## 1sycea2023003 ## Source details **Canonical URL:** [1sycea2023003](https://www.imf.org/-/media/files/publications/cr/2023/english/1sycea2023003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2023/english/1sycea2023003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2023/english/1sycea2023003.pdf.json) --- ### Preface and mission - At the request of the Ministry of Finance, National Planning and Trade (MoFNPT) of Seychelles, an IMF Fiscal Affairs Department (FAD) and World Bank team conducted a Public Investment Management Assessment (PIMA) and Climate PIMA (C‑PIMA) during January 18 to January 31. - Mission leadership and team: - Led by Carolina Rentería. - IMF team: Bryn Battersby, Isabel Rial, Suphachol Suphachalasai, Trish Chiinze, David Gentry. - World Bank team: Kirk Schmidt, Kene Ezemanari. - High-level and institutional consultations included Ministers Naadir Hassan, Flavien Joubert, Billy Rangasamy; Secretary of State Patrick Payet; extensive meetings across MoFNPT divisions, sector ministries, agencies (SIA, Seychelles Energy Commission, etc.), and public corporations (Islands Development Company, Public Utilities Corporation, Seychelles Civil Aviation Authority, Seychelles Port Authority). ### Executive summary — key findings and high‑priority messages - Historical public investment and fiscal outcomes: - Public capital stock peaked at around 250 percent of GDP by the mid-2000s (peak around 2005, around $50,000 per capita PPP). - Debt-to-GDP rose to 200 percent by the early 2000s; debt servicing reached 25 percent of government revenue (mid-2000s); debt-to-GDP fell from over 200 percent to 60 percent by end‑2018, rose to 89 percent in 2020, and returned to a projected 68 percent in 2022. - Investment as share of total expenditure: average around 23 percent in the 1990s → 13 percent in the 2000s → fell to below 10 percent of expenditure by end‑2010s. - Infrastructure outcomes and efficiency: - Access and quality indicators relatively high for a small island state (hospital beds 3.6 per 1000; secondary teachers 7.2 per 1000; electricity production 4.1 kWh per 1000; >90 percent access to improved drinking water; internet penetration around 70 percent). - Public investment efficiency gap is around 25 percent (related figure shows 29 percent). - Institutional performance (PIMA): - Institutional design generally stronger than effectiveness; notable under‑execution of the capital budget. - Strengths: budget comprehensiveness, availability of funding, procurement legal framework, multi‑year forecasts. - Main weaknesses: national and sectoral planning (LOW), maintenance funding and methodologies (LOW), project appraisal completeness and selection (MEDIUM design, MEDIUM effectiveness but high reform priority), monitoring of public assets (MEDIUM design, LOW effectiveness). - Climate vulnerabilities and C‑PIMA: - Seychelles highly susceptible to climate change; NDC estimates USD 671 million required between now and 2030, equivalent to 5 percent of GDP per year. - Climate‑related public investment coordination is relatively strong, but appraisal, selection, and asset management gaps hinder climate integration and access to international climate finance. - Reform context and priorities: - Ongoing reforms: new National Development Strategy (NDS), new Public Investment Management Policy, SIA operationalization, legal and regulatory revisions. - Highest priorities: ensure adequate project appraisal before selection; prepare selection criteria; define roles/responsibilities across PIM actors; develop costed national and sectoral plans aligned with the budget. - Annex 1 contains a sequenced action plan of recommendations. ### PIMA selected institutional findings (highlights and exact assessed patterns) - Fiscal targets and rules (A1): Institutional Strength = MEDIUM; Effectiveness = MEDIUM; Reform priority = Low. - MTFF produced and approved by Cabinet; no legislated fiscal rule; MTFF not published. - Debt-to-GDP converging towards 50 percent target (target year revised to 2026 in 2023 Debt Management Strategy). - National and sectoral planning (A2): Strength = LOW; Effectiveness = LOW; Reform priority = High. - Disjointed framework; sectoral plans not costed or monitored; NDS 2019‑23 and sector plans lack public investment costing and performance metrics. - Greater Victoria Masterplan 2040: Greater Victoria accounts for 29 percent of Seychelles population; Masterplan identifies 15 key projects including Project 1 (Ile Aurore) with 1500 new homes and supporting infrastructure—but projects are not costed. - Project appraisal (A4): Strength = MEDIUM; Effectiveness = MEDIUM; Reform priority = High. - PIM Policy standard project proposal form required for projects over SCR 1 million; forms often incomplete; central support incomplete; SCR 10 million used in practice as ad hoc threshold for large/complex appraisals. - Multi‑year budgeting (B6): Strength = HIGH; Effectiveness = LOW; Reform priority = High. - Three‑year capital forecasts and indicative ceilings produced; persistent capital under‑execution (aggregate capital allocations around 40 percent below budget in three years prior to COVID‑19). - Maintenance funding (B9): Strength = LOW; Effectiveness = LOW; Reform priority = High. - No standard methodologies for routine or capital maintenance; maintenance undercounted in economic classification; lack of asset stock prevents assessing maintenance funding needs. - Procurement (C11): Strength = HIGH; Effectiveness = MEDIUM; Reform priority = Low. - 2008 Procurement Act requires open tendering by default; in 2021, 75 percent of contracts awarded via open tender and 22 percent via direct bidding. - National Tender Board procurement database limited in functionality. - Availability of funding (C12): Strength = HIGH; Effectiveness = HIGH; Reform priority = Medium. - Weekly cash forecasts, treasury single account handling of donor accounts; cash forecasts reasonably accurate; invoices not always entered into TIS preventing accounts‑payable aging monitoring. - Monitoring of public assets (C15): Strength = MEDIUM; Effectiveness = LOW; Reform priority = High. - 2018 Accounting Manual requires asset registries; registries are not regularly updated nor information accessible across agencies; financial statements prepared on cash basis. ### C‑PIMA selected findings (highlights) - C1 Climate-aware planning: Institutional Strength = LOW. Climate considerations not adequately mainstreamed into public investment planning; no sectoral investment roadmaps aligned with NDC. - C2 Coordination between entities: Institutional Strength = HIGH. Climate-related public investment coordination across central government is strong; stronger oversight encouraged for public enterprises. - C3 Project appraisal and selection: Institutional Strength = LOW. Appraisals and selection criteria do not reference climate change; EIAs are often conducted after budget approval. - C4 Budgeting and portfolio management: Institutional Strength = LOW. Some climate investments identifiable (Department of Climate Change projects = 2.6 percent of PSIP and 0.9 percent of GDP), but no systematic approach to identify or track climate investments; ex‑post reviews not conducted; asset management policies do not address climate risks. - C5 Risk management: Institutional Strength = MEDIUM. Emergency management policy and coastal management plan exist; fiscal risk analysis includes qualitative climate risk assessment; Disaster Risk Management Fund authorized but not operationalized. ### Key statistics and project portfolio metrics (preserve exact values) - Public capital stock reached around 250 percent of GDP by mid‑2000s; peak around 2005, around $50,000 per capita (PPP). - Debt metrics: debt-to-GDP rose to 200 percent (early 2000s) → fell to 60 percent (end‑2018) → rose to 89 percent in 2020 → projected 68 percent in 2022. - Tourism contributes around 25 percent to GDP. - PSIP projects: 472 central government public investment projects; median project value around SCR 3 million (USD 210,000). - Largest PSIP project: new hospital infrastructure cost SCR 540 million (USD 37.8 million, or 2.6 percent of GDP). - Nine projects have project cost above SCR 150 million (USD 10 million). - Public enterprises contributed around 27 percent of total public sector investment in 2021 and as high as 70 percent in 2019. - Assets of infrastructure‑related public enterprises around SCR 8 billion (or 380 percent of GDP), dominated by the Public Utilities Corporation. - Pre‑COVID‑19 financing: domestic financing ≈ 60 percent of total investment. - PPP capital stock (PPP contribution, PPPs): purchasing power parity capital stock from PPPs ≈ 1.6 percent of GDP. - Infrastructure access/quality indicators: hospital beds 3.6 per 1000; secondary teachers 7.2 per 1000; electricity production 4.1 kWh per 1000; internet penetration around 70 percent. - Climate finance needs: NDC total funding requirement USD 671 million between now and 2030, equivalent to 5 percent of GDP per year. - Authorities estimate adapting to climate risks would cost about USD 39 million per year (about 2.7 percent of GDP) by 2030. - Sea level rise and temperature projections (from baseline 1995–2014): temperature increase 1.7-3.2°C towards 2100 across 2‑4.5 and 5‑8.5 SSPs; historical sea level rise 5.6-6.6 millimeters per year (1993–2010); sea level could rise by 0.59-0.82 meters on average by 2100 under these scenarios. - Historical disaster damages: 1997 Flood total damages 0.5 percent of GDP; 2004 Tsunami total damages 3.6 percent of GDP; 2013 Storm total damages 0.7 percent of GDP. ### Institutional arrangements and notable institutional initiatives - Seychelles Infrastructure Agency (SIA) and Inter‑Ministerial Committee (IMC): - SIA authorized by Seychelles Infrastructure Act 2021; operational since March 2022; staff ≈ 120 (architects, engineers, project managers). - SIA functions: project development, project implementation, maintenance; works as consultant/contractor to MDAs; provides staff support to IMC which prioritizes PSIP projects. - Exemptions from SIA coverage: Department of Transport, Seychelles Land Transport Agency, self‑financing commercial PEs, Public Utilities Corporation, and public enterprises with specialist technical mandates. - IMC chaired by Minister of Lands and Housing; Vice Chair Minister of Agriculture, Climate Change, and Environment; conducts prioritization annually in February/March. - Public Enterprise Monitoring Commission (PEMC): - PEMC provides financial oversight of public enterprises; 2023 Fiscal Risk Statement reported exposure to on‑lending and guarantees to public enterprises around SR774 million (21 percent of total 2021 PE debt); PEMC annual report includes three‑year Consolidated Medium Term Financial Projections and Risks Analysis (about 83 percent of public enterprises included in 2023 report). - Procurement and tendering: - Procurement Act 2008 default open competitive tendering; 2019–2021 tender request and award statistics recorded (see Table 5 exact figures in source). - Procurement monitoring database needs fields for procurement method, total time, canceled bids; debarment mechanism exists but unused. ### Major governance, process, and capacity gaps driving capital under‑execution - Weak national and sectoral planning linkages to budgeting; sectoral plans rarely costed or monitored. - Incomplete/absent project appraisals submitted for PSIP inclusion; many projects (e.g., 84 projects costing around SCR 1.6 billion / USD 118 million, ~7 percent of GDP) included without meeting pre‑approval requirements. - No systematic project selection criteria published by IMC; approximately 43 percent of projects in the 2023 budget were not included in the 2022‑24 medium‑term budget. - Maintenance methodologies absent; asset registries incomplete and not regularly updated; Fixed Asset Management System underused. - Ex‑post independent reviews not mandatory; no systematic lessons‑learned loop. - IT systems fragmented: TIS, Visual AccountMate, Fixed Asset Management System, and many bespoke spreadsheets; new IFMIS, aid coordination, debt management, and project management systems in specification/procurement stages. - Human resource constraints: MoFNPT PIMU staffed with six analysts (excluding senior management); Economic Planning Department staffed by seven; SIA ≈ 120 staff but specialized skills shortages persist; need to tailor PIM framework to Seychelles’ small size and limited personnel. ### Priority recommendations and action plan (selected, prioritized entries preserved) - Investment Planning (High priorities) - #1 Include investment plans and their costings in the forthcoming national and sectoral plans. Priority: High. Timing examples: Immediate / Early 2023 (Annex 1 actions). - #3 Enforce the PIM Policy for preparation of appraisal information; review thresholds for determining major projects and submit major projects to rigorous appraisal. Priority: High. (Actions: require SIA to prepare appraisal information; update thresholds; enforce rigorous appraisal). - Investment Allocation (High priorities) - #8 Develop a database of appraised projects and create and apply selection criteria for prioritizing them; strengthen authorization process for projects entering the PSIP. Priority: High. (Actions include staffing PIMU to reject inadequately appraised projects; establish scoring system and a pipeline of appraised projects before the budget process). - #5 Strengthen the anchoring role of MTFF in budget preparation by identifying and mitigating sources of bias and forecast error. Priority: Medium. (Action: publish multi‑year forecast error analysis). - #6 Enforce PIMU reporting requirements and adjust PSIP to show original project cost, current project cost, and variance. Priority: Medium. - #7 Develop routine and capital maintenance methodologies for MDA assets and revise program classification to identify routine and capital maintenance. Priority: Medium. - Investment Implementation (High priorities) - #9 Make ex‑post independent reviews mandatory for major and strategic capital projects. Priority: High. (Annex 6 good practice references). - #11 Identify major and critical fixed assets managed by MDAs; update asset registries; upload information to the Fixed Asset Management System. Priority: High. - #10 Establish regulation for project management requirements, procedures for adjusting projects, progress reporting, and ex‑post audits; develop implementation plan instructions. Priority: Medium. - Climate‑Sensitive PIM (High priorities) - #13 Develop and require methodologies that include climate‑related issues in project appraisals and selection criteria; conduct EIA before budget approval. Priority: High. - #14 Summarize expenditures for climate priorities in the PPBB; ensure climate impacts are incorporated in ex‑post reviews and maintenance manuals. Priority: High. - #12 Fully integrate NDC objectives in the new NDS, sectoral plans, and building legislation; develop guidelines on climate‑smart planning and systematic costing. Priority: Medium. - #15 Prepare and publish long‑term fiscal sustainability scenarios under different climate scenarios and operationalize the Disaster Risk Management Fund. Priority: Medium. - Cross‑cutting (High/Medium) - #16 Legal Framework: modernize, consolidate, harmonize, and sequence different legal and regulatory amendments; clarify PIMU vs SIA roles. Priority: High. - #17 IT: develop a simple system to follow projects across the cycle and report PSIP at various stages; integrate into long‑term IT plan. Priority: Medium. - #18–#19 Capacity: map institutions and tailor PIM framework to Seychelles’ small size and personnel constraints; use technical assistance and training. Priority: Medium. ### IT, automation, and implementation sequencing - Current IT ecosystem: TIS (expenditure control), Visual AccountMate (accounting/reporting), Fixed Asset Management System, many bespoke spreadsheets; no planning system. - New systems in advanced specification: IFMIS (to replace TIS and Visual AccountMate), aid coordination system, debt management system, project management system; IFMIS administration and staffing challenges anticipated. - IT planning recommendations: develop top‑down IT plan prioritizing simple, inexpensive, maintainable systems; ensure interoperability and common project identification codes; implement a simple pipeline system for appraised projects prior to the annual budget. ### Climate fiscal risk emphasis and illustrative international approaches - Fiscal exposure recommendations: - Integrate climate scenarios into Fiscal Risk Statement; quantify discrete fiscal risks; prepare long‑term fiscal sustainability scenarios under different climate scenarios. - Illustrative international approaches: - UK OBR example: layered fiscal risk baselines including adaptation cost assumption 0.3 percent of GDP a year and increased disaster frequency/severity under RCP8.5. - Georgia IMF TA example: climate change could reduce GDP per capita by 13 percent by end of century and increase public debt by 18 percent of GDP relative to baseline. *Source: IMF and World Bank mission PIMA and C‑PIMA report (Preface, Executive Summary, Chapters, Annexes from 1sycea2023003).* ### Preface ____________________________________________________________________________ 5 ### Preface ### Mission and engagement - At the request of the Ministry of Finance, National Planning and Trade (MoFNPT) of Seychelles, a team from the IMF’s Fiscal Affairs Department (FAD) and the World Bank undertook a Public Investment Management Assessment (PIMA) and Climate PIMA (C-PIMA) during the period from January 18 to January 31. - Mission leadership and team: - Led by Carolina Rentería. - IMF team members: Bryn Battersby, Isabel Rial, Suphachol Suphachalasai, Trish Chiinze, and David Gentry. - World Bank team members: Kirk Schmidt and Kene Ezemanari. - High-level meetings: - Met the Minister of Finance, Mr. Naadir Hassan, at the close of the mission. - Met the Minister for Agriculture, Climate Change and Energy, Mr. Flavien Joubert, and the Minister for Lands and Housing, Mr. Billy Rangasamy. - Met the Secretary of State, Mr. Patrick Payet, at the outset of and during the mission. - Institutional consultations: - Extensive meetings with MoFNPT divisions: Financial Planning Division; Macroeconomic Forecasting and Analysis Division; Procurement Oversight Unit; Public Investment Unit; Debt Management Division; Treasury and Public Accounts Division. - Meetings with ministries, departments, and agencies involved in public investment and climate change, including: Ministry of Agriculture, Climate Change and the Environment; Ministry of Lands and Housing; Ministry of Transport; National Tender Board; Office of the Auditor General; Seychelles Infrastructure Agency; Seychelles Energy Commission; Seychelles Health Care Agency; Seychelles Land Transport Agency; Division of Risk and Disaster Management. - Meetings with public corporations: Islands Development Company; Public Utilities Corporation; Seychelles Civil Aviation Authority; Seychelles Port Authority. - Acknowledgements: - Thanks to the Seychelles government for cooperation and constructive discussions. - Special recognition to Ms. Astride Tamatave and Mr. Jude Commettant for coordinating mission activities and requests. ### Executive summary — key findings - Historical investment trajectory: - Significant public infrastructure investments in the 1990s built a relatively large stock of public capital. - Investment was largely debt-financed, pushing debt-to-gross domestic product (GDP) to 200 percent by the early 2000s. - Investment as a share of total expenditure declined from an average of around 23 percent in the 1990s to 13 percent in the 2000s. - Investment picked up in the mid-2010s but fell to below 10 percent of expenditure by the end of the 2010s for the first time in 20 years. - Current infrastructure outcomes and efficiency: - Indicators of access to infrastructure and perceived quality remain relatively high compared with other small island states and emerging market economies. - The public investment efficiency gap is around 25 percent in Seychelles. - Institutional performance (PIMA): - Seychelles performs comparably well in the design of public investment management institutions and more strongly in effectiveness. - Performance is stronger on institutional design than on actual effectiveness of implementation. - Strengths include budget comprehensiveness and ensuring availability of funding for projects. - A substantial capital budget under-execution indicates gaps in public investment management institutions. - Causes of under-execution identified: - Weakness in national and sectoral planning processes. - Challenges and gaps in appraisal and selection processes for projects entering the budget. - Limited capacity for preparing and analyzing appraisal and project information across government. - Maintenance budgeting and planning, and monitoring of public assets need improvement—particularly updating fixed asset registers and making information available in the Fixed Asset Management System. - Climate vulnerability and C-PIMA findings: - Seychelles is particularly susceptible to climate change as an island country. - The Nationally Determined Contribution (NDC) estimates total funding requirement of USD 671 million between now and 2030, equivalent to 5 percent of GDP per year. - Climate-related public investment is relatively well coordinated across central government and frameworks for climate-related risk management are relatively well-established. - Important gaps exist in appraisal, selection, and management of climate-related public investments. - Addressing these gaps would support attracting international climate finance and catalyzing green private sector investment. - Reform context and priorities: - Reforms underway include preparation of a new National Development Strategy, implementation of a new Public Investment Management Policy with new institutions, and revisions of legal and regulatory framework. - Annex 1 provides an action plan of recommendations to support reforms and close identified gaps. - Highest priorities include: - Ensuring projects are adequately appraised before selection. - Preparing criteria to guide project selection. - Defining roles and responsibilities of major players in public investment processes. - Developing national and sectoral plans with costed investment proposals and aligning these with the budget. - Recommendations should be tailored to Seychelles’ small government size, emphasizing simplicity and clarity; capacity and personnel availability should be considered. ### PIMA summary assessment — selected institutional findings and effectiveness (Table 1 highlights) - Overall patterns: - Institutional Strength and Effectiveness assessed across Planning, Allocation, and Implementation phases. - Notable strengths and weaknesses (selected entries): - A1 Fiscal targets and rules: Institutional Strength = MEDIUM. Effectiveness = MEDIUM. Reform priority = Low. - Seychelles sets targets and maintains a credible MTFF but does not have a legislated fiscal rule. - Debt-to-GDP is converging towards the target of 50 percent. The MTFF has been only a weak guide for capital expenditure. - A2 National and sectoral planning: Institutional Strength = LOW. Effectiveness = LOW. Reform priority = High. - Disjointed framework for national and sectoral planning, with no costing of plans or measurable outcomes. - Sectoral plans are neither costed nor monitored, nor affect the investment decisions of government. - A4 Project appraisal: Institutional Strength = MEDIUM. Effectiveness = MEDIUM. Reform priority = High. - PIM Policy project proposal form provides the basis for appraisal, including risk mitigation. Central support for the methodology is incomplete. - The project proposal form is often not completely filled out, which may result in approval of lower value projects. - B6 Multi-year budgeting: Institutional Strength = HIGH. Effectiveness = LOW. Reform priority = High. - Detailed multi-year capital forecasts and indicative ceilings are produced; project costs are identifiable in the budget. - 2023 ceilings matched budget, but there is under-execution and no published explanation of project cost changes. - B9 Maintenance funding: Institutional Strength = LOW. Effectiveness = LOW. Reform priority = High. - No standard methodologies for maintenance; maintenance budget is shown in the economic classification. - Cannot assess funding need for maintenance without stock of assets; economic classification undercounts funding. - C11 Procurement: Institutional Strength = HIGH. Effectiveness = MEDIUM. Reform priority = Low. - Tenders and awarded contracts are publicly available; system to monitor contracts maintained; independent review body ensures fairness. - Procurement database has limited functionality. - C12 Availability of funding: Institutional Strength = HIGH. Effectiveness = HIGH. Reform priority = Medium. - Weekly revised cash forecasts and cash release mechanisms exist; donor bank accounts are in the treasury single account. - Cash forecasts are reasonably accurate; monitoring of late payments is limited because invoice dates are not always entered into the TIS. - C15 Monitoring of public assets: Institutional Strength = MEDIUM. Effectiveness = LOW. Reform priority = High. - Accounting Manual requires MDAs maintain registries for fixed assets, but financial statements are cash basis. - Asset registries not regularly updated and information not accessible across agencies and projects. ### C-PIMA summary assessment — selected findings (Table 2 highlights) - C1 Climate-aware planning: Institutional Strength = LOW. Reform priority = Medium. - Climate change considerations are not adequately mainstreamed into the public investment planning process. - C2 Coordination between entities: Institutional Strength = HIGH. Reform priority = Low. - Climate-related public investment is well coordinated across central government, but stronger climate oversight of public enterprises is encouraged. - C3 Project appraisal and selection: Institutional Strength = LOW. Reform priority = High. - Project appraisal and selection criteria do not reference climate change, nor is there a framework to assess the climate sensitivity of PPPs. - C4 Budgeting and portfolio management: Institutional Strength = LOW. Reform priority = High. - Some climate-related investments are identifiable, but there is no systematic approach to identifying them. - Ex-post reviews are not conducted, and asset management policies do not address climate-related risks. - C5 Risk management: Institutional Strength = MEDIUM. Reform priority = Medium. - An emergency management policy exists and the coastal management plan assesses climate-related hazards. - Plans to mitigate climate-related risks are limited; budget contingency and provision for a disaster risk management fund exist. - Climate risks are only qualitatively assessed in the Fiscal Risk Statement. ### Recommendations — prioritized actions (Table 3 highlights) - Investment Planning - #1 Include investment plans and their costings in the forthcoming national and sectoral plans. Priority: High - #2 Add new NDS objective-linked performance indicators to programs in the PPBB statement. Priority: Medium - #3 Enforce the PIM Policy for preparation of appraisal information; review thresholds for determining major projects and submit major projects to rigorous appraisal. Priority: High - #4 Ensure that relevant new legislation under consideration prevent conflict of interests for regulators, promote PPP best practice, and align with the climate framework. Priority: Medium - Investment Allocation - #5 Strengthen the anchoring role of MTFF in budget preparation by identifying and mitigating sources of bias and forecast error. Priority: Medium - #6 Enforce the PIMU reporting requirements and adjust the PSIP to more easily identify project costs and variations. Priority: Medium - #7 Develop routine and capital maintenance methodologies for MDA assets and revise the program classification to identify routine and capital maintenance. Priority: Medium - #8 Develop a database of appraised projects and create and apply selection criteria for prioritizing them. Strengthen the authorization process for projects entering the PSIP. Priority: High - Investment Implementation - #9 Make ex-post independent reviews as mandatory for major and strategic capital projects. Priority: High - #10 Establish, by regulation, key project management requirements, procedures for adjusting projects, progress reporting, and ex-post audits; develop instructions for completing the implementation plan portion of the existing project proposal form. Priority: Medium - #11 Identify major and critical fixed assets managed by MDAs; update their asset registries; and upload information to the Fixed Asset Management System. Priority: High - Climate-Sensitive Public Investment Management - #12 Fully integrate the NDC objectives in the new NDS, sectoral plans, and building legislation; develop guidelines on climate-smart planning and a systematic costing. Priority: Medium - #13 Develop and require the use of methodologies that include climate-related issues in project appraisals and selection criteria; conduct EIA before budget approval. Priority: High - #14 Summarize the expenditures for climate priorities in the PPBB; ensure that climate impacts are incorporated in ex-post reviews and in future maintenance manuals. Priority: High - #15 Prepare and publish scenarios of long-term fiscal sustainability analysis under different climate scenarios and operationalize the Disaster Risk Management Fund. Priority: Medium - Cross-Cutting Issues - #16 Legal Framework: Use the existing reviews and plans to modernize, consolidate, harmonize, and sequence the different legal and regulatory amendments. Priority: High - #17 IT: Develop a plan to build a simple system to (i) follow up projects across the cycle and (ii) report the PSIP at various stages in the budget preparation. Priority: Medium - #18 Capacity: Map existing and new institutions and a proposal of the adjustments and clarifications needed in roles and responsibilities of the different actors of the system. Priority: Medium - #19 Capacity: Ensure the development of the PIM framework is customized to Seychelles’ small size and limited personnel. Priority: Medium - Note: ‘Priority’ reflects a combination of the immediate achievability of a recommendation and the importance of the recommendation. *Source: IMF and World Bank mission PIMA and C-PIMA report (Preface and Executive Summary).* ### 1. Seychelles is a high-income, small island state. Seychelles has the highest GDP per capita in ### 1. Seychelles is a high-income, small island state. Seychelles has the highest GDP per capita in ### Overview and economic structure - Seychelles has the highest GDP per capita in Sub Saharan Africa, with income exceeding the emerging market economy average and that of most other small islands states. - The economy is supported by tourism — tourism related activities contribute around 25 percent to GDP. - Intensive public investment, particularly in the 1990s, helped support and sustain high GDP per capita and enabled private sector investment in tourism, fisheries, and finance. ### Public investment history, capital stock, and fiscal outcomes - Public investment in the 1990s was substantial and debt-financed: - Public capital stock reached around 250 percent of GDP by the mid-2000s. - Public capital stock reached 250 percent of GDP at its peak around 2005, around $50,000 per capita in purchasing power parity terms. - Debt dynamics and consolidation: - Public investment in the 1990s pushed Seychelles debt-to-GDP to 200 percent by the early 2000s. - Debt servicing reached 25 percent of government revenue (mid-2000s). - Through primary balance surpluses, debt restructuring, and international support, debt-to-GDP fell from over 200 percent to 60 percent by the end of 2018. - Debt-to-GDP rose to 89 percent in 2020 and returned to a projected 68 percent in 2022. - Public investment trends: - Public investment decreased in the early 2000s as the government shifted toward fiscal consolidation and debt reduction. - Public investment fell further during the COVID-19 crisis. - Investment as a share of total expenditure fell from an average of around 23 percent in the 1990s to 13 percent in the 2000s, rose in the mid-2010s, then fell to below 10 percent of expenditure by the end of the 2010s. - The government is planning and forecasting an increase in public investment in the medium-term budget framework 2023-2025. ### Size, composition, and financing of public investment projects - Project counts and sizes: - There are 472 central government public investment projects in the Seychelles Public Sector Investment Program (PSIP), with a median value of around SCR 3 million (USD 210,000). - The largest project in the PSIP is new hospital infrastructure with a project cost of SCR 540 million (USD 37.8 million, or 2.6 percent of GDP). - There are nine projects with a project cost above SCR 150 million (USD 10 million). - Composition and financing: - Public investments are primarily funded through the central government; no sub-national governments exist. - Public enterprises (PE) make up a substantial component of public sector investment: - Public enterprises contributed around 27 percent of total public sector investment in 2021, and as high as 70 percent in 2019. - Assets of infrastructure-related public enterprises are around SCR 8 billion (or 380 percent of GDP), dominated by the Public Utilities Corporation. - Pre-COVID-19 financing: domestic financing made up around 60 percent of total investment, with the residual largely financed through foreign grants. - Exceptions: 2019 saw substantial foreign loans for investment; during COVID-19 the government relied more heavily on foreign grants. - Public private partnerships (PPPs) have been limited: the purchasing power parity capital stock from PPPs is equivalent to only around 1.6 percent of GDP. ### Efficiency and quality of infrastructure - Access and output indicators: - Hospital beds: 3.6 per 1000 people. - Secondary teachers: 7.2 per 1000 people. - Electricity production: 4.1 kWh per 1000 people. - Over 90 percent of the population has access to improved drinking water sources. - Internet penetration rate: around 70 percent. - Transportation infrastructure includes a network of paved roads, airports (including on remote outer islands) and seaports. - Perceived infrastructure quality and rankings: - Seychelles ranked 53rd out of 190 countries in "ease of getting electricity" (2020). - World Economic Forum 2020−21: 42nd out of 141 in "quality of electricity supply"; 63rd out of 141 in "quality of overall infrastructure". - Public investment efficiency: - The public investment efficiency gap in Seychelles is around 25 percent (Figure 18), indicating scope to improve quality and accessibility of infrastructure given existing capital stock per capita. - A related figure shows an Efficiency Gap of 29% (Figure 19). - The gap is slightly smaller than the average for emerging market economies, but slightly larger than for other comparable small island economies. ### Public Investment Management Assessment (PIMA) — framework and key institutional findings - PIMA framework: - The PIMA evaluates 15 institutions across three major stages of the public investment cycle: planning (investment levels and sustainability), allocation (sectors and projects), and delivery (productive and durable assets). - For each institution, three indicators are scored on institutional design, effectiveness, and reform priority. - Overall assessment highlights: - Institutional design tends to be stronger than effectiveness in Seychelles. - Sharpest design-effectiveness gaps are in: - Multi-year budgeting, where capital expenditure is under-executed. - Appraisal, procurement, and monitoring of public assets, where procedures are not fully implemented. - Some institutions perform effectively despite weaker formal design: - Debt-to-GDP has trended lower consistent with fiscal policy targets despite the absence of fiscal rules. - Portfolio management is undertaken well, despite absence of formal requirements. *Source: IMF | Technical Report (excerpts from 1sycea2023003).* ### 17. Seychelles compares well to other small island states and emerging market economies on ### 17. Seychelles compares well to other small island states and emerging market economies on ### Comparative strengths and weaknesses - Strengths in design: coordination mechanisms; appraisal framework; budgeting; procurement; project funding. - Weaknesses in design: national and sectoral planning. - Multi-year budgeting: - Design strength: multi-year budgeting framework is sound. - Effectiveness weakness: effectiveness is considerably weaker relative to other island states and emerging market economies, reinforced by substantial under-execution in the capital budget. - Identified causes of capital budget under-execution: - Weakness in national and sectoral planning processes and their linkages to budgeting. - Gaps in appraisal and selection of projects. - Limited capacity for preparing and analyzing investment information across government. ### Key recommendations (high-priority) - Ensure projects are adequately appraised before selection for the budget. - Prepare selection criteria to guide project selection. - Define roles and responsibilities of major players in public investment management (PIM) processes. - Develop and align national and sectoral plans with costed investment proposals within the budget. *IMF Staff assessment* --- ### C. Investment Planning — Summary of institutional assessment and priorities - Overall finding: Seychelles is particularly strong in institutions related to budget preparation and availability of funding for projects, but weaker effectiveness and substantial capital budget under-execution reveal gaps across PIM institutions. - Reform emphasis: small changes across many institutions would improve design and effectiveness; priority actions focus on appraisal, selection criteria, role clarity, and aligning plans with costed investment proposals. ### 1. Fiscal Targets and Rules (Strength—Medium; Effectiveness—Medium; Reform Priority—Low) - Institutional features: - No permanent fiscal rule in the Public Financial Management (PFM) Act, the Public Debt Management Act, or subsidiary law specifying a numerical debt target/ceiling. - Public Debt Management Act authorizes the Minister of Finance to specify fiscal objectives via a 3-year rolling Debt Management Strategy presented with the budget. - The 2019 Debt Management Strategy set the public debt objective to achieve a debt-to-GDP ratio of 50 percent by 2020. - The 2023 Debt Management Strategy revised the target year to 2026. - A detailed MTFF is produced and approved by Cabinet as part of the Medium-Term Expenditure Strategy; it differentiates current and capital spending and is used as the basis for selecting new projects for the PSIP. - Performance and issues: - Debt-to-GDP was converging to objectives established prior to COVID-19 and forecasts were broadly in line with outcomes. - The MTFF is not published, though first-round budget ceilings for MDAs are drawn from it. - Prior to 2023, budgeted capital expenditure varied considerably from the first ceilings; the link was strengthened in 2023 with a new budget preparation calendar. - Recommendation to strengthen MTFF: - Regularly publish analysis of multi-year forecast errors of key fiscal aggregates (revenue, expenditure, fiscal deficit). - Explain forecast errors in budget documents (e.g., Fiscal Risk Statement) to identify and mitigate bias and strengthen MTFF anchoring for capital budgeting. ### 2. National and Sectoral Planning (Strength— Low; Effectiveness— Low; Reform Priority—High) - Current status: - Disjointed framework with no costing of sectoral investment plans and no inclusion of measurable outcomes and targets. - MoFNPT oversaw NDS 2019-2023; sectoral plans envisaged with NDS were derailed by COVID-19. - Most MDAs lack publicly available sectoral plans; existing plans are past their lifespan (examples: Education Medium Term Strategy (2018-2022); National Health Strategic Plan (2016-2020)—the latter remained in draft). - Neither NDS 2019-23 nor outdated sector plans include public investment projects and respective costs; performance information is not contained in the strategies. - Public Investment Management Policy acknowledges limited linkage between public investment projects and sector/national priorities. - Impacts: - No costing of investment plans in the NDS or outdated sectoral plans; plans are not monitored nor do they affect investment approval. - NDS cites misalignment of strategy lifespan (5-years) with budgeting framework (3-years) as a cause of not being costed. - Some spatial masterplans and sub-sector plans provide investment information (example: Victoria masterplan, Coastal Management Plan, e-Mobility Plan), but these are not well-integrated and have sectoral gaps. - The PPBB lists outcomes and indicators for programs and connects to PSIP but is not linked to performance measures for achieving national strategy objectives. - Greater Victoria Masterplan highlights: - Greater Victoria accounts for 29 percent of the total population of Seychelles. - Victoria Masterplan 2040 identifies 15 key projects; Project 1 (Ile Aurore) includes infrastructure elements (1500 new homes; community hub; schools and sports pitches; a hotel and marina; an intra-island road; waterfront and beaches; green spaces; pedestrian and cycle routes; wastewater treatment plant). - Masterplan projects are assessed, phased, prioritized, assigned to agencies, and linked to possible financing sources, but they are not costed. - Ongoing reforms and opportunities: - New NDS 2024−28 is being drafted; portfolio-based sector strategy plans are being prepared concurrently and expected to be published in March. - MoFNPT plans to align NDS, portfolio sector plans, and agency master plans and to ensure costed investment plans are included in portfolio sector plans. - Draft National Strategic Planning Guidelines (October 2022) include identification of investments and a “fiscal impact assessment for strategic interventions” as part of Phase 4 in preparing sector strategic plans. - Government plans to introduce performance indicators in the PPBB with adoption of NDS 2024-28 to evaluate consistency of public investment program with sectoral and national priorities. - Recommendation priority: - Use drafting of NDS 2024−28 and PPBB improvements to strengthen planning framework quickly, ensure sectoral plans are costed, include measurable outcomes, and link to budget and PSIP. ### 3. Coordination Between Entities (Strength— High; Effectiveness— High; Reform Priority—Low) - Institutional setup: - No subnational governments; districts funded centrally and not autonomous. - Contingent liabilities from public entities are reported to central government and published. - Public Enterprise Monitoring Commission (PEMC) provides financial oversight of public enterprises and reports to MoFNPT. - PEMC reports on capital investment projects self-financed by public enterprises presented in PSIP. - Regular oversight reports including contingent liabilities are prepared for the Ministry of Finance and feed into the Fiscal Risk Statement. - Fiscal risk reporting: - The 2023 Fiscal Risk Statement reported total exposure to on-lending and guarantees extended to public enterprises of around SR774 million (21 percent of total 2021 PE debt). - PEMC produces an annual report with three-year Consolidated Medium Term Financial Projections and Risks Analysis on PEs and a Public Enterprise Fiscal Risk Report quantifying contingent liabilities where possible. - In the 2023 PEMC report, about 83 percent of public enterprises are included; of 30 PEs, four are in the financial sector and one is said to be winding down. - The MoFNPT publishes an annual Fiscal Risk Statement presented with the Budget, summarizing public enterprise risks and covering explicit and implicit contingent liabilities. - Good practice and suggested improvements: - Reporting of PE fiscal risks in budget documentation is good practice and should continue. - Suggested enhancements: include summary heat maps of key financial ratios and risk ratings, and specific stress tests of individual PEs undertaking large capital projects. - COVID-19 likely changed contingent liabilities and risk profiles; these should be assessed and reported specifically in the Fiscal Risk Statement. ### 4. Project Appraisal (Strength— Medium; Effectiveness— Medium; Reform Priority—High) - PIM Policy and appraisal requirements: - Public Investment Management Policy issued by MoFNPT stipulates appraisal methods and mandates a standard project proposal form covering: - i) project design and services and alternatives considered, - ii) project costs, financing, risks, and externalities, - iii) details of project implementation. - The standard form is required for all projects costing over SCR 1 million (about USD 70,000); this defines “major projects.” - For large and complex medium-sized projects, an integrated appraisal is required (technical, organizational, contractual, other features) to maximize net present value; no formal published thresholds for such projects in the PIM Policy, though in practice SCR 10 million is used. - Risk assessment and mitigation plans are part of standard appraisal for major projects. - SIA provides central support for costing and scoping projects not considered large and complex for ministries within its purview, primarily offering architectural, engineering, and project management expertise; SIA does not provide technical support to assess project objectives and benefits. - Implementation gaps and effects: - Project proposal forms submitted to MoFNPT are often incomplete, suggesting appraisals do not always filter out low-value projects. - Many projects submitted for inclusion in the budget lack required appraisal documentation per the PIM Policy. - Low monetary threshold for defining major projects reduces attention paid to larger projects that merit deeper analysis. - Many benefits of appraisal are realized through other means: SIA’s engineering/project management role; local area masterplans that assess social, economic, natural resource impacts and risks for groups of interdependent projects, though masterplans do not address specific financial impacts. - Recommendation priorities: - Improve completeness and quality of project appraisal documentation before budget inclusion. - Establish and publish clear thresholds and procedures for rigorous integrated appraisals of large and complex projects. - Enhance SIA support to include assessment of project objectives and benefits, not only technical scoping and costing. - Leverage masterplans while ensuring financial impacts and investment costs are explicitly addressed. *Source: IMF Staff* ### Box 4. The Seychelles Infrastructure Agency and the Inter-ministerial Committee ### Box 4. The Seychelles Infrastructure Agency and the Inter-ministerial Committee ### Overview and mandate - The Seychelles Infrastructure Agency (SIA) and the Inter-Ministerial Committee (IMC) were created by the Seychelles Infrastructure Act 2021 and became operational in 2021. - SIA was authorized in the Seychelles Infrastructure Act 2021 and became operational in March 2022. - Main SIA functions: project development, project implementation, and maintenance. - SIA provides staff support for the IMC, which is charged with prioritizing projects for the PSIP. - SIA covers projects and activities under the responsibility of budget public bodies, with specified exceptions (Department of Transport, Seychelles Land Transport Agency, self-financing commercial PEs, Public Utilities Corporation, and public enterprises with specialist technical mandates). - Operational modality: SIA works as a consultant or contractor to MDAs. MDAs submit project concept notes to SIA; SIA develops full project designs to meet MDA objectives; once budget-approved, SIA implements projects through procurement, construction oversight, and completion certification; SIA carries out routine and capital maintenance under contract with MDAs. - Funding for projects and maintenance carried out by SIA is appropriated in the respective MDA budgets, keeping funding, supported projects and activities, and accountability together. ### Institutional design, staffing, and centralization rationale - Reform essence: centralization to apply specialized functions consistently, improve professionalism, and deploy limited staff resources more efficiently. - Seychelles context: infrastructure functions were previously spread over many MDAs in small offices. - Staffing: SIA is staffed by around 120 officials, consolidated from MDA infrastructure staff and new hiring, comprising mostly architects, engineers, and project managers. - IMC principal functions: - Oversee the work of the SIA. - Review project proposals prepared by SIA in consultation with MDAs and prioritize them consistent with national development strategies. - IMC Chair and Vice Chair: chaired by the Minister of Lands and Housing; Vice Chair is the Minister of Agriculture, Climate Change, and Environment. - IMC conducts prioritization annually in February / March as part of the normal budget calendar. ### Project appraisal and selection - The PIM Policy standard appraisal form is largely descriptive; completing the form aligns with SIA responsibilities for project development and management. - Appraisal information is necessary for the IMC to prioritize projects; SIA can act as a gateway to ensure PIM Policy–mandated appraisals are completed before IMC review and prioritization. - MoFNPT, Public Investment Management Unit (PIMU) retains responsibility for setting appraisal methodology and conducting reviews when projects are submitted for review. - Appraisal methodologies should be better targeted to the size and complexity of projects. - The current monetary threshold for designating a major project is too low; it should be increased to justify significant appraisal resources and be easily verified so rigorous appraisals are conducted for major projects. ### Alternative infrastructure financing — legal, regulatory, and oversight issues - Legal and regulatory framework does not promote effective competition in infrastructure markets; oversight of public enterprises is centralized by the MoFNPT by law; PPP-specific legislation is pending revision and approval. - Market structure: telecommunications fully privatized; major infrastructure markets (electricity, transport, water) lack significant private sector involvement. A few regulatory entities exist; the Fair Competition Act (2009) governs private sector activity, but regulators are not independent and are fully budget-funded. - PPPs: no PPP strategy; PPP legal/regulatory framework drafted but pending revision and approval. - Oversight of public enterprises: PEMC (created by law in 2013) provides fiscal oversight of 27 public enterprises. All planning and infrastructure investment of public enterprises is coordinated and shared with government, even where no government funding is used. PEMC mandated to advise government on financial performance and issue relevant publications. Public enterprises share investment plans with Cabinet and parent ministry for review; projects implemented using own revenues do not require approval. Project information is shared with SIA on a voluntary basis when SIA support is required. - Practical issues: - Regulatory conflict of interest: Seychelles Energy Commission combines regulatory and project implementation functions by law. The Energy Act allows Public Utilities to regulate themselves, creating uncertainty and regulatory failures. - Planned legislative changes: authorities plan two complementary draft acts—(i) Multisectoral Regulation Act to transform the Seychelles Energy Commission into a regulator for water, electricity and sanitation; (ii) Electricity Act to eliminate current conflict of interest and address gaps. Both acts are in draft form. - PPP practice: limited to a few small, ad-hoc projects using PFM and Procurement Acts; a few projects in preparation with SIA support. Existing legislation allows PPPs but lacks clarity on implementation, accounting, and reporting. No uniform PPP screening or financial modeling tool, no specific PPP reporting requirements, no PPP strategy. Draft PPP legislation existed in 2017 and 2019 but were not adopted, producing inconsistent MDA interpretations and requests for special waivers. - PEMC oversight constraints: delays by some public enterprises in submission of audited financial statements reduce PEMC effectiveness. Authorities plan to address weaknesses in upcoming Public Enterprise Act revisions, including strengthening PEMC’s ability to set performance targets and penalize non-compliance with reporting requirements. ### Key recommendations (from the Box and surrounding analysis) - Recommendation 1: - Implement the Draft National Strategic Planning Guidelines; prepare the new NDS 2024-26 and introduce portfolio sector plans concurrently. - Include investment plans and their costings in the new national and sectoral plans. - Recommendation 2: - Once NDS objectives and performance measures are set, add these linkages to programs in the PPBB statement. - Recommendation 3: - Enforce PIM Policy for preparation of appraisal information. - Review thresholds for determining major projects and submit major projects to rigorous appraisal. - SIA should ensure projects submitted to MoFNPT are properly appraised. - Recommendation 4: - Ensure that new legislation under consideration for the energy sector, the draft Act for PPPs and upcoming amendments to the PFM and Procurement Act prevent conflict of interests for regulators, promote PPP practices in line with good international practices, and align with the country’s climate smart framework. ### Investment allocation and budgeting highlights - Multi-year budgeting: - Three-year projections of total capital spending for general government are presented by ministry in budget summary tables and detailed in Programme Performance Based Budget Statements. - Multi-year indicative ceilings are provided at program and ministry level; multi-year ceilings are first issued in March. - Ceilings are indicative and may be amended during budget consultations and project submissions. - Projections for project costs are included in the PSIP, disaggregated by external and domestic funding sources; cumulative costs to date and forecast costs over the medium term are presented, enabling calculation of total costs. - Persistent capital under-execution: aggregate capital budget allocations have persistently deviated from the budget. In the three years prior to COVID-19, capital allocations were around 40 percent below those budgeted. - The 2022 Fiscal Risk Statement highlighted capital under-execution as a significant concern and risk, attributing under-execution to procurement delays, poor project planning, and lack of human resources and capacity. - Recommendation to enforce PIMU reporting processes established in the PIM Policy and to publish total project costs, year-to-year cost variations, and short explanations for variations in the PSIP. - Budget comprehensiveness and unity: - Most capital spending projects are delivered through the budget, irrespective of financing sources, and recurrent and capital budgets are prepared and presented together. - Only one extrabudgetary entity exists. - Budget documentation is comprehensive, including most externally funded capital projects and capital projects undertaken by public corporations. - Two transaction types where acquisition of fixed assets may not be captured in budget documents: (i) capital projects externally funded through grants with disbursements delivered directly to private developers; (ii) capital grants delivered in kind. These irregularities were recognized in the 2021 annual report of the Auditor General. - Budgets should ensure MoFNPT has full access to information on acquisition of fixed assets regardless of financing source and disclose such information in fiscal reports and notes to cash-based annual financial statements. - Budgeting for investment: - Information on future commitments for capital projects is available for a limited horizon. - Transfers from capital to recurrent budgets (virements) are allowed by the 2014 PFM regulation with authorization of the MoFNPT’s Comptroller General, without quantitative restrictions. - No provisions to carry forward unused appropriation balances to the next fiscal year; no legal requirement to provide total costs of major capital projects in budget documents. - Practice: major capital projects are well-protected during budget implementation; virements from capital to recurrent budgets have been marginal over the past 5 years, averaging 1.8 percent of total capital spending. - PSIP is comprehensive, consistent with the medium-term budget framework, reviewed and approved by Cabinet, and disclosed to the National Assembly for information. Capital Projects Progress reports submitted quarterly by MoFNPT to Cabinet include total project cost information for some implementing bodies. - There is no formal mechanism to ensure ongoing projects are given priority over new projects, but in practice spending agencies generally prioritize ongoing projects relative to new ones and there are no examples of major ongoing projects receiving less funding than their needs. *Source: IMF staff* ### 42. Information of full project cost for major capital projects should be reported by ### 1sycea2023003 - 42. Information of full project cost for major capital projects should be reported by ### Reporting of full project cost for major capital projects - Finding: Information of total cost for capital projects is disclosed only for some government entities in the Capital Projects Progress reports submitted by the MoFNPT quarterly to Cabinet. - Finding: Total cost of on-going capital projects is critical for the government to decide whether it can afford new projects and its related future commitments. - Reference: The report notes that the disclosure gap is discussed in Box 6 in Institution 13. ### Maintenance Funding (Institutional Strength: Low; Effectiveness: Low; Reform Priority: High) - Finding: No standard methodologies are in place for estimating the need and related cost of routine or capital maintenance; maintenance spending is only partially measured in the budget. - Finding: There are no national standard methodologies for maintenance adaptable to specific classes of assets. - Institutional arrangements: - The SIA has been assigned responsibility for routine and capital maintenance of the infrastructure of agencies under its responsibility. - MDAs will budget for maintenance; the SIA will carry out the work under contract. - Some major MDAs not covered by SIA, such as the Ministry of Transport and the Seychelles Land Transport Agency, do not have formal maintenance standards. - Measurement and classification issues: - Capital maintenance needs are not currently included in national or sectoral plans. - The economic classification is used to identify routine and capital maintenance, but this is insufficient. - Example: If government employees are used for maintenance and personnel costs are classified under maintenance, the total wage bill is distorted; conversely, if labor cost is under personnel, maintenance cost is underestimated. - Asset information constraints: - An accurate inventory of assets is not available (see Institution 15), so budget funding compared to replacement value cannot be calculated. - Given Seychelles’ small stock of infrastructure, informal methods (age, visual inspections, cumulative minor problems) are likely adequate for capital maintenance but not for routine maintenance. - The Ministry of Transport maintains a laboratory to analyze materials and soils and plans to enhance its ability to measure the condition of roads and bridges, but it does not have published standards against which laboratory results are compared. - Recommendation summary: - Maintenance standards for routine and capital maintenance should be adopted and the program classification should be used to better measure maintenance costs. - SIA should develop routine and capital maintenance standards for major asset classes it oversees and include methods for estimating the cost of maintenance over time. - SIA should work with MoF to introduce maintenance-related codes in the program classification of MDAs so total costs of routine and capital maintenance can be reported by broad asset type. - Ministry of Transport could establish a program code to identify capital maintenance projects separately from new projects. - Improvements in the asset registry would promote timely conduct of maintenance. ### Project Selection (Strength— Medium; Effectiveness— Medium; Reform Priority— High) - Institutional context: - Seychelles Infrastructure Act 2021 requires major projects to be reviewed centrally by the IMC, a specialized agency independent of the MoFNPT. - The IMC does not review all major projects submitted for budget funding because some public bodies are exempt under the Act. - The committee does not publish its selection criteria. - Other entities (e.g., Ministry of Transport, Seychelles Land Transport Agency) prioritize projects without published selection criteria. - The PFM Act 2012 and the PIM Policy authorize MoFNPT to review projects submitted by MDAs for budget funding. - Process overview (Box 5 summary): - SIA, in consultation with line ministries, prepares project proposals for MoFNPT. - MDAs may submit project requests exceeding the funding ceiling; requests are reviewed in March by MoFNPT and IMC. - PIMU undertakes cost-benefit analysis for major projects and reviews completeness for smaller projects. - Between March and July MDAs revise proposals and negotiate priorities and ceilings with MoFNPT. - In September the final PSIP (consistent with the proposed budget) is presented to Cabinet for final selection. - The pipeline for selection consists of all projects proposed by MDAs; the PSIP is defined as projects funded within the ceiling for the budget year. - Findings on selection quality and consequences: - Selection of poorly appraised projects, many not in the prior year medium-term budget, hinders project execution. - Approximately 43 percent of projects in the 2023 budget year were not included in the 2022-24 medium-term budget. - 84 projects with total project costs of around SCR 1.6 billion (USD 118 million or around 7 percent of GDP) are included in the PSIP but have not gone through the pre-approval requirements. - In the 2023 budget, around 11 percent of the appropriated capital expenditure was for projects that had not met pre-approval requirements. - Externally funded projects comprised 71 percent of the capital budget in 2022. - These practices are major contributors to low execution rates for capital projects. - Counterbalancing factors: multilateral development partners typically employ rigorous analytical methods; national and local masterplans have been useful for sequencing projects; public utilities have well defined capacity measures. - Recommended steps to improve selection: - Projects that are not adequately appraised should not be eligible for selection; PIMU must exercise quality control; MoFNPT authority to reject poorly appraised projects should be stated in the budget circular. - Establish selection criteria by MoFNPT, e.g., project scoring systems to rank projects numerically (an example is noted in Annex 5). - Create a project pipeline separate from annual budget requests by preparing a list of appraised projects before the annual budget process begins (i.e., before January). - Develop a simple information system to support the list of appraised projects (example: Rwanda’s simple excel-based system). - Fund large and complex projects in two sequential appropriations: first for feasibility study, detailed design and accurate cost estimates; second for construction of the fully evaluated project. ### Recommendations (Issues and specific recommendations) - Issue: Capital expenditure is persistently under-executed, which can lead to poor prioritization of resources. - Recommendation 5: While the main causes of under-execution are in the planning, appraisal, and selection processes, the anchoring role of MTFF in budget preparation could also be strengthened by identifying and mitigating sources of bias and forecast error and publishing these results. - Issue: Total project costs and variations from year to year are available for Seychelles’ major capital projects, but they are not systematically compiled nor disclosed in the budget documentation. - Recommendation 6: Enforce the PIMU reporting requirements and add columns to the PSIP that show the original project cost, the current project cost, and the variance, drawing on the underlying PSIP database. - Issue: There are no maintenance methodologies to determine maintenance needs, costs, and optimal maintenance services. The amount of funding for routine and capital maintenance cannot accurately be identified in the budget. - Recommendation 7: SIA to develop routine and capital maintenance methodologies for MDA assets under its purview; and MoFNPT to revise the program classification to identify routine and capital maintenance. - Issue: Selection of projects that are not ready for execution is a key cause of under-execution of the capital expenditure budget. - Recommendation 8: Develop and maintain a list of appraised projects and create selection criteria for prioritizing them. Enhance and enforce the authorization process for projects entering the budgeted PSIP. ### Procurement (Strength— High; Effectiveness— Medium; Reform Priority— Low) - Legal/institutional framework: - The 2008 Procurement Act requires open competitive tendering as the default option, regular publication of tender awards, and timely handling of complaints. - The Procurement Law is supported by a comprehensive procurement policy from 2014 and is regularly amended. - Approval thresholds for procurement are appropriate for Seychelles (Table 4; Source: Act 33 – Public Procurement Amendment 2022). - All challenges must be resolved within 35 days; final decisions are binding and must be published. - Practice and monitoring: - Procurement is largely competitive: in 2021, 75 percent of contracts awarded via open tender and 22 percent via direct bidding (Table 5). - The National Tender Board maintains a spreadsheet tracking contracts awarded but lacks fields for procurement method, total time, or canceled bids. - In 2015, three challenges were received and resolved; none were resolved in the required 30-day period (Table 6; Source: 2016 PEFA). - The debarment mechanism exists but has not been used; procuring entities do not enter complaints on poor contractor performance, limiting the ability to blacklist contractors. - Data and rule improvements suggested: - Update the procurement database to improve reporting and analytical functionality for the National Tender Board. - Amend the Procurement Act to allow mandatory triggers for investigations in the event of poor contractor performance, enabling the Procurement Oversight Unit to initiate investigations proactively. - Key procurement tables (as reported) - Table 4. Procurement thresholds (summary categories provided in source; Source: Act 33 – Public Procurement Amendment 2022). - Table 5. Tender Requests and Results - 2019: Total Project Request 787; Total Approved Request 612; Total Approved Request under Open Tender Method 414; Total Approved Request under Limited Bidding 110; Total Approved Request under Direct Bidding 88; Total Deferred Request 145; Annulments 6; Total Rejected Request 22; Total Termination 2. - 2020: Total Project Request 996; Total Approved Request 745; Total Approved Request under Open Tender Method 495; Total Approved Request under Limited Bidding 170; Total Approved Request under Direct Bidding 84; Total Deferred Request 191; Annulments 21; Total Rejected Request 32; Total Termination 3. - 2021: Total Project Request 562; Total Approved Request 325; Total Approved Request under Open Tender Method 245; Total Approved Request under Limited Bidding 8; Total Approved Request under Direct Bidding 72; Total Deferred Request 199; Annulments 30; Total Rejected Request 7; Total Termination 1. - Source: National Tender Board Annual Report 2021. - Table 6. Procurement Challenges, Results, and Timeframe (procuring entities and dates listed; Source: 2016 PEFA). - Ministry of Land Use and Housing: Complaint Filed 13-Mar-15; Resolution Date 24-Apr-15. - Ministry of Education: Complaint Filed 9-Dec-15; Resolution Date 12-Feb-16. - Financial Services Authority: Complaint Filed 24-Dec-15; Resolution Date 12-Feb-16. ### Availability of Funding (Institutional Strength: High; Effectiveness: High; Reform Priority: Medium) - Cash management practices: - Cash-flow forecasts prepared weekly; system in place since 2010. - Annual cash plans prepared at fiscal year start and updated weekly by the Chief Accountant. - Monthly budget expenditure estimates made by MDAs at fiscal year start and updated in the mid-year review. - Cash forecasts used by the Central Bank of Seychelles for treasury single account liquidity management and domestic financing. - Quarterly budget allocations control spending during the year; allocations are not adjusted to ration cash. - TIS allows recording commitments, but the practice is not enforced. - Strong payment mechanisms: purchase orders required, treasury to maintain register of unpaid invoices, payment to be made within 20 days of invoice receipt, constitutional provision allows releases more than appropriations in unusual cases. - By MoF instruction, all budget expenditures must go through the treasury single account unless otherwise authorized by the Minister of Finance. - All but one externally financed project account are held in the central bank and are part of the treasury single account. - Effectiveness and constraints: - Cash is available when needed for domestically funded and externally financed projects; delays in payments occur for other reasons. - Cash forecasts are reasonably accurate; quarterly allocations cover the quarter and may be revised. - Project execution rates have been low, reducing aggregate cash demand relative to the budget. - Main effectiveness issue: MoF’s ability to know if arrears are developing. - Mechanisms to ensure timely payment do not work well: purchase orders not always used; invoice dates not universally entered into the TIS, preventing reports on the age of payables. - Evidence of arrears: vendors occasionally complain to the treasury about not being paid. - Authorities recognize arrears have occurred and have been an issue in recurrent budget spending, not project spending. *Source: IMF Technical Report content from the provided PDF unit.* ### 54. The authorities recognize limitations in the system of expenditure control and are planning ### 1sycea2023003 - 54. The authorities recognize limitations in the system of expenditure control and are planning ### Expenditure control, IFMIS, and arrears reporting - Authorities plan a new Integrated Financial Management Information System (IFMIS) to improve information flow between PFM functions, reduce duplicate data entry, and allow for greater control using required fields and multiple approvals. - Caution: "controls in information systems can always be turned off." Prior to implementing a new IFMIS, the MoF must identify whether current shortcomings are due to system features or users' use of the system. - Example of an existing system capability gap: invoice dates are not entered into the TIS, yet "there is no technical reason why invoice dates cannot be entered into the TIS" to allow close monitoring of past due payments. - Near-term arrears reporting improvement: MoFNPT should ensure that dates for all invoices are entered into the existing TIS even before the new IFMIS becomes operational. ### Portfolio management and oversight (Strength—Medium; Effectiveness— Medium; Reform priority: High) Findings: - Major capital projects are centrally monitored; funds cannot be reallocated between projects that fall under separate appropriations. - MoFNPT’s PIMU compiles monthly and quarterly progress reports on capital projects in line with the 2014 PFM regulation. - Quarterly reports are submitted by the MoFNPT to Cabinet to inform decision making. - The SIA, established in 2021 (operational since March 2022), monitors several capital projects as part of advisory services to MDAs but its reports are not published. - IDC implements and manages infrastructure projects in the outer islands and reports financial performance and progress of capital projects to the PEMC. - Reallocations of funds between projects are allowed within one appropriation, but not for projects that fall under separate appropriations; funds can be reallocated between appropriations only through a supplementary budget as prescribed in the 2014 PFM Act and related regulations. - Legal/regulatory framework does not require government entities to conduct ex-post reviews of capital projects that have completed the construction phase. Details on reporting: - PIMU monthly reports: mainly internal oversight purposes. - PIMU quarterly reports: consolidated information on project financial performance and physical progress for capital-intensive MDAs; submitted to Cabinet; neither monthly nor quarterly reports are published. - Quarterly reports include: overall status of project implementation by source of financing, brief analysis of execution rates and contributing factors, and detailed information on individual capital project data following a standard template. - Not all MDAs provide complete information to PIMU, particularly on total project costs (contract values). - Source example: Quarterly report Q3 2022. SIA note (footnote): - SIA established in 2021 under the 2021 SIA Act; operational since March 2022; advisory services from project design to contract management; mandate currently limited mainly to housing sector and excludes major roads, ports, airports, and public utilities; monitoring function still being developed; produces internal management reports; not expected to compete with PIMU centralized monitoring. ### Need for ex-post project reviews - Current practice: ex-post reviews are not conducted by government entities; no lessons learnt are systematically incorporated into new projects. - Recommendation direction: Formalize independent ex-post reviews for major capital projects as intrinsic to the investment life cycle to improve design, costing, and implementation of future projects. - Legal/regulatory suggestions: - Provide a clear process to identify major and critical projects subject to ex-post reviews. - Specify the mandate to enforce MDAs to carry out ex-post reviews in a timely, systematic, and consistent manner. - Provide clear guidance on ex-post review contents (e.g., project costs, deliverables, outputs). - Ensure ex-post reviews are done by an independent party to avoid conflicts of interest. - Implementation options suggested: - Include requirement for independent ex-post project reviews in the upcoming revision of the PFM Act. - Mandate PIMU at MoFNPT to enforce ex-post reviews and ensure findings inform planning and budget cycles. - Independence can be achieved by SIA conducting reviews of projects where it was not involved, IDC conducting reviews given its project experience, or using external independent consultants (noting potential high costs). - Annex 6 referenced for international good practices. ### Management of project implementation (Strength— Medium; Effectiveness— Medium; Reform Priority— Medium) Findings: - PIM Policy and the Public Financial Management Regulations 2014 require preparation of project implementation plans before budget approval but do not require assignment of a project manager. - The Public Financial Management Regulations 2014 allow project adjustments but do not identify triggers or procedures for adjustments. - The PIM Policy stipulates a fundamental review is required if project costs increase more than 20 percent, or demand declines by 20 percent. - Procurement Act 2008 allows for contract adjustments of up to 7.5 percent by the procuring entity, or more if approved by the authorizing entity such as the National Tender Board. - No legal or regulatory requirement exists for a project-focused ex post external audit; Auditor General has authority but is not required to perform project audits. Projects may be audited as part of an annual MDA audit. - In practice: project managers are often appointed and project audits performed selectively; project implementation plans are often not prepared before budget approval and frequently omit major topics (roles and responsibilities, major tasks, schedule, budget, necessary resources, major risks, key success factors, reporting, document management). - Ministry of Transport has a formal project adjustment process using a project manager proposal to an internal Vetting Committee; no project audits conducted in the last two years. SIA role: - Creation of SIA is a major step to improve project management, but SIA does not implement every project. - Need for a comprehensive regulatory framework specifying key requirements: appointment of a project manager, reporting, triggering events and adjustment procedures, ex post financial audits for large projects (e.g., "the five largest projects by cost completed or prematurely terminated in a year"). - Existing PIM Policy project proposal form implementation requirements are too general; developing instructions for preparing the implementation section is recommended. ### Monitoring of public assets (Strength—Medium; Effectiveness— Low; Reform priority: High) Findings: - The 2018 Accounting Manual requires MDAs to maintain asset registries and compile government annual financial statements in line with cash-basis International Public Sector Accounting Standards. - Coverage includes all ministries, departments, budget-dependent agencies, and public corporations covered by the 2013 Public Enterprise Monitoring Commission Act (adoption by public corporations is voluntary). - Asset registries must include description, unique code, location, condition, and value. - Accounting officers must record fixed assets in the Fixed Asset Management System and ensure annual verifications are carried out and certified by an independent public officer. - The cash-basis IPSAS-based annual financial statements do not provide for accounting the value of fixed assets or depreciation. - Statements, after Cabinet approval, should be submitted to the National Assembly and the Auditor General within ninety-one days. - Public enterprises compile asset registries and annual financial statements following International Financial Reporting Standards. Practical shortcomings: - Asset registries are neither comprehensive nor regularly updated; challenges include inadequate historical data, poor monitoring skills, and insufficient staff (as highlighted in Auditor General annual reports). - The manual lacks full guidance on critical issues: no thresholds (practically requiring recording of even minor capital outlays), not specific on valuation methods for typical asset classes, and no guidance on periodicity for updates. - Partial information on net acquisition of nonfinancial assets and depreciation appears in the consolidated cash flow statement—this corresponds to public corporations that report to MoFNPT on a voluntary basis. Boxed example — La Digue: - Construction on La Digue generally costs an additional 20 percent more than similar construction on Mahé. - The new hospital: 50-bed capacity; construction began in August of 2022 and is on schedule to open in August of 2023; hospital elevated above ground level and will provide a portion of its own energy through solar power. - SIA takes a whole-island project management approach on La Digue; project manager travels weekly to the island to oversee work across sectors. - Example opportunity: co-locate a new school adjacent to the new hospital to reduce construction time from six years to two years and use a public sports complex for physical education; recommendation: conduct a cost benefit analysis on each school proposal site before final decision. ### Priority actions and concrete recommendations - Issue: Ex-post reviews are not required nor conducted by line ministries; lessons from completed major projects are not incorporated. - Recommendation 9: As part of the upcoming revision of the PFM Act and related regulations, include ex-post independent reviews as mandatory for major and strategic capital projects (i.e., above a threshold and/or related to critical sectors). - Issue: No consistency in project management across sectors. - Recommendation 10: Establish key project management requirements by regulation, such as identification of a project manager, policies and procedures for adjusting a project during implementation, progress reporting, and ex post financial audits. Develop instructions for completing the implementation plan portion of the existing PIM Policy project proposal form. - Issue: Poor information on asset registries undermines certainty about asset conditions and effective maintenance and climate risk assessment. - Recommendation 11: Government should identify major and critical fixed assets managed by MDAs and give priority to update their asset registries and to uploading this information in the Fixed Asset Management System to inform decision making. *Source: IMF | Technical Report (excerpt).* ### 64. Climate change and natural disasters have significant macroeconomic and fiscal ### Climate change and natural disasters have significant macroeconomic and fiscal implications in Seychelles ### Climate impacts and fiscal exposure - Annual mean temperature in Seychelles have risen steadily over the past decades and are projected to increase by 1.7-3.2°C towards 2100 relative to the 1995–2014 baseline across the 2-4.5 and 5-8.5 Shared Socioeconomic Pathway emission scenarios. - Sea level has risen at a rate of 5.6-6.6 millimeters per year between 1993 and 2010. - Sea level could rise by 0.59-0.82 meters on average by 2100 under these scenarios. - Climate trends likely to increase intensity and frequency of storms and heavy rainfalls, and exacerbate water shortages through prolonged droughts. - Authorities indicate that adapting to climate risks in Seychelles would cost about USD 39 million per year (about 2.7 percent of GDP) by 2030. - IMF analysis finds Seychelles has financial resilience to withstand a reasonably large disaster but would suffer a heavier debt burden; a catastrophic tail risk event would make debt unsustainable. ### Historical natural disasters and infrastructure impacts - About 72 percent of natural disasters that occurred in Seychelles during 1980-2020 were climate-related. - Selected major events with recorded damages: - 1997 Flood: 1,237 people affected; Total damages 0.5 percent of GDP. - 2004 Tsunami: 4,830 people affected; Total damages 3.6 percent of GDP. - 2013 Storm: 3,000 people affected; Total damages 0.7 percent of GDP. - Notable infrastructure impacts: - Entire airfield of Seychelles International Airport flooded in the 1997 flooding. - High tides in May 2007 resulted in flooding as far as 50 meters inland, causing damage to public infrastructure. - Other hazards: coastal erosion in Praslin in 1986; massive coral bleaching in 1998; tropical cyclone in 2006; coastal flooding on Mahé in 2007 and 2012. ### Climate-resilient infrastructure and green transition priorities - Climate-resilient infrastructure is key to averting impacts across energy, transport, water supply, and urban sectors. - Seychelles’ green infrastructure transition priorities include: - Scaling up renewable electricity generation (particularly solar, wind, and energy storage). - Promoting low emission public transport and electric vehicles. - Investing in energy efficiency buildings. - Better infrastructure planning across urban and rural areas. - Institutional and financing enablers required: - Institutional reforms, funding strategies, enabling policies and regulations, and coordination across institutions and stakeholders. - Mainstreaming climate change into public investment management to attract international climate finance and catalyze green private investment. ### Climate mitigation commitments and financing - Seychelles’ updated NDC (2021) targets: - Greenhouse gas emission reduction target of 26.4 percent below its business-as-usual emission level by 2030. - Net-zero emission target by 2050. - Estimated funding needs and planned spending: - Total funding required to support implementation of climate adaptation and mitigation activities: USD 671 million between now and 2030, approximately 5 percent of GDP per year. - Government plans to spend an equivalent of 0.9 percent of GDP per year for climate change objectives (PSIP 2023-2025). - Sovereign and international finance initiatives: - Seychelles issued the world’s first sovereign blue bond in 2019 and raised USD 15 million to finance sustainable use of marine resources. - Seychelles has started to access international climate funds such as the Green Climate Fund and the Global Environmental Facility at a relatively small scale. ### Climate PIMA framework and focus areas - The Climate PIMA (C-PIMA) assesses five key public investment management practices from a climate change perspective: - C1. Climate-aware planning: Is public investment planned from a climate change perspective? - C2. Coordination across public sector: Is there effective coordination of decision making on climate change-related public investment across the public sector? - C3. Project appraisal and selection: Do project appraisal and selection include climate-related analysis and criteria? - C4. Budgeting and Portfolio management: Is climate-related investment spending clearly identified in the budget and subject to active management and oversight? - C5. Risk management: Are fiscal risks relating to climate change and infrastructure incorporated in budgets and fiscal risk analysis and managed according to a plan? ### Detailed assessment — C1 Climate-aware Planning (Strength: Low; Reform Priority: Medium) - National planning: - Climate change is well mainstreamed into national plans: Vision 2033 and the NDS consider environmental sustainability and climate resilience as guiding principles. - NDS objectives are broadly consistent with the NDC in some sectors including energy, infrastructure, and transport. - Seychelles’ net-zero emission target by 2050 is currently not supported by any concrete plan; a long-term low emission development strategy is expected to start later this year. - Sectoral and sub-sectoral planning gaps: - No sectoral plans exist to provide investment roadmaps to achieve the NDC commitments. - Sub-sectoral plans/masterplans (Blue Carbon Roadmap, Coastal Management Plan, e-mobility plan, Integrated Resource Plan, Solid Waste Master Plan, National Biodiversity Strategy) and the NCCP exist but are developed independently of sectoral plans, creating risks of misalignment and fragmentation in public investment planning. - Land-use, spatial planning, and building regulation: - Seychelles Strategic Land Use Development Plan promotes flood/landslide risk zoning, resilience of critical infrastructure, distributed utility networks, renewable energy and waste management solutions, and underpins Greater Victoria Masterplan. - Existing building regulations and construction guidelines under the Town and Country Planning Act 1972 do not include climate change considerations. - The Physical Planning Bill 2021 (draft) does not address climate change issues and only contains a provision for declaration of no development zones in cases of natural disasters. - Coastal Management Plan and Marine Spatial Plan initiative contain climate-sensitive elements but are ad-hoc with weak institutional linkages between national/sectoral and spatial planning processes. - Guidance and costing deficiencies: - National Planning Guidelines published by the Economic Planning Department of the MoFNPT do not reflect climate change considerations. - No centralized guidance or technical support for government agencies on the preparation and costing of climate-responsive public investment planning. - Training under the Global Climate Change Alliance Plus program covers climate topics but does not provide sector-specific guidance on preparing climate-aware public investment plans. - Planning and costing of climate-related investment are fragmented and inconsistent across planning documents (example: Coastal Management Plan project list and NDC costing use different project/measures lists). - NDC costing should ideally be mainstreamed into the costing of national and sectoral plans. *Source: IMF staff based on government documents and assessments contained in the referenced chapter.* ### 75. Public investment decisions are coordinated across all central government including from ### 1sycea2023003 - 75. Public investment decisions are coordinated across all central government including from ### Coordination of public investment and climate governance - Public investment is coordinated across the central government through the PIM Policy, which is guided by the priorities and key results areas of the NDS that include climate resilience as a main pillar. - Institutional actors integrating climate objectives into public investment decision-making: - IMC (Inter-Ministerial Committee) - National Climate Change Council - MOACCE (Vice-Chairperson of both IMC and National Climate Change Council) - Legal and institutional origins: - IMC and National Climate Change Council established through the Seychelles Infrastructure Agency Act 2021 and the NCCP 2020, respectively. - Assessment of effectiveness: - Both bodies are relatively new and the effectiveness of their coordination functions remains to be seen. - Additional coordination mechanisms: - A national committee for addressing flood risks chaired by the President. - Government utilization of several other venues for informal discussions and coordination between ministries and agencies on climate-related public investment. - Subnational context: - There is no local government structure in Seychelles; capital projects are executed through the central budget of the Ministry of Local Government. - PSIP 2023-2025: most projects of the Ministry of Local Government are not climate-related. - Districts and local communities contribute to disaster risk preparedness, reduction, and response through the national resilience platform structure as part of the National Integrated Emergency Management Plan. - Example: new public hospital in La Digue designed with a raised floor of at least one meter and equipped with solar rooftop. ### Public enterprises and alignment with climate objectives - Public Enterprises Bill 2022 requires alignment between investments of public enterprises and the NDS priorities but: - There is no explicit legal requirement to ensure investments by public enterprises are consistent with national climate objectives or the NDC. - PEMC intends to begin overseeing whether public enterprises adhere to national climate policy; PEMC conducted a climate change assessment on the Public Utility Corporation’s investment. - Corporate governance codes include environment and sustainability aspects but only provide broad guidance and good practices. ### Project appraisal and selection (C3) — Strength: Low, Reform Priority: High - Major infrastructure projects: - Not required to include climate change-related considerations. - PIM Policy project proposal’s guideline does not explicitly solicit information on climate related risks. - SIA has not adopted an appraisal methodology; the budget circular provides no direction on project appraisal. - Environmental Protection Act 2016: - Requires environmental authorization before development in protected or ecologically sensitive areas. - Requires an environmental impact assessment (EIA) study before issuing authorization. - The Act does not specifically mention climate change, but EIA provisions (47.(2).(e) and 47.(2).(f)) could be interpreted to address climate impacts. - Climate Change Department is consulted as part of the EIA process, but this consultation is not formally mandated. - Timing and practice: - EIAs currently are conducted after budget approval, causing project implementation delays and possible cost increases. - Recommendation in text: EIAs should be prepared before budget approval; if EIA costs cannot be covered, PSIP could fund projects in two steps: first to cover EIA cost, second to cover final design and implementation. - PPP framework: - No operational PPP framework currently; a PPP framework was drafted in 2019 but revision and approval are pending. - Potential: well-designed PPPs could attract finance for revenue-generating climate projects (example: photo-voltaic and wind energy generation by the Public Utilities Corporation). - Local planning: - Inter-ministerial Committee has not adopted selection criteria. - Local area masterplans have not consistently adopted climate change goals, though many do (example: Greater Victoria Masterplan 2040 includes adaptation and mitigation projects). - Future masterplans should reflect NDS climate change priorities. ### Budgeting and portfolio management (C4) — Strength: Low; Reform Priority: High - Identification and magnitude: - Department of Climate Change investments are identifiable in the PSIP. - The total value of investments in the PSIP for the Department of Climate Change represent 2.6 percent of the PSIP and 0.9 percent of GDP. - Note: not all identified items are investment projects; some are foreign financed non-investment activities. - Prioritization exercise (2022): - Identified 52 projects that had a climate impact, prioritized them, and identified their timeframe. - The prioritized list and the value of the projects were not published with the budget documentation. - Ex-post review and asset maintenance: - Legal and regulatory framework does not require government entities to conduct ex-post reviews of capital projects. - No published ex-post reviews to date; no ex-post audits of climate mitigation or adaptation outcomes of investment projects. - The 2018 Accounting Manual and the draft asset management policy provide no guidance on estimating maintenance needs of climate change-exposed infrastructure assets. - Tracking and capacity building: - Seychelles has implemented a PPBB approach with a three-phased budget preparation process including top-down and bottom-up mechanisms. - Program indicators are identifiable but program performance is not yet linked with the NDS. - Government coordinated with the International Renewable Energy Agency to enhance capacity for tracking and monitoring climate finance flows related to energy. - A proposed system of "climate markers" was prepared with EU assistance in May 2020 but has not been implemented and awareness across government is limited. ### Risk management (C5) — Strength: Medium; Reform Priority: Medium - Planning and evaluation: - National Integrated Emergency Management Plan published for nationwide disaster risk response and recovery coordination. - Coastal Management Plan evaluates flooding impacts on public infrastructure and identifies 3,939 buildings and around 48 percent of the road network at risk from coastal flooding and provides mitigation measures. - Disaster Risk Management Division statutory body with strategic plan for 2021-2030 focusing on resilience and climate risks (flash flooding, cyclones, erosion). - Ex ante financing mechanisms: - Disaster Risk Management Fund allowed under Disaster Risk Management Act (2014) but not established. - Catastrophe Deferred Drawdown Option negotiated with the World Bank as a contingency line of credit. - Budget includes explicit fixed annual contingency allocation of 50 million rupees (0.5 percent of expenditure, 0.25 percent of GDP) usable for disasters, health crises, economic shocks, or emergency infrastructure needs. - Fiscal risk analysis: - Government conducts and publishes a fiscal risk analysis that incorporates climate-related risks to public infrastructure assets, but the analysis is qualitative. - The fiscal risk analysis includes qualitative assessment of natural disaster risks facing public enterprises and a brief description of the annual contingency allocation. - Suggested improvements: comprehensive mapping of fiscal risks from climate change, quantifying fiscal risks through long-term fiscal sustainability analysis under different temperature scenarios, and quantifying discrete risks to infrastructure/public assets from hazards in the coastal management policy. ### Illustrative international approaches (Box 9) - United Kingdom (OBR 2021): - Created a “stable deficit baseline”, layered periodic fiscal risks to create a “historical shocks baseline”, and added an “unmitigated global warming scenario” based on RCP8.5. - Assumptions in the illustrative scenario: adaptation cost of 0.3 percent of GDP a year; cost of natural disasters is twice as high; natural disasters occur twice as frequently. - Georgia (IMF TA engagement): - Assessed fiscal impact of climate change from three perspectives: macroeconomic productivity impacts, fiscal cost of more frequent/severe natural disasters (floods, landslides, droughts), and qualitative review of discrete fiscal risks (long-run power contracts, guarantees, on-lent loans to SOEs). - Analysis found climate change could reduce GDP per capita by 13 percent by the end of the century and increase public debt levels by 18 percent of GDP, both relative to the baseline. ### Recommendations (numbered as in source) - Issue: Climate change considerations are not adequately mainstreamed into the public investment planning process. - Recommendation 12: Fully integrate the NDC objectives in the new NDS, sectoral plans, and building legislation, as well as develop guidelines on climate-smart planning and a systematic costing. - Issue: Appraisal and selection of projects are made without reference to climate change mitigation and adaptation. - Recommendation 13: Develop and require the use of methodologies that include climate-related issues in project selection criteria and project appraisals and conduct an EIA including climate impacts before budget approval. - Issue: There is no systematic approach to identify and track climate-sensitive investments and climate-related aspects are not included in asset management and ex-post reviews of projects. - Recommendation 14: Identify and summarize the expenditures targeting climate priorities in the performance-based budget as a pilot of that approach and ensure that climate impacts are incorporated in ex-post reviews and in the preparation of future maintenance manuals. - Issue: Fiscal risk analysis related to climate change is qualitative in nature limiting awareness of the government’s fiscal exposure, while the Disaster Risk Management Fund has not been established. - Recommendation 15: Prepare scenarios of long-term fiscal sustainability analysis under different climate scenarios, publish the results in the Fiscal Risk Statement, and operationalize the Disaster Risk Management Fund. ### Legal and regulatory framework (Cross-cutting) - Core legislation governing public investment: 2012 PFM Act, 2014 PFM regulation, 2018 PIM Policy; framework also reflects elements of the 2008 Public Procurement Act (with 2011 and 2014 regulations) and the 2013 Public Enterprises Monitoring Commission Act. - Table of relevant acts (as listed): - The Constitution of Seychelles 1993 - Public Financial Management Act 2012 (Revision starting in 2023) - Public Financial Management regulations 2014 - Public Investment Management Policy 2018 - Public Procurement Act 2008 (Under revision) - Public Procurement regulations 2011; 2014 - Public Asset Management Policy ... Draft - Public Enterprise Monitoring Commission Act 2013 (Under revision) - Seychelles Infrastructure Agency (SIA) Act 2021 - SIA regulations 2022 (Being developed) - Auditor General Act 2010 - Public Private Partnerships Act 2011; 2019 (Drafted but revision and approval pending) - Energy Act 2012 (Under revision) - Road Act and regulations 1991; several years (Under revision) - Environmental Protection Act 2016 - Disaster Management Act 2014 - Conservation and Climate Adaptation Trust of Seychelles Act 2015 - Town and Country Planning Act 1972 - Physical Planning Act 2021 - Meteorology Act 2015 - Observations: - Several critical laws and regulations are being reviewed or drafted; no evidence project implementation has been negatively impacted during the revision process. - Seychelles relies on environmental laws and regulations to support NDC implementation but has critical legal and institutional gaps for effective coordination and implementation of national climate change objectives. - The Constitution of Seychelles (1993, Article 38) recognizes the right to a clean, healthy, and ecologically balanced environment and the duty of citizens to protect, preserve and improve the environment. *IMF | Technical Report* ### 90. The PIM cycle is not highly automated. ### The PIM cycle is not highly automated. ### Existing IT systems and automation - Some systems exist to support the PIM cycle: TIS (expenditure control), Visual AccountMate (accounting and reporting), and the Fixed Asset Management System (asset registry). - Bespoke excel-based spreadsheet tools support fiscal analysis, PE monitoring, procurement, preparation of the PPBB, and cash forecasting. - There are no systems to support planning. - Three new systems for MoF, and one for SIA, are in an advanced stage of specification and procurement: - a new IFMIS covering much of the PFM cycle, which will replace the TIS and Visual AccountMate systems; - an aid coordination system; - a debt management system; - a project management system. ### Interoperability, administration, and human resource constraints - Existing IT systems do not communicate well with each other, leading to duplicate data entry that is labor intensive and error prone. - Example: TIS and Visual AccountMate systems do not communicate automatically. - The PPBB is compiled on spreadsheets, for recurrent and capital, and for portfolios, which are consolidated manually. - The new IFMIS is intended, in part, to solve inter-operability problems. - IFMISs are "notoriously difficult to administer and maintain" and will present a significant challenge to MoF to hire and retain IT staff who are in short supply in Seychelles. ### IT planning guidance - IT systems should be developed based on a long-term top-down plan. - The IT plan should include: - a system to plan, budget and track investment projects (simple while meeting the most important information needs); - coverage of functions (to focus on high labor and time-sensitive functions); - the general nature of systems to be developed (simple bespoke systems or off-the-shelf systems); - integration (projects should be in the national plan, sector plans, and PSIP); - interoperability, cost, and IT staff expertise required (MoFNPT staff and local contractors). - Because of the small size of Seychelles, priority should be given to systems that are inexpensive, easy to maintain, and easily adapted to evolving PFM practices. - The IT plan should focus on PFM / PIM processes broadly and include SIA, the IMC, and MDAs that submit budgets to MoF for inclusion in the budget. - How data are standardized and transferred between systems should be identified. - Project identification codes should be the same throughout the PIM cycle and across systems engaged in PIM (for example, the SIA system and the IFMIS). - PIM processes would benefit from a simple system to establish a pipeline of appraised projects before the annual budget process begins, as recommended in Institution 10, Selection. - Controlling development of new systems and ensuring interoperability across MDAs is difficult and will need high level political support. ### Capacity: structure, staffing, and implementation roles - Seychelles is a small island economy with human resource and skills gaps in specialized areas, including project management. - The SIA was established in 2021 to close specialized skills gaps for infrastructure management and project implementation in government. - The merging of smaller project implementation units in MDAs aimed to enhance information sharing, coordinate master-planning, avoid duplication of responsibilities and standardize processes for public investment management across government. - PIMU in MoFNPT coordinates the public infrastructure management function, with roles shared with the IMC and SIA. - PIMU is under the Office of the Comptroller General and has six staff (excluding senior management): four finance analysts, one quantity surveyor and one project officer. - Project management role is centralized and delegated to SIA, which has 120 staff responsible for providing technical services for civil engineering and construction projects to all MDAs and maintenance of government properties. - The Economic Planning Department of the MoFNPT coordinates national and sector planning and links to budgeting and performance management. - The department is staffed by seven members, an inadequate number with insufficient technical capacity to guide MDAs on sector planning. - Evidence: complexity and lack of standardized planning processes for public investment by MDAs, with a significant number of sector plans not yet developed, updated, or integrated into the budgeting process. - MoFNPT is aware of human resource and skills gaps and is implementing actions to close the gap within the ministry. - There is a structural shortage of economists across government. - Staff attrition, which was a big issue in 2019, especially for financial analysts, has since receded. - The scheme of service for the MoFNPT is being reviewed, with a salary freeze lifted and a 10 percent salary increment to be in effect beginning April 2023. - Proposed incentives to retain staff include flexible work schedules, educational benefits, and allowances. - The ministry organizational structure is being reviewed to rationalize responsibilities. - The Human Resource Director is yet to assume the post and the Secretary of State is carrying out the human resourcing function in the interim. - The department of Comptroller General has drawn up a training plan to be implemented in 2023. ### Climate-related PIM capacity - Seychelles is at the initial stage of capacity building for implementing the NDC and climate-related PIM. - MoFNPT does not have capacity on climate aspects for executing PIM processes. - Sector ministries and agencies are familiar with climate issues broadly but lack technical capacity on climate-sensitive PIM practices. - Ministry of Agriculture, Climate Change, and Environment holds much of the climate science and policy expertise but has limited staff capacity and usually seeks technical assistance from external experts and international organizations. - Most climate-oriented masterplans and sub-sector plans have been developed largely with support from the World Bank, United Nations agencies, the NDC Partnership, bilateral donors, and international research institutions. - The United Kingdom’s Foreign Commonwealth Office is providing a climate finance advisor who will work jointly with the MoFNPT and the Ministry of Agriculture, Climate Change, and Environment to support climate finance mobilization and tracking. - There is a need to develop local technical capacity for government staff on mainstreaming climate change considerations into the PIM process, including climate-smart planning and climate-related project preparation and implementation. ### Recommendations (from the source) - Issue: A significant revision of different elements of the legal and regulatory framework governing PIM is either being carried out or planned for the near future. - Recommendation 16: Use the existing reviews and plans for future reviews of various legislative pieces, to modernize, consolidate, harmonize, and sequence the different legal and regulatory amendments. - Issue: It is not possible to comprehensively report on projects at various stages during the budget preparation process, and existing IT systems are inefficient and unintegrated. - Recommendation 17: Establish a simple system to (i) follow up projects across the cycle, from design to execution and ex-post evaluations (ii) report the PSIP at various stages in the budget preparation as part of a high-level, long- term plan for IT systems. - Issue: The implementation of a new Public Investment Management Policy and creation of new institutions (SIA, IMC), creates risks of potential duplications, poor coordination and power struggles, and opportunities to generate strong synergies and complementarities. - Recommendation 18: Prepare a detailed mapping of the existing and new institutions and a proposal of the adjustments and clarifications needed in roles and responsibilities of the different actors of the system. - Issue: Seychelles small size limits the number of personnel available to develop and maintain the public investment management framework. - Recommendation 19: Adopt IT and legal framework recommendations and ensure development of the PIM framework is customized to Seychelles’ small size and limited personnel. *IMF | Technical Report* ### Annex 1. PIMA and C-PIMA Action Plan ### Annex 1. PIMA and C-PIMA Action Plan ### A. Planning Sustainable Levels of Public Investment - Issue: The disjointed planning framework, proliferation of planning documents and absence of costed investment plans undermine the government’s capacity to coordinate investment priorities across sectors. - Recommendation: Investment plans and their costings to be included in new national and sectoral plans. - Actions: - Implement the Draft National Strategic Planning Guidelines. - Provide national and sectoral guidance on the preparation of plans and costings of sectoral investment plans. - Include costings of investment plans in new national and sectoral plans. - Priority: High (three entries) - Responsibility: MoFNPT National Planning Dept. and MDAs (three entries) - Timing: Immediate; Immediate; Early 2023 - Issue: PPBB not linked to performance measures for achieving national strategy objectives while NDS is being drafted. - Recommendation: Once NDS objectives are set and performance measures identified, add these linkages to programs in the PPBB statement. - Actions: - Identify the NDS objectives and align program performance measures with these objectives. - Prepare and provide guidance to MDAs on the linkages between PPBB and the national and sectoral plans. - Incorporate a summary of budget measures achieving NDS performance indicators at the outset of the PPBB statement. - Priority: Medium; Medium; Low - Responsibility: MoFNPT Financial Planning Div. and MDAs; MoFNPT National Planning Dept; Financial Planning Division - Timing: Mid- 2023; 2023; 2024 - Issue: Many projects submitted without required appraisals; existing threshold to define a major project is too low. - Recommendation: Enforce the PIM Policy for preparation of appraisal information; review in the PIM Policy thresholds for determining major projects and submit major projects to rigorous appraisal. - Actions: - Require the SIA to prepare project appraisal information, in accordance with the current PIM Policy, in the course of its work on project development. - Update thresholds for major projects. Thresholds for large and complex projects must be defined in a verifiable manner, distinguishing the appraisal treatment of these projects separately from those that cost more than SCR 1 million. - Enforce rigorous appraisal of large and complex projects to include analysis of benefits, costs, and risks, from a social, economic, and financial perspective in accordance with the PIM Policy. - Adjust definition of major projects in PIM policy; if consistency with Procurement Act is required, clarify definitions of major projects for different purposes. - Priority: High; High; Medium; High - Responsibility: IMC, MoFNPT and SIA; MoFNPT PIMU; MoFNPT PIMU; MoFNPT PIMU - Timing: Mid-2023; Mid-2023; 2023; 2024 - Issue: Room to improve legal and regulatory framework to promote private sector involvement. - Recommendation: Ensure that new legislation under consideration for the energy sector, the draft Act for PPP’s and upcoming amendments to the PFM and Procurement Act, prevent conflict of interests for regulators and promote PPP practices in line with good international practices, and aligned with the country’ climate smart framework. - Actions: - Assess whether the Multisectoral Regulation Act and the Electricity Act, currently under development, provide for a clear separation between regulatory and project implementation functions. - If there is no clear separation, revise the drafts to ensure that regulators are not also serving an implementation function. - Review the need for a PPP Act and assess the pros and cons of alternatively incorporating amendments in the PFM Act and Procurement Act, to include provisions for budgeting, accounting, and reporting PPPs. - Draft PPP Strategy and Guidelines to provide a framework that does not create a parallel process for PPPs and is aligned with good international practices and the country’s climate smart framework. - Priority: High; High; Medium; Medium - Responsibility: MoFNPT and PEMC; MoFNPT and PEMC; MoFNPT and PIMU; MoFNPT and PIMU - Timing: Immediate; Immediate; Mid-2023; 2024 ### B. Ensuring Public Investment is Allocated to the Right Sectors and Projects - Issue: Capital expenditure is persistently over-forecasted, leading to poor prioritization. - Recommendation: Strengthen the anchoring role of MTFF in budget preparation by identifying and mitigating sources of bias and forecast error. - Action: Undertake and publish in the Fiscal Risk Statement multi-year forecast error analysis of key fiscal aggregates, including capital expenditure. - Priority: Medium - Responsibility: Macroeconomic Forecasting and Analysis Division - Timing: Mid 2023 - Issue: Total project costs and variations are available for major projects but not systematically compiled nor disclosed. - Recommendation: Enforce the PIMU reporting requirements and adjust the PSIP to more easily identify project costs and variations. - Action: Add columns to the PSIP that show the original project cost, the current project cost, and the variance, drawing on the underlying PSIP database. - Priority: Medium - Responsibility: Financial Planning Division - Timing: 2023 - Issue: No maintenance methodologies to determine maintenance needs, cost, and optimal maintenance services; funding for routine and capital maintenance cannot be accurately identified. - Recommendation: Develop routine and capital maintenance methodologies for MDA assets under its purview; and MoFNPT to revise the program classification to identify routine and capital maintenance. - Actions: - Develop routine and capital maintenance methodologies for MDA assets under its purview. - Estimate the cost of performing those services. - Publish the results. - Revise the program classification to identify routine and capital maintenance under each MDA that has maintenance responsibilities. - Priority: High; Medium; Medium; Medium - Responsibility: SIA; SIA and MoFNPT; MoFNPT; MoFNPT - Timing: 2024 (all entries) - Issue: Weakness in project selection causes under-execution of the capital expenditure budget. - Recommendation: Develop and maintain a list (pipeline) of appraised projects; create and apply selection criteria for prioritizing them. Enhance and enforce the authorization process for projects entering the budgeted PSIP. - Actions: - Authorize the MoFNPT and adequately staff the PIMU to exercise greater quality control over appraisals and reject inadequately appraised projects before inclusion in the budget. - Establish a scoring system, which includes criteria, to select projects. - Establish a list (pipeline) of appraised projects before the budget process begins from which MDAs choose projects for inclusion in their budget proposal. - Projects should be consolidated in a simple, accessible information system. - Appropriate funds for large and complex projects in two steps: first to conduct feasibility and other studies to ensure the project is costed and appraised well and is ready to be executed. If the conclusions of the studies are favorable, a second appropriation would be made to implement the project. - Announce in the annual budget circular that projects will not be included in the MTES if PIM Policy appraisal information is absent or materially incomplete. - Priority: High; High; High; Medium; Medium; High - Responsibility: MoFNPT and PIMU; PIMU, IMC, and SIA; PIMU; MoFNPT (Financial Planning Division); MoFNPT; MoFNPT - Timing: 2023; 2023; 2024; 2024; 2024; 2024 Budget ### C. Delivering Productive and Durable Public Assets - Issue: Ex-post reviews are not required nor conducted by line ministries; lessons not incorporated into life cycle of new major projects. - Recommendation: As part of the upcoming revision of the PFM Act and related regulations, include ex-post independent reviews as mandatory for major and strategic capital projects (i.e., above a threshold and/or related to critical sectors). - Actions: - Develop a clear criterion to identify major and strategic capital projects to be subject to ex-post reviews. - Include provisions in the revised PFM Act to make ex-post project reviews mandatory for projects under the selected criterion. - Develop a template with detailed requirements to be included in ex-post project reviews and include the template as part of the revised PIM Policy. - Priority: High; Medium; Medium - Responsibility: MoFNPT, SIA; MoFNPT; MoFNPT, SIA - Timing: 2024; 2024; 2023 - Issue: No consistency in project management across sectors; lack of standardized implementation, contractor treatment, and uniform data for portfolio monitoring. - Recommendation: Establish, by regulation, key project management requirements, policies, and procedures for adjusting projects during implementation, progress reporting, and ex post financial audits; develop instructions for completing the implementation plan portion of the existing PIM Policy project proposal form. - Actions: - Identify specific proposals to be included in the proposed regulation. - Establish project management requirements. - Develop instructions for preparing implementation plans. - Priority: Medium (three entries) - Responsibility: SIA and PIMU; SIA and PIMA; SIA and PIMU in consultation with MDA’s - Timing: 2024 (all entries) - Issue: Poor information on asset registries hinders certainty about asset conditions, maintenance practices, and climate risk assessment. - Recommendation: Identify major and critical fixed assets managed by MDAs and give priority to update their asset registries and to upload information in the FAMS to inform decision making. - Actions: - Determine a criterion and/or threshold to identify critical fixed assets and include it in the PIM Policy document. - Request MDAs to prioritize the updating of the asset registries for selected critical fixed assets and upload information in the Fixed Asset Management System. - Request MDAs to compile and upload information in the Fixed Asset Management System on the value of critical fixed assets based on construction costs. Coordinate with SIA and IDC for relevant assets to avoid duplication of efforts. - Priority: High; High; High - Responsibility: MoFNPT, SIA, IDC; MoFNPT, MDAs; MoFNPT, SIA, IDC and MDAs - Timing: 2023; 2023; 2024 ### Climate PIMA - C1 Issue: Climate change considerations not adequately mainstreamed into public investment planning. - Recommendation: Fully integrate the NDC objectives in the new NDS, sectoral plans, and building legislation; develop guidelines on climate-smart planning and a systematic costing. - Actions: - Fully integrate the NDC objectives and priorities in national and sectoral plans and ensure that capital projects included in national and sectoral plans are aligned with the NDC (link to PIMA Institution 2). - Integrate climate adaptation and mitigation aspects in building legislation and construction codes. - Develop relevant guidelines and provide capacity building for sector ministries and agencies on climate-smart planning. - Conduct a systematic costing of climate adaptation and mitigation investment across sectors. - Priority: High; Medium; Medium; Medium - Responsibility: MoFNPT; National Planning and Ministry of Agriculture, Climate Change, and Environment; MOFNPT, Ministry of Agriculture, Climate Change, and Environment; MOFNPT, Ministry of Agriculture, Climate Change, and Environment - Timing: 2023; 2024; 2025; 2025 - C3 Issue: Appraisal and selection of projects made without reference to climate mitigation and adaptation. - Recommendation: Develop and require the use of methodologies that include climate-related issues in project appraisals and selection criteria; conduct EIA before budget approval. - Actions: - Produce and require the use of methodologies to identify the net greenhouse gas emission, emission reduction alternatives, and climate resilience of projects in project appraisals. - Consistent with the NDS, develop project appraisals and selection criteria that address climate change impacts, building on the recommendations in PIMA institutions 4 and 10. - The project proposal form, in addition to indicating the location of the project, should identify if it is a protected or ecologically sensitive area. - If an EIA is required, mandate it is conducted before budget approval and addresses climate impacts. - Priority: High (four entries) - Responsibility: MOFNPT and Ministry of Agriculture, Climate Change, and Environment (four entries) - Timing: 2024 (all entries) - C4 Issue: No systematic approach to identify and track climate-sensitive investments; climate aspects not included in asset management and ex-post reviews. - Recommendation: Identify and summarize the expenditures for climate priorities in the PPBB; ensure that climate impacts are incorporated in ex-post reviews and in the preparation of future maintenance manuals. - Actions: - Identify and summarizing the measures and expenditures for climate priorities in the PPBB. - Consistent with recommendations in PIMA institutions 9 and 14, ensure analysis of the climate objectives of projects is incorporated when ex-post reviews are undertaken. - Incorporate climate considerations in the preparation of future maintenance manuals. - Priority: High; Medium; High - Responsibility: MOFNPT; MOFNPT, MDAs; SIA, MOFNPT - Timing: 2023; 2025; 2024 - C5 Issue: Fiscal risk analysis related to climate change is qualitative; Disaster Risk Management Fund not established. - Recommendation: Prepare scenarios of long-term fiscal sustainability analysis under different climate scenarios; publish the results in the Fiscal Risk Statement; and operationalize the Disaster Risk Management Fund. - Actions: - Prepare scenarios of long-term fiscal sustainability analysis under different climate scenarios, assess the main discrete fiscal risks related to climate change, and publish the results in the Fiscal Risk Statement. - Plan, establish and operationalize the Disaster Risk Management Fund. - Priority: Medium; Medium - Responsibility: MOFNPT; Division of Disaster Risk Management, MOFNPT - Timing: 2024; 2025 ### Cross Cutting Issues - Legal and Regulatory Framework - Issue: Significant revision of legal and regulatory framework governing PIM is being carried out or planned. - Recommendation: Use existing reviews and plans to modernize, consolidate, harmonize, and sequence different legal and regulatory amendments; enforce existing laws and regulations consistently. - Actions: - Ensure planned revisions of the PFM Act and the Procurement Act include good practices for budgeting, accounting, and reporting PPPs in the government accounts. - Clarify in the revised PFM Act the roles and responsibilities of all institutional actors involved in PIM, in particular between the PIMU of the MoFNPT and the recently established SIA. - Ensure the revised PFM Act and planned update of the PIM policy take into consideration the PIMA finding and recommendations, and other existing diagnostics and studies, taking special care of harmonization and consistency of proposals. - Priority: High (three entries) - Responsibility: MoFNPT, SIA, MDAs; MoFNPT; MoFNPT, SIA - Timing: Immediately; 2023; 2023 - Additional: High priority action for MoFNPT in 2023 to harmonize proposals. - Information Technology - Issue: Cannot comprehensively report on projects at various stages; existing IT systems inefficient and unintegrated. - Recommendation: Establish a simple system to (i) follow up projects across the cycle, from design to execution and ex-post evaluations (ii) report the PSIP at various stages in the budget preparation as part of a high-level, long- term plan for IT systems. - Actions: - Determine the functional characteristics of the system (users, reports, data). - Identify options for producing the system, including inclusion in the IFMIS, a simple bespoke database software system (e.g., MS Access) or other; select the option. - Present to the IMC and Cabinet a concept notes for the PIM IT solution, including how it will interact with MDAs and other boundaries. - If approved by Cabinet, create a working group composed of representatives of MoFNPT, SIA, and MDAs; working group to be chaired by a senior MoFNPT official. - The working group completes their work, including consultation with stakeholders, and presents their findings to Cabinet for approval and gazettal. - Priority: Medium (five entries) - Responsibility: MoFNPT Budget office, including PIMU; MoFNPT, Dept of Information Communication Technology; MoFNPT; MoFNPT; Working group, MoFNPT - Timing: 2023; 2024; End 2023; Early 2024; Late 2024 - Capacity - Issue: Implementation of new PIM Policy and creation of new institutions (SIA, IMC) creates risks of duplication, poor coordination, and power struggles; Seychelles’ small size limits personnel available. - Recommendation: Prepare a detailed mapping of existing and new institutions and propose adjustments and clarifications to roles and responsibilities; adopt IT and legal framework recommendations and ensure development of the PIM framework is customized to Seychelles’ small size and limited personnel. - Actions: - Undertake a thorough review of the functions, roles, and responsibilities of the new and existing institutions, including MDA’s; identify potential conflicts, duplications, misalignments as well as complementarities and opportunities in the MoFNPT, SIA and selected MDA’s; identify if required personnel and skills are available and propose adjustments if needed. - Clarify roles and responsibilities, including checks and balances, in the update of the PIM Policy. - Assess the design and implementation of processes and systems to strengthen the PIM Framework against capacity needs. Ensure systems, processes, and tools (including IT systems) are tailored to the Seychelles government and needs, and ease workloads rather than adding new staff requirements. - Draw on technical assistance and training (e.g., AFRITAC South) to build skills and capacity (including in climate-sensitive PIM), tailored to Seychelles’ capacity context. - Priority: Medium; Medium; Medium; Medium; Medium; High (as listed) - Responsibility: MoFNPT, SIA, Selected MDA’s; MoFNPT; MoFNPT, SIA, Selected MDA’s; MoFNPT, SIA; MoFNPT, SIA; MoFNPT - Timing: 2023; Late 2023; 2023; 2023; 2024; 2023 *Source: Annex 1. PIMA and C-PIMA Action Plan (1sycea2023003 - Annex 1. PIMA and C-PIMA Action Plan).* ### Annex 2. PIMA Questionnaire ### Annex 2. PIMA Questionnaire ### A. Planning Sustainable Levels of Public Investment - Indicator 1. Fiscal targets and rules - 1.a. Is there a target or limit for government to ensure debt sustainability? - Score 1: There is no target or limit to ensure debt sustainability. - Score 2: There is at least one target or limit to ensure central government debt sustainability. - Score 3: There is at least one target or limit to ensure general government debt sustainability. - 1.b. Is fiscal policy guided by one or more permanent fiscal rules? - Score 1: There are no permanent fiscal rules. - Score 2: There is at least one permanent fiscal rule applicable to central government. - Score 3: There is at least one permanent fiscal rule applicable to central government, and at least one comparable rule applicable to a major additional component of general government, such as subnational government (SNG). - 1.c. Is there a medium-term fiscal framework (MTFF) to align budget preparation with fiscal policy? - Score 1: There is no MTFF prepared prior to budget preparation. - Score 2: There is an MTFF prepared prior to budget preparation but it is limited to fiscal aggregates, such as expenditure, revenue, the deficit, or total borrowing. - Score 3: There is an MTFF prepared prior to budget preparation, which includes fiscal aggregates and allows distinctions between recurrent and capital spending, and ongoing and new projects. - Indicator 2. National and Sectoral Planning - 2.a. Does the government prepare national and sectoral strategies for public investment? - Score 1: National or sectoral public investment strategies or plans are prepared, covering only some projects found in the budget. - Score 2: National or sectoral public investment strategies or plans are published covering projects funded through the budget. - Score 3: Both national and sectoral public investment strategies or plans are published and cover all projects funded through the budget regardless of financing source (e.g. donor, public corporation (PC), or PPP financing). - 2.b. Are the government’s national and sectoral strategies or plans for public investment costed? - Score 1: The government’s investment strategies or plans include no cost information on planned public investment. - Score 2: The government’s investment strategies include broad estimates of aggregate and sectoral investment plans. - Score 3: The government’s investment strategies include costing of individual, major investment projects within an overall financial constraint. - 2.c. Do sector strategies include measurable targets for the outputs and outcomes of investment projects? - Score 1: Sector strategies do not include measurable targets for outputs or outcomes. - Score 2: Sector strategies include measurable targets for outputs (e.g., miles of roads constructed). - Score 3: Sector strategies include measurable targets for both outputs and outcomes (e.g., reduction in traffic congestion). - Indicator 3. Coordination between Entities - 3.a. Is capital spending by SNGs coordinated with the central government? - Score 1: Capital spending plans of SNGs are not submitted to, nor discussed with central government. - Score 2: Major SNG capital spending plans are published alongside central government investments, but there are no formal discussions, between the central government and SNGs on investment priorities. - Score 3: Major SNG capital spending plans are published alongside central government investments, and there are formal discussions between central government and SNGs on investment priorities. - 3.b. Does the central government have a transparent, rule-based system for making capital transfers to SNGs, and for providing timely information on such transfers? - Score 1: The central government does not have a transparent rule-based system for making capital transfers to SNGs. - Score 2: The central government uses a transparent rule-based system for making capital transfers to SNGs, but SNGs are notified about expected transfers less than six months before the start of each fiscal year. - Score 3: The central government uses a transparent rule-based system for making capital transfers to SNGs, and expected transfers are made known to SNGs at least six months before the start of each fiscal year. - 3.c. Are contingent liabilities arising from capital projects of SNGs, PCs, and PPPs reported to the central government? - Score 1: Contingent liabilities arising from major projects of SNGs, PCs, and PPPs are not reported to the central government. - Score 2: Contingent liabilities arising from major projects of SNGs, PCs, and PPPs are reported to the central government, but are generally not presented in the central government’s budget documents. - Score 3: Contingent liabilities arising from major projects of SNGs, PCs, and PPPs are reported to the central government, and are presented in full in the central government’s budget documents. - Indicator 4. Project Appraisal - 4.a. Are major capital projects subject to rigorous technical, economic, and financial analysis? - Score 1: Major capital projects are not systematically subject to rigorous, technical, economic, and financial analysis. - Score 2: Major projects are systematically subject to rigorous technical, economic, and financial analysis. - Score 3: Major projects are systematically subject to rigorous technical, economic, and financial analysis, and selected results of this analysis are published or undergo independent external review. - 4.b. Is there a standard methodology and central support for the appraisal of projects? - Score 1: There is no standard methodology or central support for project appraisal. - Score 2: There is either a standard methodology or central support for project appraisal. - Score 3: There is both a standard methodology and central support for project appraisal. - 4.c. Are risks taken into account in conducting project appraisals? - Score 1: Risks are not systematically assessed as part of the project appraisal. - Score 2: A risk assessment covering a range of potential risks is included in the project appraisal. - Score 3: A risk assessment covering a range of potential risks is included in the project appraisal, and plans are prepared to mitigate these risks. - Indicator 5. Alternative Infrastructure Financing - 5.a. Does the regulatory framework support competition in contestable markets for economic infrastructure (e.g., power, water, telecoms, and transport)? - Score 1: Provision of economic infrastructure is restricted to domestic monopolies, or there are few established economic regulators. - Score 2: There is competition in some economic infrastructure markets, and a few economic regulators have been established. - Score 3: There is competition in major economic infrastructure markets, and economic regulators are independent and well established. - 5.b. Has the government published a strategy/policy for PPPs, and a legal/regulatory framework which guides the preparation, selection, and management of PPP projects? - Score 1: There is no published strategy/policy framework for PPPs, and the legal/regulatory framework is weak. - Score 2: A PPP strategy/policy has been published, but the legal/regulatory framework is weak. - Score 3: A PPP strategy/policy has been published, and there is a strong legal/regulatory framework that guides the preparation, selection, and management of PPP projects. - 5.c. Does the government oversee the investment plans of public corporations (PCs) and monitor their financial performance? - Score 1: The government does not systematically review the investment plans of PCs. - Score 2: The government reviews the investment plans of PCs, but does not publish a consolidated report on these plans or the financial performance of PCs. - Score 3: The government reviews and publishes a consolidated report on the investment plans and financial performance of PCs. ### B. Ensuring Public Investment is Allocated to the Right Sectors and Projects - Indicator 6. Multi-Year Budgeting - 6.a. Is capital spending by ministry or sector forecasted over a multiyear horizon? - Score 1: No projections of capital spending are published beyond the budget year. - Score 2: Projections of total capital spending are published over a three to five-year horizon. - Score 3: Projections of capital spending disaggregated by ministry or sector are published over a three to five-year horizon. - 6.b. Are there multiyear ceilings on capital expenditure by ministry, sector, or program? - Score 1: There are no multiyear ceilings on capital expenditure by ministry, sector, or program. - Score 2: There are indicative multiyear ceilings on capital expenditure by ministry, sector, or program. - Score 3: There are binding multiyear ceilings on capital expenditure by ministry, sector, or program. - 6.c. Are projections of the total construction cost of major capital projects published? - Score 1: Projections of the total construction cost of major capital projects are not published. - Score 2: Projections of the total construction cost of major capital projects are published. - Score 3: Projections of the total construction cost of major capital projects are published, together with the annual breakdown of these cost over a three-five-year horizon. - Indicator 7. Budget Comprehensiveness and Unity - 7.a. Is capital spending mostly undertaken through the budget? - Score 1: Significant capital spending is undertaken by extra-budgetary entities with no legislative authorization or disclosure in the budget documentation. - Score 2: Significant capital spending is undertaken by extra-budgetary entities, but with legislative authorization and disclosure in the budget documentation. - Score 3: Little or no capital spending is undertaken by extra-budgetary entities. - 7.b. Are all capital projects, regardless of financing source, shown in the budget documentation? - Score 1: Capital projects are not comprehensively presented in the budget documentation, including PPPs, externally financed, and PCs’ projects. - Score 2: Most capital projects are included in the budget documentation, but either PPPs, externally financed, or PCs’ projects are not shown. - Score 3: All capital projects, regardless of financing sources, are included in the budget documentation. - 7.c. Are capital and recurrent budgets prepared and presented together in the budget? - Score 1: Capital and recurrent budgets are prepared by separate ministries, and/or presented in separate budget documents. - Score 2: Capital and recurrent budgets are prepared by a single ministry and presented together in the budget documents, but without using a program or functional classification. - Score 3: Capital and recurrent budgets are prepared by a single ministry and presented together in the budget documents, using a program or functional classification. - Indicator 8. Budgeting for Investment - 8.a. Are total project outlays appropriated by the legislature at the time of a project’s commencement? - Score 1: Outlays are appropriated on an annual basis, but information on total project costs is not included in the budget documentation. - Score 2: Outlays are appropriated on an annual basis, and information on total project costs is included in the budget documentation. - Score 3: Outlays are appropriated on an annual basis and information on total project costs, and multiyear commitments is included in the budget documentation. - 8.b. Are in-year transfers of appropriations (virement) from capital to current spending prevented? - Score 1: There are no limitations on virement from capital to current spending. - Score 2: The finance ministry may approve virement from capital to current spending. - Score 3: Virement from capital to current spending requires the approval of the legislature. - 8.c. Is the completion of ongoing projects given priority over starting new projects? - Score 1: There is no mechanism in place to protect funding of ongoing projects. - Score 2: There is a mechanism to protect funding for ongoing projects in the annual budget. - Score 3: There is a mechanism to protect funding for ongoing projects in the annual budget and over the medium term. - Indicator 9. Maintenance Funding - 9.a. Is there a standard methodology for estimating routine maintenance needs and budget funding? - Score 1: There is no standard methodology for determining the needs for routine maintenance. - Score 2: There is a standard methodology for determining the needs for routine maintenance and its cost. - Score 3: There is a standard methodology for determining the needs for routine maintenance and its cost, and the appropriate amounts are generally allocated in the budget. - 9.b. Is there a standard methodology for determining major improvements (e.g. renovations, reconstructions, enlargements) to existing assets, and are they included in national and sectoral investment plans? - Score 1: There is no standard methodology for determining major improvements, and they are not included in national or sectoral plans. - Score 2: There is a standard methodology for determining major improvements, but they are not included in national or sectoral plans. - Score 3: There is a standard methodology for determining major improvements, and they are included in national or sectoral plans. - 9.c. Can expenditures relating to routine maintenance and major improvements be identified in the budget? - Score 1: Routine maintenance and major improvements are not systematically identified in the budget. - Score 2: Routine maintenance and major improvements are systematically identified in the budget. - Score 3: Routine maintenance and major improvements are systematically identified in the budget, and are reported. - Indicator 10. Project Selection - 10.a. Does the government undertake a central review of major project appraisals before decisions are taken to include projects in the budget? - Score 1: Major projects (including donor- or PPP-funded) are not reviewed by a central ministry prior to inclusion in the budget. - Score 2: Major projects (including donor- or PPP-funded) are reviewed by a central ministry prior to inclusion in the budget. - Score 3: All major projects (including donor- or PPP-funded) are scrutinized by a central ministry, with input from an independent agency or experts prior to inclusion in the budget. - 10.b. Does the government publish and adhere to standard criteria, and stipulate a required process for project selection? - Score 1: There are no published criteria or a required process for project selection. - Score 2: There are published criteria for project selection, but projects can be selected without going through the required process. - Score 3: There are published criteria for project selection, and generally projects are selected through the required process. - 10.c. Does the government maintain a pipeline of appraised investment projects for inclusion in the annual budget? - Score 1: The government does not maintain a pipeline of appraised investment projects. - Score 2: The government maintains a pipeline of appraised investment projects but other projects may be selected for financing through the annual budget. - Score 3: The government maintains a comprehensive pipeline of appraised investment projects, which is used for selecting projects for inclusion in the annual budget, and over the medium term. ### C. Delivering Productive and Durable Public Assets - Indicator 11. Procurement - 11.a. Is the procurement process for major capital projects open and transparent? - Score 1: Few major projects are tendered in a competitive process, and the public has limited access to procurement information. - Score 2: Many major projects are tendered in a competitive process, but the public has only limited access to procurement information. - Score 3: Most major projects are tendered in a competitive process, and the public has access to complete, reliable and timely procurement information. - 11.b. Is there a system in place to ensure that procurement is monitored adequately? - Score 1: There is no procurement database, or the information is incomplete or not timely for most phases of the procurement process. - Score 2: There is a procurement database with reasonably complete information, but no standard analytical reports are produced from the database. - Score 3: There is a procurement database with reasonably complete information, and standard analytical reports are produced to support a formal monitoring system. - 11.c. Are procurement complaints review process conducted in a fair and timely manner? - Score 1: Procurement complaints are not reviewed by an independent body. - Score 2: Procurement complaints are reviewed by an independent body, but the recommendations of this body are not produced on a timely basis, nor published, nor rigorously enforced. - Score 3: Procurement complaints are reviewed by an independent body whose recommendations are timely, published, and rigorously enforced. - Indicator 12. Availability of Funding - 12.a. Are ministries/agencies able to plan and commit expenditure on capital projects in advance on the basis of reliable cash-flow forecasts? - Score 1: Cash-flow forecasts are not prepared or updated regularly, and ministries/agencies are not provided with commitment ceilings in a timely manner. - Score 2: Cash-flow forecasts are prepared or updated quarterly, and ministries/agencies are provided with commitment ceilings at least a quarter in advance. - Score 3: Cash-flow forecasts are prepared or updated monthly, and ministries/agencies are provided with commitment ceilings for the full fiscal year. - 12.b. Is cash for project outlays released in a timely manner? - Score 1: The financing of project outlays is frequently subject to cash rationing. - Score 2: Cash for project outlays is sometimes released with delays. - Score 3: Cash for project outlays is normally released in a timely manner, based on the appropriation. - 12.c. Is external (donor) funding of capital projects fully integrated into the main government bank account structure? - Score 1: External financing is largely held in commercial bank accounts outside the central bank. - Score 2: External financing is held at the central bank, but is not part of the main government bank account structure. - Score 3: External financing is fully integrated into the main government bank account structure. - Indicator 13. Portfolio Management and Oversight - 13.a. Are major capital projects subject to monitoring during project implementation? - Score 1: Most major capital projects are not monitored during project implementation. - Score 2: For most major projects, annual project costs, as well as physical progress, are monitored during project implementation. - Score 3: For all major projects, total project costs, as well as physical progress, are centrally monitored during project implementation. - 13.b. Can funds be re-allocated between investment projects during implementation? - Score 1: Funds cannot be re-allocated between projects during implementation. - Score 2: Funds can be reallocated between projects during implementation, but not using systematic monitoring and transparent procedures. - Score 3: Funds can be re-allocated between projects during implementation, using sy stematic monitoring and transparent procedures. - 13.c. Does the government adjust project implementation policies and procedures by systematically conducting ex post reviews of projects that have completed their construction phase? - Score 1: Ex post reviews of major projects are neither systematically required, nor frequently conducted. - Score 2: Ex post reviews of major projects, focusing on project costs, deliverables and outputs, are sometimes conducted. - Score 3: Ex post reviews of major projects focusing on project costs, deliverables, and outputs are conducted regularly by an independent entity or experts, and are used to adjust project implementation policies and procedures. *Annex 2. PIMA Questionnaire (IMF Technical Report excerpt).* ### 14. Management of Project Implementation: Are capital projects well managed and controlled during the execution stage? ### 14. Management of Project Implementation: Are capital projects well managed and controlled during the execution stage? ### Project management arrangements (14.a) - Indicator scoring scale: 1 = To no or a lesser extent; 2 = To some extent; 3 = To a greater extent. - Findings/options: - 1: Ministries/agencies do not systematically identify senior responsible officers for major investment projects, and implementation plans are not prepared prior to budget approval. - 2: Ministries/agencies systematically identify senior responsible officers for major investment projects, but implementation plans are not prepared prior to budget approval. - 3: Ministries/agencies systematically identify senior responsible officers for major investment projects, and implementation plans are prepared prior to budget approval. ### Rules, procedures and guidelines for project adjustments (14.b) - Findings/options: - 1: There are no standardized rules and procedures for project adjustments. - 2: For major projects, there are standardized rules and procedures for project adjustments, but do not include, if required, a fundamental review and reappraisal of a project’s rationale, costs, and expected outputs. - 3: For all projects, there are standardized rules and procedures for project adjustments and, if required, include a fundamental review of the project’s rationale, costs, and expected outputs. ### Ex post audits of capital projects (14.c) - Findings/options: - 1: Major capital projects are usually not subject to ex post external audits. - 2: Some major capital projects are subject to ex post external audit, information on which is published by the external auditor. - 3: Most major capital projects are subject to ex post external audit information on which is regularly published and scrutinized by the legislature. ### 15. Monitoring of Public Assets: Is the value of assets properly accounted for and reported in financial statements? ### Asset registers (15.a) - Findings/options: - 1: Asset registers are neither comprehensive nor updated regularly. - 2: Asset registers are either comprehensive or updated regularly at reasonable intervals. - 3: Asset registers are comprehensive and updated regularly at reasonable intervals. ### Recording nonfinancial asset values in government financial accounts (15.b) - Findings/options: - 1: Government financial accounts do not include the value of non- financial assets. - 2: Government financial accounts include the value of some non- financial assets, which are revalued irregularly. - 3: Government financial accounts include the value of most nonfinancial assets, which are revalued regularly. ### Depreciation of fixed assets in operating statements (15.c) - Findings/options: - 1: The depreciation of fixed assets is not recorded in operating statements. - 2: The depreciation of fixed assets is recorded in operating statements, based on statistical estimates. - 3: The depreciation of fixed assets is recorded in operating expenditures, based on asset-specific assumptions. ### Cross-cutting issues affecting implementation and asset monitoring - A IT support: Is there a comprehensive computerized information system for public investment projects to support decision making and monitoring? - B Legal Framework: Is there a legal and regulatory framework that supports institutional arrangements, mandates, coverage, procedures, standards and accountability for effective PIM? - C Staff capacity: Does staff capacity (number of staff and/or their knowledge, skills, and experience) and clarity of roles and responsibilities support effective institutions? ### Annex 3. C-PIMA Questionnaire — Climate-aware planning and oversight ### C1. Climate-aware planning - C.1.a Consistency with NDC or overarching climate strategy: - 1: Not consistent. - 2: Consistent for some sectors. - 3: Consistent for most sectors. - C.1.b Regulations on spatial/urban planning and construction: - 1: Do not address climate-related risks. - 2: Either spatial/urban planning or construction (through building codes) addresses climate-related risks. - 3: Both spatial/urban planning and construction (through building codes) address climate-related risks. - C.1.c Centralized guidance/support for preparation and costing: - 1: No centralized guidance/support. - 2: Centralized guidance/support for preparation. - 3: Centralized guidance/support for preparation and costing. ### C2. Coordination between entities - C.2.a Decision making coordinated across central government from a climate-change perspective: - 1: Not coordinated. - 2: Coordinated across budgetary central government. - 3: Coordinated across all central government, including externally financed projects, PPPs and extra-budgetary entities. - C.2.b Coordination with sub-national governments (SNGs): - 1: Not coordinated. - 2: Central government issues guidance; information on major climate-related projects of SNGs is shared with central government and published alongside central government projects. - 3: As in 2, and there are formal discussions between central government and SNGs on planning and implementation of climate-related investments. - C.2.c Regulatory/oversight framework for public corporations: - 1: Does not promote consistency with national climate policies. - 2: Promotes consistency. - 3: Requires consistency. ### C3. Project appraisal and selection — climate-related analysis - C.3.a Appraisal of major infrastructure projects require climate-related analysis by standard methodology: - 1: Does not require. - 2: Requires. - 3: Requires and a summary of appraisals is published or subject to independent external review. - C.3.b Framework for longer-term contracts (PPPs) and climate risk: - 1: Does not include explicit consideration. - 2: Includes explicit consideration for risk allocation. - 3: Includes explicit consideration and mandates contract managers to address climate-related challenges. - C.3.c Climate-related elements among selection criteria: - 1: No explicit selection criteria or climate elements not included. - 2: Included for all major budget-funded projects and published. - 3: Included for all major projects including externally financed projects, extra-budgetary entities, and PPPs, and published. ### C4. Budgeting and portfolio management for climate investments - C.4.a Identification, monitoring and reporting of climate-related public investment in the budget: - 1: Not identified. - 2: Some are identified, including externally funded, extra-budgetary, and PPPs. - 3: Most planned climate-related expenditure, sources of financing, outputs and outcomes are identified, including externally funded, extra-budgetary, and PPPs, and expenditure is monitored and reported. - C.4.b Ex-post reviews/audits of climate mitigation/adaptation outcomes: - 1: No ex-post reviews or audits. - 2: Ex-post reviews or audits for selected major investments of either mitigation or adaptation outcomes. - 3: Ex-post reviews or audits conducted and published for selected major investments of both mitigation and adaptation outcomes. - C.4.c Asset management policies and methodologies addressing climate-related risks: - 1: Neither policies/practices nor methodologies address climate-related risks. - 2: Methodologies for some climate-exposed assets address climate-related risks. - 3: Methodologies for most climate-exposed assets address risks, and asset registers include climate-related information. ### C5. Risk management of climate-related fiscal risks - C.5.a National disaster risk management strategy: - 1: No published strategy or it does not identify key climate-related risks to public infrastructure. - 2: Publishes a strategy that identifies key climate-related risks in terms of hazards, exposure, and vulnerability. - 3: Publishes a strategy that identifies and analyses risks in terms of hazards, exposure and vulnerability, and includes plans to mitigate and respond. - C.5.b Ex ante financing mechanisms for climate-related damages: - 1: No ex-ante financing mechanisms. - 2: There is an annual contingency appropriation in the budget or other financing mechanisms available to meet costs of climate-related damages. - 3: There is an annual contingency appropriation in the budget and other financing mechanisms available to meet costs. - C.5.c Fiscal risk analysis incorporating climate-related risks: - 1: No fiscal risk analysis incorporating climate-related risks. - 2: Conducts and publishes a qualitative assessment of climate-related risks to public infrastructure assets over the medium term. - 3: Conducts and publishes a quantitative assessment of climate-related risks to public infrastructure assets over the medium term and policies to mitigate these risks, and a qualitative assessment of long-term risks. ### Annex 4. Detailed PIMA Scores (extract) - Institutional Design / Effectiveness table entries (selected exact cells as presented): - 1.a.3 3 6.a.3 1 1.a.3 3 - 1.b.1 1 6.b.2 2 1.b.2 1 - 1.c.3 1 6.c.3 1 1.c.3 3 - 2.a.1 1 7.a.3 3 2.a.3 3 - 2.b.1 1 7.b.3 2 2.b.3 2 - 2.c.1 1 7.c.3 3 2.c.3 3 - 3.a.-- 8.a.2 3 3.a.3 3 - 3.b.-- 8.b.2 2 3.b.3 1 2 - 3.c.3 3 8.c.1 2 3.c.3 1 1 - 4.a.2 2 9.a.1 1 4.a.2 2 - 4.b.2 2 9.b.1 2 4.b.2 2 - 4.c.3 2 9.c.2 1 4.c.3 2 1 - 5.a.1 1 10.a.2 3 15.a.3 1 - 5.b.1 1 10.b.1 2 15.b.1 1 - 5.c.3 3 10.c.2 1 15.c.1 1 - Legend reproduced exactly from the table: - A. Planning - B. Allocation - C. Implementation - Not met / Partially met / Met ### Annex 5. Project Selection Scoring Table — guidance and example criteria - Purpose: Prioritize and select projects by identifying factors, assigning weights, scoring, and selecting projects with highest total scores; adjust for outliers and large projects that may crowd out smaller ones. - Design principles: - Weights should be calibrated through experience. - Include political preferences if appropriate. - Specialist agencies (e.g., SIA or National Climate Change Commission) may rate some factors. - Weights can be positive and negative; risks should reduce total score. - Avoid using ratios such as benefit/cost directly in scoring tables. - Example criteria and exact values from Table 9: - Importance - clearly aligned with National Development Strategy goals: Weight 5; Scoring: 0 – no alignment; 3 – 1 priority goal; 4 – 2 or more priority goals. - Importance – cited in sector plan or masterplan: Weight 5; Scoring: 0 – not cited or no plan; 3 - cited. - Importance – cited as high priority by President or Cabinet: Weight 5; Scoring: 0 - no; 3 - yes. - Effectiveness – increases major outcome performance indicator over 5 years: Weight 4; Scoring: 0 – none; 1 – between 1% and 5%; 2 – between 5% and 10%; 3 – between 10% and 20%; 5 – more than 20%. - Efficiency – reduces operating cost over 10 years: Weight 4; Scoring: 0 – none; 1 – 50% of project cost; 3 – 100% of project cost; 5 – 200% of project cost. - Financing: Weight 3; Scoring: 0 - commercial loan; 1 – own resources; 3 - concessionary loan; 5 - grant. - Climate mitigation / adaptation - rated by National Climate Change Committee: Weight 4; Scoring: 0 – not measurable; 2 – minor; 4 - major. - Cost risk when completed – rated by SIA: Weight -2; Scoring: 0 – little; 1 – moderate; 2 - high. - Timing risk for beginning in proposed year of Medium-Term Expenditure Strategy – rated by SIA: Weight -2; Scoring: 0 – little; 1 – moderate; 2 - high. - Timing risk for completion as planned – rated by SIA: Weight -2; Scoring: 0 – little; 1 - moderate; 2 - high. - Disaster risk – rated by Disaster Risk Management Division: Weight -2; Scoring: 0 – little; 1 – moderate; 2 - high. - Consumes limited resources – land, labor, materials; rated by SIA and Planning Authority: Weight -2; Scoring: 0 – little; 1 – moderate; 2 - high. ### Annex 6. Good Practice in Post Project Reviews and Acting on Findings - Core message: Ex-post review of major projects is widely regarded as a core phase of the investment life-cycle; good practice examples: - Infrastructure Australia (example): detailed requirements for post completion review including forecast and outturn data on cost, schedule and benefits, interviews with project delivery team, and communication of findings and recommendations for future projects. - UK: The Green Book documents requirements for ex-post evaluation covering process and impact evaluation; IPA undertakes periodic reviews and in 2019 documented 24 lessons from four transport megaprojects. - Ireland: Review of construction problems in the National Children’s Hospital recommended governance reforms, informing changes to the Public Spending Code including arrangements for project governance, risk management and cost forecasting. *Source: 1sycea2023003 - 14. Management of Project Implementation: Are capital projects well managed and controlled during the execution stage?* --- _Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1sycea2023003.pdf_