due to be submitted in the very near future to parliament; a land management strategy and a land use strategy are being finalized and include references to climate risks with a dedicated strategic pillar. - A methodological guide for participatory zoning of village land and regional entities was produced in April 2021 as part of PIREDD and refers to environmental constraints. - Institutional support gap: - No dedicated unit exists to support sectoral ministries with technical support for preparation and costing of climate-aware investment strategies. - The Ministry of the Environment and Sustainable Development (MEDD) and the Congolese Environment Agency (ACE) concentrate environmental and climate expertise but MEDD has no explicit mandate to provide technical support for costing sectoral planning strategies. - Policy recommendations: - Align the PNSD and sectoral strategies with the NDC’s climate objectives to provide a sectoral breakdown of climate-related objectives, targets, and outcomes. - Provide training for sectoral ministries by the MEDD and the ACE to promote integration of climate issues in investment strategies. - Develop a national strategy for combating climate change in the medium term. - Adopt the new law on land management and publish its dedicated strategy as prerequisites for climate-sensitive planning. ### C2. Coordination across the Public Sector (Institutional design: Weak; Priority of reform: Medium) - Scope: - Targets coordination of climate-related public investment decision-making across central government, general government (including local authorities), and the public sector including public corporations. - Coordination at central level: - Sectoral thematic groups created to support operationalization of the PNSD promote cross-cutting approaches and are specified in an operational framework; Decree 13/011 of April 9, 2013 establishes their organization and operation; the operational framework was updated October 2020. - One thematic group is specifically dedicated to climate matters, the environment, water and sanitation; membership includes MEDD (chair) and the Ministries of Water resources, of Planning, of Agriculture and of Mines. - Thematic groups enable coordinated choices at central government level but do not yet include extrabudgetary entities and PPPs. - Central–provincial coordination: - Mechanisms coordinating project investment relating to climate change between central government and provinces are emerging, but information on these projects is not consolidated. - The 2011 environmental law (Article 48) gives provinces and ETDs power to adopt climate change adaptation measures, but legal framework does not explicitly require provinces’ investment spending on combating climate change to be planned and implemented in coordination with central government. - NAP emphasizes decentralization in operationalization of adaptation strategies and lays foundations for coordination. - The local development plan for the 145 territories (PDL-145T) and the REDD+ strategy provide for consultation and coordination mechanisms between central government and provinces on climate change issues, but these mechanisms are not yet operational. - Thematic groups are also provided for at the provincial level as a space for dialog between center and provinces. - Provincial investment plans are not published in general or for climate change-related investments. ### Climate vulnerability and sectoral implications (selected facts) - Climate and geography: - Annual average temperature has increased by 0.2 degree per decade over the last thirty years and is expected to continue to increase by 1 to 2 degrees by 2050 with a potential rise of 5 degrees by 2100. - DRC land mass: 2.4 million km2; spans three climate zones (equatorial, tropical, and high-altitude). - Notre Dame University index ranking: 177th out of 181 countries. - Sectoral exposure: - Agriculture represents 40 percent of GDP and employs almost three out of every four people within the DRC’s labor force. - DRC contains 62 percent of the Congo basin fresh water; 50 million people lack drinking water out of a total Congolese population of nearly 90 million. - National energy production is almost exclusively from hydroelectricity (thanks to two dams) and is sensitive to disruptions to river flow. - Climate commitments: - DRC ratified UNFCCC in 1997, Kyoto Protocol in 2005, and the Paris Agreement in 2017. - Emissions reduction target of 21 percent by 2030. - NDC presented in 2017 and revised at end-2021; NAP covers 2022-2026 and has nine priority adaptation objectives (manage forest ecosystems and biodiversity; strengthen resilience of the agriculture sector; manage climate risks in small-scale farming; reduce the risk of disasters; provide management of water resources and environmental sanitation; strengthen the resilience of the health sector; guarantee access by the populations to energy; protect energy production infrastructure; and improve energy efficiency). *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 102. According to the current legal framework, public corporations are not encouraged or ### 1codea2023001 - 102. According to the current legal framework, public corporations are not encouraged or ### Public corporations and climate alignment - Finding: Public corporations are not encouraged or required to make their climate-related investments compliant with national climate policies. - Finding: The legal framework on oversight of public corporations and their investment plans contains no mention of climate change. - Finding: No formal incentive by the central government exists for public corporations to take climate change into account in their investment projects, in the absence of a portfolio strategy or guidelines on governance. - Finding: The 2011 environmental law requires all private and public entities, and thus all public corporations, to carry out social and environmental impact studies for their investment projects, to be validated by the ACE, but effects of climate change are not explicitly part of such studies. - Recommendation (medium priority): Strengthen formal coordination of investment decisions relating to climate change by amending the decree relating to sectoral thematic groups to include public corporations and by expanding consultation frameworks between the central government and the provinces to take the climate dimension into account. - Recommendation (medium priority): Operationalize mechanisms planned under the PDL-145T relating to REDD+ and provincial sectoral thematic groups. - Recommendation: The Government as shareholder could insist on public corporations taking climate change into account in their investment projects in a future portfolio strategy. ### C3. Project Appraisal and Selection (Institutional design: Weak: Priority of reform: Medium) - Scope: Assesses whether appraisal and selection of projects include climate-related analyses and criteria: - Dimension 1: existence of a climate-related analysis using a standard methodology. - Dimension 2: whether climate-related challenges are taken into account in PPPs. - Dimension 3: whether climate-related factors are included in project selection criteria. - Finding: Legal framework requires environmental impact studies reviewed by the ACE, but does not explicitly stipulate coverage of climate change. - Citation: Article 19 of the 2011 environmental law requires prior environmental assessment for any policy, plan, or program likely to have significant effects on the environment, following an implementing decree. - Finding: ACE bylaws (decree of November 18, 2014) make ACE responsible for assessing and approving such assessments and monitoring implementation, but no reference to climate change exists in this legal framework. - Finding: No standard methodology is established for environmental assessments or instructions guiding ACE reviews. - Practice: In December 2021, BCECO prepared a draft environmental and social procedures manual including a climate change vulnerability analysis procedure, to be validated at a forthcoming workshop (as part of its accreditation with the Green Climate Fund). - Practice: In 2021, the ACE conducted over 300 reviews of environmental impact assessments and publishes assessments on its website. - Finding: The 2018 law on PPPs does not explicitly take climate change into account for risk allocation or contract management; however, Article 30 of the 2015 law on water requires climate data to be taken into account in environmental and social impact studies for granting water operating concessions. - Finding: The central government does not use any climate-related criteria to guide selection of appraised projects; project selection manual includes environmental criteria in summary form but without explicit reference to climate change. - Recommendation (medium priority): Future decree on public investment management should require systematic climate-related analysis for preliminary appraisal of major infrastructure projects using a standard methodology supported by the MEDD. - Recommendation: Legal framework for PPP projects should reflect climate-related risks appropriately given contract terms of generally 20 to 30 years or more. - Recommendation: Explicitly include climate-linked factors in the list of decision-making criteria at the project selection stage. ### C4. Budgeting and Portfolio Management (Institutional design: Weak: Priority of reform: Medium) - Scope: Assesses ability of budgeting and project portfolio management to take climate change into account via: - (I) identifying in budget/documentation specific expenditures and funding for climate-related investments; - (ii) ex post external audits to measure project impacts in terms of climate adaptation and mitigation; - (iii) taking climate risks into account in asset management policies. - Finding: No identification of public investment spending relating to climate change within the budget. - Finding: Budget uses a COFOG functional classification which can assess investment spending relating to environmental protection, but not spending relating to climate change. - Finding: Indicators focused on climate change exist in provisional annual performance project for forestry, water, and environmental sectors, but are not reported due to lack of data and incomplete transition to program-based budgeting. - Finding: There is no explicit legal basis for ex post reviews or audits on outcomes of investment projects in terms of climate mitigation and adaptation; no legal framework for internal audits/reviews of major investment projects, and Court of Accounts plans one audit report on the environment each year without explicit link to public investment. - Practice: Ex post reviews of donor-financed major projects are supposedly carried out but were not available to the mission. - Practice: Implementation of the Measuring, Reporting and Verification system for REDD+ is an initiative to strengthen monitoring of climate performance of projects. - Finding: Asset management and maintenance policies do not take climate risks into account; standard road maintenance methodologies do not consider climate aspects; legal framework on asset management/monitoring fails to reflect effects of climate risks on valuation or depreciation of assets. - MEDD plan: MEDD plans near-term work with sectoral ministries on specific studies to assess impacts on concerned assets. - Recommendation (medium priority): Future decree on public investment management could establish legal foundations for monitoring and ex post assessment of investment project impacts on climate change, requiring measurable monitoring targets from planning stage. - Recommendation: Use transition to program-based budgeting to establish appropriate monitoring indicators. - Recommendation: Authorities should assess the impact of climate change on maintenance needs to allocate necessary resources. - Recommendation: Set up a tagging system for climate-related investment spending, requiring preparation of nomenclature and information systems; envisaged in medium term. - Box 4.A — Climate budget tagging (summary of international practice and methodological issues): - Purpose: Tagging provides an overall picture of budget spending and tax expenditure relating to climate, emphasizes climate significance in resource allocation, and enables monitoring over time. - Coverage: Methodologies typically cover current and capital budgets of central governments; some extend to local government, transfers to public corporations, and fiscal spending. - Definition choices: - Objective-based definition: define climate-related expenditures by expected impact (mitigation and adaptation). - Policy-based definition: identify relying on national climate change documents. - Estimation approaches for amounts of climate-related spending: - First approach: identify programs with climate change as main objective. - Second approach: estimate spending associated with all climate-related activities. - Third approach: apply weightings to estimate the portion of program/project spending related to climate. - International examples: Bangladesh, Indonesia, Nepal, Philippines; OECD and EU use in e.g., France and Ireland. - References noted in source: “Climate change budget tagging: a review of international experience” World Bank (February 2021) and “Climate-sensitive management of public finances – green PFM” IMF (August 2021). ### C5. Risk Management (Institutional design: Medium; Priority of reform: Low) - Scope: Assesses identification and management of fiscal risks related to climate change affecting infrastructure across three dimensions: - Dimension 1: publication of a national disaster risk management strategy incorporating exposure of public infrastructure to climate-related disasters. - Dimension 2: existence of financing mechanisms to deal with costs of climate-related damage to public infrastructure. - Dimension 3: existence of fiscal risk analysis that includes climate risks to public infrastructure. - Finding: ORSEC plan (2012) exists and is applicable to climate disaster response, but does not identify specific risks to infrastructure from climate change (data on location of risk, exposure of assets, or emergency procurement procedures). - Finding: A draft national natural disaster risk management strategy over four years reportedly produced by MAAH and being updated for publication by end-2022; not yet endorsed by Government. - Institutional development: Creation (Decree 21-05) of a National Solidarity Fund for Disaster and Humanitarian Management (CSNGHC) attached to MAAH to mobilize and channel financial flows and equipment for humanitarian crises and disasters. - Ex ante funding mechanisms: - Budgetary: MAAH budget includes “reserve for accidents and disasters” executed each year for unforeseen events, including climate-related disasters; represented CGF 65 million in the 2021 LFI and CGF 90 million in the 2022 draft budget law. - Extrabudgetary: CSNGHC aims to enhance coverage via strategic resource mobilization plan (document not available to mission) which could assemble resources from budget allocations, national/international donations, parafiscal charges, and donor contributions. - Finding: Fiscal risk statement (first published September 2021) categorizes main risks for public finances and mentions climate change-related risks, but presents natural disaster risks only briefly and qualitatively and does not assess impacts on infrastructure. - Practice: MAAH maintains a summary table of natural disasters and their financial impacts over a long period (good practice) but the table is not published and was not forwarded to the mission. - Recommendation (low priority): Operationalize recently created foundations (CSNGHC), finalize and publish the national disaster management strategy and strategic resource mobilization plan, and analyze and publish climate change risks affecting infrastructure to feed into the fiscal risk statement. *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 119. The following section presents the main issues relating to IT support, the legal and ### 1codea2023001 - 119. ### Legal framework - The legal framework for public investment management (PIM) is fragmented (Table 5.A). - Key laws cited: - Law 11/011 of July 13, 2011 on public finance (LOFIP) (revised in 2018). - Law 18/016 of July 9, 2018 on public-private partnerships. - Law 10/010 of April 27, 2010 on procurement. - Law 11/009 of July 9, 2011 establishing fundamental principles for protection of the environment. - Relevant decrees, ordinances, ministerial and interministerial orders and memoranda are listed in Table 5.A (examples include Decree 13/050 of November 6, 2013; Decree 21/04 of October 2, 2021; Ministerial order of December 5, 2011; Ministerial order of July 19, 2019; Interministerial order of May 20, 2013; Ministerial order of February 7, 2011; Memorandum of understanding of March 29, 2013). - Gaps and weaknesses: - No single high-level law or regulation covers PIM across the whole project investment cycle (appraisal, selection, monitoring of physical/financial implementation, ex post assessment). - Procedures are often guided by manuals compiled over many years with donor support; application and staff knowledge are often uncertain. - Budget circulars guide investment budgeting but do not guarantee procedural stability year-to-year. - Some legally-established project management structures have remained inactive (example: 2019 order establishing the CISPIP). - Conflicts between standards exist (example: between the law on PPPs and the law on procurement regarding the jurisdiction of the ARMP; between these two laws and the decree on the powers of the UC-PPP regarding issuance of nonobjection notices). - Climate change in the legal framework: - The 2011 law on the protection of the environment requires environmental impact studies for every investment project; it mentions climate change in Article 48 but the provision is too general to be operable. - An update of the 2011 law or adoption of a new law specifically on climate change is under consideration. - A PIM decree could set the principle of involvement of the MEDD and the ACE in all stages of the investment cycle to ensure climate change is considered. - Priority recommendation: - Adoption of a decree on PIM covering all stages of the project cycle is a high priority to define responsibilities, structure the institutional framework, and guide development of indispensable tools. ### IT support - Institutional and capacity situation: - Authorities lack an effective institutional framework to guide, support, and implement the computerization of PIM. - IT functions across main ministries suffer from limited coordination and lack staff with required capacities. - There is no IT master plan for consistent, coordinated strategy for development and operation of software supporting PIM from planning to asset accounting. - The inter-ministerial coordination unit aims to build capacity under the Ministry in charge of Digitization (recently set up). - Ministry-level specifics: - Ministry of Planning: - The DPB has an IT division that manages the public investment database staffed solely by IT specialists. - The Aid and Investment Management Platform (PGAI) established by Ministerial order on February 7, 2011 is the technical agency tasked with strengthening its information system and is designated as government’s official source of information on aid flows in the DRC; in practice, PGAI has difficulty gathering reliable information, particularly from bilateral partners. - The Infrastructure Directorate has developed a mapping of infrastructure projects in the DRC (citation: https://www.cartoinfrardc.org/gis/), presenting projects by type of financing, sector, location, and implementation agency, but data are not comprehensive and do not contain amounts of funding. - Ministry of the Budget: - The Interministerial Information Technology Coordination department (C2I) has a staff of 69 and coordinates IT work of the Ministries of the Budget and Finance. - The Ministry’s IT function faces challenges in financial resources, sufficient competent staff, motivation, and lack of a dedicated IT career path. - No formal coordination mechanism exists between the IT function of the Ministry of Planning and the C2I. - Ministry of Finance: - In the absence of a dedicated IT stream and sufficient resources, IT capacities are weak. - The ministry chairs the integrated human resources and public finance management system digitization steering committee (the “Committee”), which still has to come into operation. - The recent updating of the General Operation Plan (POG) for the computerization of the system of management of public finance and general government, managed by the Public Finance Reform Orientation Committee (COREF), does not cover the area of public finance management, and the Ministry of Planning is not involved in the work. - Systems landscape and interoperability: - No comprehensive, computerized information system exists for public investment projects to support decision making and oversight. - Ministry of Planning project database: Access format, following project fiches in Excel. - PGAI administers its external resources management information system. - Ministry of Planning information systems have no interface with the “Expenditure chain” applications (“Préparation du Budget” (PREPABUD), “Gestion des Dépenses” (GESDEPENSE), and COMPTA), some of which are not fully operational. - “Système Intégré de Gestion des Marchés Publics” (SIGMAP) is in the deployment phase, and an e-procurement (E-GP) project is being prepared with World Bank support. - The Ministry of Finance is preparing a data warehouse project. - Climate data systems: - There is no specific information system for monitoring climate change. - MEDD reported no system or database beyond forests and weather data published on its website. - NAP prepared at end-2021 stipulates DRC should rely on data collection from various national institutions (Agence nationale de météorologie et télédétection par satellite; Institut national d’études et recherches agronomiques; Ministries of Energy, Agriculture, Rural and Urban Development, Land Management, Scientific Research; universities), and from international and non-governmental organizations and other agencies, public and private. - Priority recommendation: - Development of an integrated bank of projects that follows projects throughout their life-cycle is a high priority. - Key options for integration include: standard data exchange procedures, implementation of software interface plans, or posting in a data warehouse feeding a decision-making dashboard. - Major principles of a project bank are set forth in Annex 7. ### Staff capacity - Structural constraints: - Administrative fragmentation dilutes PIM capacities; public administration is highly fragmented and compartmentalized. - Institutional complexity, legal uncertainty, multiplicity of parties, unproductive use of existing capacities, lack of coordination, and absence of consistent information circulation blur roles and responsibilities and limit effectiveness. - Proliferation of ad hoc project portfolio management and oversight committees and agencies (often donor-driven) weakens technical capacity. - Information flows among parties are often nonexistent or fragmented and redundant, leading to suboptimal use of human and IT resources. - Pooling skills, knowledge, and information across committees and agencies could substantially improve analysis and monitoring capacities. - Capacity needs: - Majority of ministries and organizations involved in project management indicate capacity building needs at all stages of PIM at central and provincial levels: planning; appraisal, selection, and preparation of projects; budgeting and producing more reliable financial estimates; monitoring of project implementation; and ex post evaluation. - For PPPs, capacity building is crucial to control fiscal risks associated with that financing modality. - Authorities identify need for capacity building to consider climate change throughout the investment cycle: - Awareness-raising and training of central and provincial governments on climate impacts on public investment and infrastructure is urgent. - Sectoral ministries need technical support to incorporate climate issues in planning and projects, and to analyze and assess costs and risks associated with climate change. - MEDD and ACE, given technical competence in environmental and climate-related issues, are best placed to offer this support. - Training and technical assistance plan: - A training and technical assistance plan with financial backing by technical and financial partners will support authorities’ reform strategies. - As set in the Priority Action Plan for implementation of the Strategic Public Finance Reform Plan (PSRFP) for 2022-2028 (Annex 1), a training plan will be developed, adopted, and implemented to support authorities’ capacities and strengthen PIM capacity. - A PIM training program priorities: - Enhance skills and knowledge in planning, monitoring and evaluation of projects. - Strengthen skills in risk analysis, including fiscal risks associated with PPPs and climate change. ### Priority actions and timeline excerpts (from draft 2022-24 Priority Action Plan) - Strategic pillar 1: Budget reform — Specific target 1.1: Strengthen the macro-fiscal function - Expected outcomes and indicators include MTFF consistency with macroeconomic forecasts and inclusion of provisional Government Flow-of-Funds Table (TOFE). - Selected actions and timing: - Signature of the Interministerial order for restructuring the CPCM, including a TOFE subcommittee (2022). - Signature of the Ministerial order establishing the macro-fiscal unit (2022). - Adoption of the internal regulations for functioning of the CPCM (2023). - Production of a procedures manual for preparation of the macro-fiscal framework and revision of MTFF presentation (2023). - Specific target 1.2: Develop the fiscal risk management function - Action 1.2.2: Gradually complete the list of fiscal risks of all general government departments and quantify them in the DRB. - Tasks include strengthening macroeconomic risk analysis tools, completing and classifying specific and institutional fiscal risks, quantifying risks and formulating mitigation measures (including viability of PPPs, provincial debt levels, climate-related risks) (2024), and expanding the DRB to cover risks from major provincial investment projects, public corporations, PPP guarantees, and climate change scenarios (2024). - Action 1.2.4: Improve oversight of public corporations (EPs) and administrative public entities (EPAs) and transparency of financial flows. - Tasks include adoption of a portfolio strategy document (2023); Prime Minister circular instructing EPs and EPAs to produce financial reports with a standard model within six months of year-end (2023); attach to the draft budget a consolidated report on EPs and EPAs (2024); and strengthen computerization of the EPs (2022-24). - Specific target 1.3: Introduce budget management based on performance - Action 1.3.4: Gradually increase the number of ministries with up-to-date strategies and adopt updated model of program budgets (ongoing through 2028). *IMF | Technical Assistance Report – Democratic Republic of the Congo* ### 1. Publication of the presidential order to confer powers on the ministries ### 1. Publication of the presidential order to confer powers on the ministries ### Governance, institutional reclassification, and climate mainstreaming - Action: Publication of the presidential order to confer powers on the ministries (2022). - Action: Completion of the reclassification and streamlining of government organizations and signature of the related decree (QIV 2022). - Action (2023): Enhance the information on the objectives in the priority action plans, in particular those relating to climate change. Strengthen the sectoral thematic groups to ensure greater cross-cutting awareness of climate change in public investment decisions. - Action (2023): Finalize the fiscal program models, including for the special accounts, supplementary budgets and operators, and their adoption by the Council of Ministers. The models should: - reinforce the links between planning and budgeting, for example through the sharing of various performance indicators, - establish the indicators for monitoring investments in relation to climate change. - Responsible / actors listed: Council of Ministers; MINPLAN; MINBUD; Sectoral ministries. - Priority: High. - Reference indicators: PIMA 7c, 8. ### Transition to budgeting in program mode; capacity and regulatory measures (Action 1.3.5) - Objective: Implement the technical and educational tools for the implementation of budgeting in program mode. The capacities for budgeting by program are strengthened. - Timeline markers shown: X X X (multi-year rollout). - Outcome: Regulatory framework for the transition to program mode adopted. - Inputs and tasks: 1. Identification of new fiscal management actors, within a framework establishing their respective roles (2022). 2. Validate guides including: - (I) appointment of persons responsible for programs and procedures for delegation of the payment authority function, preparation of the program budget, framework for management dialogs (2023); - (ii) budgeting and application through AE/CP (commitment authorizations/payment appropriations), in particular with the requirement to break down the status of consumption of the AEs by project (2023); - (iii) procedures for selection, steering, and governance specific to Government operators (2024); - (iv) Audit of programs; practice of management supervision; (v) preparation of the MTFF, the overall MTEF, and the ministerial MTEFs; (2024). - Responsible: COREF; MINBUD (DGPPB; DGDSP); Ministères sectoriels. - Priority: Medium. ### Improve budget credibility (Action 1.3.6) - Objective: Improve the credibility of the budget. The Government budget is executed as planned in accordance with the preparation of the expenditures, and the gaps between forecasts and outcomes are reduced. - Timeline markers: X X X X. - Outcome indicators referenced: PEFA PI-1, PI-2, and PI-3; PIMA 6, 7, 8, 14. - Actions: 1. Forecast fiscal resources solely on the basis of technical considerations and ascertain that the execution of expenditures follows the provision of the LOFIP and the General Public Accounting Regulations (RGCP) (LF 2023). 2. Execute almost all the expenditures on the basis of normal procedures (2022 and subsequent years). - Responsible: National Assembly and Senate; Council of Ministers; MINFIN; MINBUD; High. ### Improve budget documentation and parliamentary transparency (Specific target 1.4; Action 1.4.1) - Objective: Produce all the annexes to the draft budget law as provided in the LOFIP and supplement the documentation to enhance transparency and nourish parliamentary debate. The information provided by the annexes to the draft budget law (PLF) meets the requirements of the LOFIP and contributes to greater understanding of the fiscal issues. - Timeline markers: X X X. - Outcome indicator: PEFA PI 5; PIMA 6c, 8, 12. - Actions and timeline: 1. Prepare the budget documentation as required by the LOFIP, including the documents listed under Article 78 (6), (7), and (8) and the last four listed under Article 79 (5) (2023). 2. Fill in the budget documentation in addition to the requirements of the LOFIP (specifically, reports on fiscal expenditure, fiscal risk, the general position of public corporations and institutions, the status of collateral and guarantees granted by the Government, the annual cash flow plan adjusted to a monthly rate, the assessment of the stock of debt, and the list of PPPs in progress) and the Public Investment Program (PIP) (2024). - Responsible: MINBUD (DGPPB). - Priority: Medium. ### Public expenditure management — predictability and commitment planning (Strategic pillar 3; Action 3.2.1) - Specific target 3.2: Strengthen the predictability of public spending execution. - Action: Improve the methodology for preparing and updating commitment plans. Steering of budget execution is improved. - Timeline markers: X X X. - Outcome indicators: PEFA PI-1, PI-2 and PI-3; PEFA PI-21. Rate of execution of the PEB; Level of RAPs in relation to expenditures (pending payments and arrears). PIMA 12a, 12b. - Actions and timeline: 1. Take up a text making preparation of the PEB and the PTR mandatory (Q4 2022). 2. Adopt the guide for the preparation of the PEBs and the PTR, which increases the consistency between the two tools (Q1 2023). 3. Strengthen in-year budget regulation by having the commitment plan at the beginning of the year based on the draft budget law appropriations, as presented by the Government (2023). 4. Establish the top-down and bottom-up approach in the preparation/updating of the PEBs (Q2 2024). - Responsible: MINBUD/DCB/DGTCP. - Priority: High. ### Public procurement reform (Specific target 3.4; Actions 3.4.1 and 3.4.2) - Objective: Enhance the transparency and effectiveness of public procurement. The governance of the procurement system is strengthened; the transparency of public procurement is improved. - Timeline markers: X X X (3.4.1) and X X X (3.4.2). - Outcome indicators: PEFA PI-24 (1 to 4); PIMA 11a, 11b, 12a, 12b. - Actions and timeline for Action 3.4.1: 1. Revise the laws and regulations pertaining to public procurement on the basis of the MAPS II recommendations and, in particular, further restrict the possibilities of granting special authorizations (Q4 2023). 2. Require mandatory preparation of provisional plans for procurement contracts based on the draft budget law adopted in the Council of Ministers (Q1 2023). 3. Improve the format of the plan for public procurement to be submitted to the department tasked with the preparation of the commitment plan by incorporating the budget data in it. 4. Authorize the DGCMP to access the budget information system to ascertain the availability of appropriations for the files on public contracts submitted to it for supervision (Q2 2022). 5. Interface the procurement management system with the budget execution system for embedded checks on the availability of appropriations (Q4 2024). - Responsible: MINBUD/ARMP/DGCMP. Priority: High. - Actions and timeline for Action 3.4.2: 1. Draw up a form for transmission of requests for notices to the DGCMP for files entered at the office of the Ministry of the Budget (MINBUD) (Q1 2022). 2. Gradually reduce the number of special authorizations granted by the DGCMP (2022). - Responsible: MINBUD/ARMP/DGCMP. Priority: High. ### Public debt management — register of collateral and guarantees (Specific target 3.6; Action 3.6.2) - Objective: Keep and regularly update the register of collateral and guarantees granted by the Government. The management of public debt is strengthened. Its viability and sustainability are regularly ensured. - Timeline markers: X X. - Outcome indicator: PEFA PI-13 (1 to 3). Number of notices on the viability and sustainability of debt agreements. PIMA 1a. - Actions and timeline: 1. Establish a database of all the agreements with collateral and guarantee clauses (Q2 2023). 2. Design markers for the collateral and guarantees likely to be called, so that they can be covered in the budget (Q4 2023). 3. Conduct regular analyses of the viability of the debt, including alternative scenarios incorporating all debt instruments, natural resource operating profiles, demographic projections, contingent liabilities, and climate change (2023). - Responsible: MINFIN/DGDP. Priority: High. ### Public accounting and inventory accounting (Strategic pillar 4; Actions 4.4.1 and 4.4.2) - Specific target 4.4: Prepare the implementation of inventory accounting. - Action 4.4.1 Objective: Implement the institutional framework for inventory accounting, as defined in the LOFIP. Inventory accounting meets the requirements of accrual and asset accounting. - Timeline markers: X X. - Outcome: The institutional framework is in place. PIMA 15. - Action: Establish a consultation framework between the DGCTP and the agency tasked with the management of the Government’s movable and immovable assets in order to strengthen the institutional framework for inventory bookkeeping (2023). - Responsible: MINFIN/DGTCP/CPCC/MIN Transp/MIN BUDGET/DIG-CC. Priority: Medium. - Action 4.4.2 Objective: Develop the regulatory framework for inventory accounting. - Timeline marker: X. - Outcome indicator: PEFA PI-12. PIMA 15. - Actions and timeline: 1. Adopt the inventory nomenclature and a clear methodology for asset valuation (2024). 2. Adopt the procedures manual for managing inventory accounting (2024). 3. Incorporate inventory accounting rules in the book of accounting standards. 4. Carry out gradually a full inventory of nonfinancial assets (2024). - Responsible: MINFIN/DGTCP/CPCC/MIN Transp/MIN BUDGET/DIG-CC. Priority: Medium. ### Cash management and Treasury Single Account (Specific targets 4.8 and 4.9) - Specific target 4.8: Strengthen the quality of cash flow forecasts and improve the practice of issuing government securities. - Action 4.8.1: Strengthen the quality of cash flow forecasts. Cash management plan forecasts are made reliable. - Timeline markers: X X X X. - Outcome indicators: PEFA PI-16 and PI-21. Gap between cash flow forecasts and outcomes. PIMA 12a, 12b. - Actions and timeline: 1. Prepare a procedures manual for drawing up the cash management plan (2022). 2. Produce the cash management plan on the basis of actual inflows and disbursements affecting the Treasury General Account (TGA) at the Central Bank of the Congo (BCC) and the cash shown in the accounting items (2022). - Responsible: DGTCP. Priority: High. - Specific target 4.9: Set up the Treasury Single Account (TSA). - Action 4.9.2: Progressively expand the coverage of the TSA. The various parties involved comply with the reform. The TSA is operational and covers all Government resources. - Timeline markers: X X X X. - Outcome indicator: PEFA PI-21. Number of accounts that are included under the TSA again. PIMA 12c. - Actions and timeline: 1. Adopt a communication and awareness-raising strategy for the various parties concerned on the benefits of consolidating resources in the TSA (2022). 2. Limit the procedure of exemption from the principle of mandatory deposit at the Treasury of all government liquid assets (2022). 3. With the support of the BCC carry out a comprehensive survey of government accounts open in the financial system (2022-23). 4. After a stress test of the impact on the financial system of returning to the Treasury the credit balances of public accounts residing in the financial system, determine an appropriate approach to a process of closing these accounts and gradually transferring the balances to the TSA (2023). 5. At the same time carry out discussions with the PTFs in order to proceed with the transfer of donors’ accounts to the General Treasury Account (TSA) (2024). - Responsible: MINFIN, BCC, project team, DGTCP, PTF. ### Strengthen external auditing and independence of the Court of Accounts (Specific target 5.3; Action 5.3.1) - Objective: Strengthen the guarantees of the independence of the Court of Accounts. An independent audit providing assurance of the appropriateness and compliance of the execution of public spending is assured. - Timeline markers: X X X X. - Outcome indicator: PEFA PI-30.4. PIMA 14c. - Actions and timeline: 1. Appointment of the President of the Court of Accounts as of right (2022). 2. Judges take an oath before the President of the Republic, to ratify the appointment after receiving the opinion of the National Assembly (AN) (2022). 3. Production of the functional organization chart of the Court of Accounts (2022). 4. Signature of the Decree on the official regulations of the technical and administrative staff (2023). 5. Signature of an instruction authorizing the automatic transfer of budget allocations; appoint an accountant to the Court of Accounts who meets the requirements of independence of the Supreme Audit Institutions (SAIs) (2014). 6. Set up an automatic transfer mechanism for budget allocations. (2024). 7. Submit to the National Assembly a proposal to securely establish the formulation of the budget of the Court of Accounts (2025). - Responsible: Court of Accounts; National Assembly (AN); MINBUD; MINFIN. Priority: High. ### Capacity building — training plan for public financial management (Pillar 0; Cross-cutting action 0.2.1) - Objective: Develop, adopt, and implement a training plan to accompany the implementation of the Strategic Public Finance Reform Plan (PSRFP) 2022-28. The capacities of the various parties involved in GFP (public financial management) are strengthened. - Timeline markers: X X X X. - Outcome indicator: Number of annual training courses. - Actions: 1. Adopt an updated public financial management training plan (2022). 2. Implement the training plan thereby strengthening, among other things, the capacities for public investment management and capacities for analysis of the fiscal risks arising from PPPs (2022-28). - Responsible: COREF, MINFIN, MINBUD, Ministries, Supervisory authorities. Priority: High. ### Management of externally financed projects — proposal to set up a single Office (Annex 4) - Finding: Management of the externally financed project portfolio in the DRC is fragmented across several agencies within the Ministry of Finance, the Ministry of Planning, and other ministries. The legal framework for some entities is obsolete or expired, producing problems including: - difficulty consolidating information on projects, inability to oversee financial and physical flows in real time, and irregular or late reporting; - dispersion of management skills and knowledge amid scarce human and financial resources; - suboptimal donor discussions and difficulties verifying donor alignment with DRC strategic priorities; - mixed portfolio performance and poor rates of uptake of resources driven by complexity and variability of donor procedures and use of funds for ineligible expenditures; - entities continuing beyond their mandate to implement centrally financed projects, raising internal control concerns (examples cited: BCECO and the Infrastructure Unit). - Recommendation: Establish a single office ("the Office") tasked with coordination and oversight of all externally financed projects to pool currently scattered resources. - Proposed core functions of the Office: (i) Front office: organize pitches for projects to be financed; ensure alignment with strategic development priorities; participate in funding negotiations; gather information on banking flows. (ii) Middle office: support sectoral ministries in preparation and implementation of projects (feasibility studies, selection of projects for the PIP, preparation of files for calls for bids, contract allocation). Sectoral ministries may delegate principal contractor role to the Office under prior agreement; management fees to be reported transparently in the budget law. (iii) Back office: maintain a comprehensive consolidated database of externally financed projects; produce monitoring reports for each project and donor; supply financial information to institutional users (Ministries of Finance, Planning, Budget). Sectoral ministries remain responsible for budget appropriations; accounting covered by public accountants under the General Directorate of the Treasury and Public Accounting. - Institutional form recommended: an établissement public administratif (administrative public entity) under the financial and technical oversight of the Ministry of Finance, successor to the BCECO. - Benefits cited: financial and administrative autonomy, attractiveness for high quality experts, use of BCECO and CFEF local correspondent networks. - Governance: Board of Directors should include representatives of the Ministries of Planning and the Budget and sectoral ministries; Office must comply with law on public institutions and be given a regulation defining functional relationships with other authorities. - Other options discussed and drawbacks: - Internal entity at a ministry: lacks institutional and financial autonomy; weak coordination. - Inter-ministerial committee with permanent technical secretariat: complex to implement and limited attractiveness for high-quality experts. - Examples of existing agencies noted: Central Coordination Office (BCECO), Fragile States Finance Implementation Unit (CFEF), Project and Program Oversight Unit (CSPP), European Development Fund payment authority support unit, Aid and Investment Management Platform (PGAI). - Page reference note presence: 101. _Italic: IMF | Technical Assistance Report – Democratic Republic of the Congo_ ### Annex 5. Guiding principles for preparation of a decree on public investment management ### Annex 5. Guiding principles for preparation of a decree on public investment management ### Purpose and overarching priorities - The adoption of a decree on public investment management is a high priority. - The adoption of such a decree covering all stages of the project cycle, would make it possible to define the responsibilities of the various parties involved in each of these stages, to structure the institutional framework, and to provide guidance for the development of indispensable tools to build optimal investment project management. - This decree should specifically respond to the following basic elements: ### Scope and applicability - Applying to all the projects borne by the public sector regardless of their sources of finance – central government, public services and institutions, provinces and ETDs, public corporations, as well as PPPs (in accordance with the existing legal framework). - The decree should stipulate the anchoring of the development programs and projects within the budget and the relationships between the development program and project management units and the budget program managers. - It should lay down an institutional structure that includes all the relevant parties and provides regulatory responses to any potential areas of conflict among the parties. - It must give indications on the rules of behavior of the parties involved in the various stages of the cycle (planning, allocation, and implementation). ### Framework for planning and budgeting - Setting the framework for planning and budgeting of the projects recorded in the budget by: - stipulating the rules for the management of the portfolio/bank of projects, in particular the criteria for registration, completion, eligibility for the PIP, integration in the budget, and removal from the portfolio; - detailing the activities of the planning and budgeting process, as well as the role of the parties involved as part of a unified budget process; - specifying the format of the PIP; and - requiring the register of guarantees to be kept, in particular for PPP projects. - The text could also provide for the publication of comprehensive information on the whole of the public investment project portfolio, regardless of the source of financing and the management entity. ### Appraisal and selection of projects - Laying down the main rules for appraisal and selection of projects by: - stipulating the approach for identification, appraisal, selection, and completion of projects, as well as the approach to eligibility for the PIP and inclusion in the budget from the perspective of informing the various guides and manuals on their content; - organizing the budgeting and use of study funds to carry out feasibility studies. - General selection criteria, including those giving explicit priority to projects combating climate change, could be set forth in the text. ### Monitoring project implementation - Specifying the rules for monitoring project implementation, particularly covering project management units financed both internally and externally, the heads of major projects, and their relationships with the technical and financial supervisors for information reporting. ### Project closing and ex post evaluation - Providing a framework for the process of closing projects and ex post evaluation by requiring that inventories, completion audits, and ex post evaluations be carried out. ### Maintenance and sustainability - Establishing the principle of systematic inclusion of project maintenance at the time of project design, budgeting, and implementation. ### Annex 6 — Illustration of the list of relevant selection criteria - The list of selection criteria presented below includes various good practices used in several countries, including Benin, and adds specific criteria relating to climate change. Each evaluation criterion and subcriterion may be subject to an order of priority, or potentially weightings, in order to attribute overall grades to the various projects. - Existence of the project document: (Yes/ No) - Degree of preparation of the project: - Have all the headings of the project fiche been filled in and are the associated documents attached? - Relevance of the project: - Have social, economic, and environmental needs, including the aspect of climate and gender equity, been clearly identified? - Have the beneficiaries been qualitatively and quantitatively defined? - Consistency of the project: - Do the project objectives comply with the strategic guidelines in terms of development? - Does the project comply with the strategic priorities for the sector? - Is the internal logic of the project (activities - outcomes - specific targets - general objective) coherent? - Technical feasibility of the project: - Have the preliminary conditions for starting project implementation (agreements, procedures, organization, responsibilities, laws and regulations) been established? - Is the technical choice optimal, in particular with regard to climate change? - Economic and financial feasibility of the project: - What is the assessment of internal return? - Appraisal of the cost and financing plan: - What is the cost estimate for carrying out the project? - Is the project financing plan sustainable? - Appraisal of risks, impacts and mitigation measures of the project: - Have the risks of the project, including climate change risk, been assessed, and have plans for mitigation of these risks been established? - Have the climate change impacts been assessed? - Project implementation strategy: - Have the project implementation mechanisms (operating mode) been established and are they appropriate? - Has the project implementation plan been established and it is appropriate? - Viability and sustainability of the project: - Have the recurring costs of the project been correctly identified and appraised? - Monitoring and evaluation of the project: (Scale and grade). - What is the relevance of the indicators associated with the project? ### Annex 7 — Principles guiding the establishment of an integrated bank of projects - Most African countries do not yet have fully developed practices in the area of information systems, structured around a bank of projects that enables projects to be monitored, identified by a unique code, over their entire life-cycle from the initial idea for each project through to its completion. - In short, however, many important principles remain to be applied with regard to computerization of the bank of projects, as follows: - Making available in advance an effective institutional framework providing steering, coordination, support, and implementation of the computerization process; - Integrating the IT development of the bank of projects in a strategy formalized in an IT master plan; - Allocating to each project in the bank a unique code following the project through its whole life-cycle using a registration system implemented by the Ministry in charge of planning; - Integrating in the bank of projects functionalities that enable monitoring over the whole life-cycle of management, from project ideas to completions, according to the following sequence: - Adopting a comprehensive approach to the bank of projects, including projects financed by own funds, external funds, and supported by PPPs, at both national and subnational level; - Supporting the implementation of the computerized bank of projects with formalized tools, in terms of steering (project fiches, appraisal and selection framework, PIP, dashboards), monitoring, and transmission of information (standard forms) and reporting (standard reports); - Identifying and facilitating, using keys (registration of projects, budget nomenclature, and registration of contracts and PPPs), charts of accounts (general accounting and inventory accounting), data interfaces, and management applications; - Ensuring the sharing and pooling of information on the bank of projects among all parties involved; - Promoting development, ownership, proper use, and autonomy among the users of the bank of projects. ### Functionality of an information system supporting public investment management - Development of the project pipeline (identification, preparation, design, and presentation); - Project appraisal and selection; - Prospective analysis - Planning - Appraisal and selection(including preliminary appraisal, based on prefeasibility and feasibility studies, and selection as part of the PIP, then in financing) - Budgeting - Implementation, including public procurement and management of project implementation - Physical and financial monitoringof implementation, adjustments, and consolidation of portfolio information - Ex post assessment - An interface with the IT system for budgeting, with the establishment of a key between the coding of projects and the budget nomenclature; - An interface with the IT system for procurement, with the establishment of a key between the coding of projects, the budget nomenclature, and the registration of contracts; - An interface with the budget implementation system(s) and general accounting; - Project management; - Periodic monitoring of physical and financial implementation of projects and the centralization of information, to steer and monitor the portfolio; - An interface with the inventory accounting system for management of assets. *IMF | Technical Assistance Report – Democratic Republic of the Congo* --- _Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1codea2023001.pdf_