## tarea2024021 ## Source details **Canonical URL:** [tarea2024021](https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024021.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2024/english/tarea2024021.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2024/english/tarea2024021.pdf.json) --- ### Preface — mission, leadership, and engagement - Mission mandate and timing: - At the request of the Guatemalan Minister of Public Finance, between May 30 and June 19, 2023 a team from the IMF's Fiscal Affairs Department (FAD) and CAPTAC-DR conducted a PIMA and the C‑PIMA. - Mission conducted in hybrid mode (initial virtual phase, subsequently in person). - Mission leadership and team composition: - Team lead: Jean-Baptiste Gros (FAD Senior Economist). - Team members: Christophe Hemous (FAD Economist), Martha Cubillo (CAPTAC-DR Long-Term Expert), Noel Gallardo (FAD Project Manager), Eduardo Aldunate, Jorge Baldrich, Rui Monteiro, Margarita Rosas (FAD Short-Term Experts). - Remote support: Letitia Li (Research Assistant). - Workshops and presentation of results: - Remote workshop: April 13. - In-person preliminary results: June 13 and 14. - Preliminary results presented to MARN Minister Mr. Gerson Barrios; MINFIN Deputy Minister Mr. Saúl Figueroa; SEGEPLAN Permanent Secretary Manuel Alonso Araujo. - Key counterpart meetings: MINFIN, SEGEPLAN, MARN, MCIV, Ministry of Public Health and Social Welfare, and multiple decentralized/autonomous entities and public corporations (ANADIE, CONRED, INSIVUMEH, CONADUR, Empresa Portuaria Quetzal, Empresa Portuaria Santo Tomas de Castilla, INDE, CNEE, SIT). - Acknowledgements: logistical support and coordination by Raimundo Rodas, Deputy Director of Economic Analysis, MINFIN. ### Executive Summary — macroeconomic significance and headline findings - Growth impact: - Increasing the stock of public capital by the equivalent of 1 GDP percentage point would increase GDP by 0.3 percent in the short term and 0.8 percent in the medium term (multiplier via foreign direct investment). - Fiscal stance and investment trends: - Budget operates de facto under a sub-2 percent deficit rule and pursues keeping debt below 40 percent of GDP. - Central government public investment has remained close to 1 percent of GDP over the last 15 years. - Percentage of total expenditure corresponding to investment has been less than 20 percent every year since 2015. - Stock of public capital: 40.8 percent of GDP in 2019; this value was three times higher on average in emerging countries. - 98 percent of public investments financed internally. - PIMA overall: institutional design generally scores higher than effectiveness. - Notable strengths: fiscal stability, FEPIP manuals, inclusion of disaster risk analysis in project selection, coverage of project recording in SINIP, project financing rules protecting budgeted resources, constitutional protection that funds allocated to investments cannot be used for other expenditure. - Main weaknesses: planning not aligned with financial constraints; lack of continuity in projects and proliferation of new projects; insufficient maintenance resources and absence of maintenance criteria; low procurement competitiveness and no independent complaints body; lack of central multi‑year monitoring; lack of information on total project costs, modifications, cost overruns, setbacks. - Climate (C‑PIMA) summary: - Guatemala highly vulnerable to floods (river, urban, coastal), earthquakes, tsunamis, volcanic activity, extreme heat, and landslides; occurrence and cost of disasters have increased markedly in the last 30 years. - Progress: Law on Climate Change; FEPIP provisions; climate thematic budget classifier; adoption of ex-ante financial instruments. - Gaps: strategies not implemented across all public sector actors; MARN lacks activities to encourage/coordinate/monitor climate investments; SEGEPLAN does not ensure application of climate provisions in land-use planning; MINFIN analyzes fiscal risks from natural disasters but policy development for adaptation of infrastructure insufficient; need to promote thematic budget classifier use. - PIMA/C‑PIMA module highlights (institutional strength; effectiveness; reform priority): - Planning: Fiscal objectives and rules MEDIUM/MEDIUM/Medium; Project appraisal HIGH/MEDIUM/Medium. - Allocation: Multi-year budgeting LOW/MEDIUM/Medium; Investment budgeting HIGH/MEDIUM/High; Maintenance resources LOW/LOW/High; Project selection HIGH/MEDIUM/High. - Implementation: Procurement MEDIUM/MEDIUM/High; Investment portfolio management and supervision MEDIUM/LOW/High; Monitoring of public assets LOW/LOW/Medium. - C‑PIMA: C1 MEDIUM/Medium; C2 LOW/High; C3 MEDIUM/Medium; C4 LOW/Medium; C5 MEDIUM/Medium. - Seven recommended objectives (summary): - Strengthen articulation of investment planning and programming. - Improve project formulation methodologies with risk analysis. - Increase transparency of investment and maintenance budget. - Strengthen annual and multi-year budgeting to improve public investment cycle and budget credibility. - Improve competitiveness and access to procurement information. - Establish differentiated model for centralized monitoring and follow-up of investment projects. - Increase interoperability and automation of information systems, in particular between SINIP and financial management systems. - Selected high-priority actions: - Prepare and approve governmental decision of SNIP to define SEGEPLAN role in programming and monitoring. - Prioritize completion of ongoing projects; include a calibration stage in budget process to determine available budgetary space. - Restrict incorporation in the budget of projects lacking a favorable SEGEPLAN technical opinion to emergency response projects only. - Add clause to Organic Budget Law (LOP) requiring projects added by Congress to be registered in SINIP and incorporated into the following year's budget based on fiscal space availability. - Estimate current and capital expenditure baselines to define multi-year fiscal space for new projects. - Publish with the draft budget the costs of projects: past-year expenditure, current-year expected expenditure, planned future-year expenditure. - Publish quarterly monitoring dashboard for priority investment projects showing cumulative physical and financial progress, cost overruns, and difficulties. - Strengthen mandate and capacity of MARN to coordinate and monitor climate investment against climate objectives. ### Trends in public investment, capital stock, and financing (2000s–2020s) - Historical public investment levels: - Public investment peaked in 1999 at 6.41 percent of GDP. - Public investment low of 2.69 percent of GDP in 2004; recovered to 3.85 percent of GDP in 2009; clear downward trend since 2009. - Between 2010 and 2019 public investment decreased to a minimum of 0.99 percent (2016). - Capital stock: - Decline in capital stock since 2009; stock of public capital represented 40.8 percent of GDP in 2019. - Relative positioning: - Guatemala lower than Central America and EMEs on public investment and public capital stock; classified among Latin American countries with lowest public capital stock relative to GDP. - Financing, debt, deficit: - 2010–2022: central government debt and deficit remained almost stable. - Over past three years, debt close to 30 percent of GDP. - Fiscal deficits ranged from 3 percent to 1 percent of GDP during 2010–2022. - Contribution of public investment expenditures to central government expenditures fell from more than 25 percent in 2010 to 17 percent in 2022. - Execution and composition: - 2008–2022 average execution rate: 85.5 percent; range: 72 percent to 94 percent. - Execution rate lowest: 72 percent (2015); highest: 94 percent (2008). - Execution rate >90 percent only in 2008, 2012, 2018. - 2016–2022 composition (2022 amounts and shares): - Economic infrastructure: 0.6 percent of GDP; 49 percent of total public investment. - Social sector: 0.3 percent of GDP; 26 percent of total public investment. - Defense, security, and justice: 0.1 percent of GDP; 6 percent of total public investment. - Other sectors: 0.2 percent of GDP; 19 percent of total public investment. - General government direct investment 2014–2022: ranged from 1.5 to 2.5 percent of GDP. - Local governments accounted for an average of 67 percent of general government direct investment. - MCIV contributed about 70 percent of central government investment in the transport sector. - As of June 2023, 44 percent of the 18 projects with requests exceeding Q50 million in 2021 had an effective allocation. - Of more than 1,000 projects prioritized in the Road Development Plan (PDV), only 10 percent had resources allocated in the budget between 2018 and 2023. - Infrastructure access and efficiency: - Improved educational infrastructure access since 1990s; setbacks in electricity and public health infrastructure access. - IMF PIMA hybrid efficiency gap estimated at 25 percent (for same expense, benefits could be 25 percent higher). - Hybrid indicator (PIE-X) calculated with information from 2017. ### Planning, appraisal, and selection — institutional observations - Planning and sector strategies: - National plans linked to five-year sectoral operational plans (MYOPs); projects not always included in the budget. - MYOPs include institutional indicators, targets, and annual/multi-year programming. - High percentage of projects in major sectors included in plans are not prioritized for budget inclusion. - Project appraisal and SEGEPLAN: - SNIP regulations define four cost ranges and study levels to obtain SEGEPLAN technical opinion: two profile types, pre-feasibility study, feasibility study. - FEPIP Guide is standard methodology; used across project types; sector-specific methodologies generally absent except HDM-4 for roads. - AGRIP tool complements FEPIP for disaster/climate risk analysis; AGRIP forms include volcanic events, landslides, floods, hurricanes, climate change. - Not all pre-investment studies address all FEPIP aspects; pre-investment studies are not published (contrary to international best practice). - Some accounting price ratios (RPCs) calculated; key social prices (social discount rate, value of time) not determined or published. - Project selection and prioritization: - SEGEPLAN issues detailed technical opinions; low percentage of projects favorable on first admission in 2022. - Projects are sometimes included in the budget without favorable SEGEPLAN opinion, especially those added by Congress during budget approval. - Document "Project Prioritization Criteria for the Public Investment Program Fiscal Year 2023 and Multi-year Budget 2023-2027" exists but no record of use. - Table 9 (SEGEPLAN favorable opinions in 2022): Overall total favorable first admission: Number 459; Percent 13.34%. Favorable after two or more admissions: Number 2,983; Percent 86.66%. - Recommendations (selection/appraisal): - Restrict incorporation in the budget of projects without prior favorable SEGEPLAN opinion to emergency projects only. - Publish pre-investment studies in SINIP and project costs with draft budget. - Improve FEPIP to better analyze non-disaster implementation risks and publish implicit costs for key parameters. ### Investment budgeting, multi‑year frameworks, and budget unity - MTFF and fiscal rules: - MINFIN deficit target and borrowing limit defined as average for 5 years (fiscal year plus next four years). - MTFF 2023‑2027 objective: average central government fiscal deficit of 1.3 percent of GDP and average borrowing level of 40 percent of GDP. - MTFF published since 2019 but does not identify capital expenditure separately; operating and investment expenditure presented in a single aggregate. - Recommendation: MTFF should distinguish operating vs capital expenditure and determine debt path consistent with medium-term sustainable development goals. - Multi-year budgeting: - Multi-year budget presents aggregate capital expenditure projection for budget year and following four years, without distribution by ministries/sectors. - Multi-year capital expenditure projections began with 2021 budget and 2022–2025 multi-year budget. - Comparison for 2023: Budget 2022 projection for 2023: 4,416 (Million GTQ). Capital Expenditure Appropriation Approved: 4,388 (Million GTQ) for 2022 and 4,371 (Million GTQ) for 2023. Appropriation 2023 budget / Projection made in 2022 budget: -1.02%. - PIP and budget 2023: Projects in 2023 PIP = Q 14.398 billion. Investment projects in budget = Q 3.352 billion for budget entities and Q 3.392 billion for Development Councils. - Budget coverage and trusts: - Number of central government trusts fell from 36 in 2015 to 19 in March 2023. - Capital expenditure by trusts in 2022 equivalent to 0.03 percent of central government capital expenditure. - Budget execution 2022: central government Q108.593 billion; trusts Q760 million. - Externally financed capital expenditure can be identified at project level in Investment Program; investments by PCs, concessions, PPPs not included/commented in budget documents. - Congressional additions: - Congress added projects to 2023 budget: Q 499 million (7.4 percent of total Q 6.744 billion for projects included in Budget); elsewhere noted as Q499 million representing 11 percent of investment projects in the budget bill sent by the Presidency. - Practice of Congress incorporating projects during budget approval prevents DTP analysis in budget preparation. - Example reform: projects added by Congress when budget is voted must not be included in the budget being voted but be incorporated into the following year's budget bill; evaluated by SEGEPLAN and have financing in the following year. - Investment budgeting reporting: - LOP requires budget documents to report total costs of multi‑year projects and past/current/future amounts; in practice budget only includes amount expected to accrue in fiscal year, not total cost. - Table 7 (Selected lines and totals for 2021 and 2022, Million GTQ): - Total — 2021: Assigned 4,791; Actual 4,861; Accrued 3,655. - Total — 2022: Assigned 4,386; Actual 5,557; Accrued 4,514. - Recommendation: integrate investment planning with budget via steps including projection of revenues, determination of aggregate ceiling, projection of current and capital baselines, determination of fiscal space, distribution between new current expenditures and new projects, issuance of budget circular communicating ceilings. ### Resources for maintenance — major gaps and recommendations - Institutional assessment: Institutional Strength LOW; Effectiveness LOW; Reform Priority High. - Key facts and gaps: - No standard methodology to assess routine maintenance needs across major public assets. - FEPIP Guide requires maintenance costing in pre-investment studies but MINFIN indicates they do not follow maintenance costs of each project. - Mission estimate: total maintenance expenditures (regular and capital) per km of road network are one third of average for representative sample of countries (source: PIMA guide). - Government recovery plan for road network; law to strengthen maintenance approved March 2022. - DGC and COVIAL implementing HDM-4 to evaluate new investment projects and maintenance costs. - Maintenance spending misclassification: regular maintenance often recorded in operating lines 161–176 and capital maintenance in lines 331–332; no consolidated separation exists. - Recommendations: - Establish standard methodologies quantifying necessary expenditure for regular and capital maintenance (e.g., HDM-4 for roads). - Identify and report different types of maintenance expenditures transparently within the budget to allow tracking. ### Procurement, availability of resources, and execution - Procurement (Institutional Strength MEDIUM; Effectiveness MEDIUM; Reform Priority High): - Law on Government Procurement (LCE) promotes competitive open tendering, but number of bids in major public works low. - Sample Jan 2022–Apr 2023, 13 MCIV projects > GTQ 200 million: nine received only one bid; two received two bids; one received four bids. - Rules include automatic elimination of abnormally low tenders without feasibility verification, facilitating collusion. - Guatecompras platform: complete database but lacks analytical reports, exportability, easy filtering; linked to SIGES. - LCE provides complaints mechanism, but no independent complaints body; procuring entities resolve reviews administratively; percentage of complaints upheld at administrative stage varied between 23 percent and 25 percent over past three years. - Short-term recommendation: analyze causes of very low competition in major public works and propose corrections. - System improvements: Guatecompras to enable periodic indicators, improve filtering and prevention flags, consider independent complaints resolution body and greater timeliness. - Availability of resources (Institutional Strength MEDIUM; Effectiveness MEDIUM; Reform Priority Low): - Cash-flow and commitment mechanisms: CDP requirement (Article 29a LOP); COPEP defines implementation and payment installments; administrative procurement regulations lay down 30 days for payment once good/service accepted; National Treasury quality standard: maximum of 78 hours for bank deposit after ordering in SIGES; TN average for April 2023: 1.27 days. - Gaps: no systematic monitoring from invoice receipt to ordering of payment; SIGES must allow traceability of payments. - External financing: fully incorporated in TSA; external resources held at Bank of Guatemala in separate accounts; disbursements processed without delays; funds from donations incorporated into TSA only if agreement allows. - Recommendation: enable SIGES traceability, analyze deviations from financial programming with implementing entities. - Management and supervision of investment portfolio (Institutional Strength MEDIUM; Effectiveness LOW; Reform Priority High): - SEGEPLAN monitoring focuses on annual execution and lacks multi‑year cumulative execution view or formal assessment explaining delays/overspending. - SEGEPLAN provides Parliament quarterly fulfilment report and monthly public investments monitoring at aggregate level; SNIP shows project stage but not multi-year cumulative performance. - Reallocation of funds regulated by Article 32 LOP; no ceilings on authorized transfer amounts; MINFIN approves transfers checking legal compliance but not economic rationale; sectors can request up to four transfers per month. - Table 10 (selected reallocation examples, Million GTQ) demonstrates large and frequent reallocations across years and projects (detailed entries provided in source). - Recommendations: centralized tracking for major projects; require SEGEPLAN to monitor cumulative execution and report cost overruns and reasons; limit unexamined reallocations. ### Project implementation, ex‑post reviews, and monitoring of public assets - Ex‑post reviews (finding: not carried out) - FEPIP mentions ex-post reviews but none are carried out. - SEGEPLAN Directorate of Analysis and Monitoring focuses on on-site visits to completed projects; sectoral ministries do not carry out ex-post reviews. - Recommendation: SEGEPLAN should establish list of major/priority projects and publish quarterly monitoring dashboard with accumulated physical and financial progress for these projects; implement ex-post review process as priority for SEGEPLAN monitoring directorate. - Management of project implementation: - FEPIP requires implementing entities to submit financial/physical schedules but does not require identification of individual project owners; in practice a person responsible is often appointed though not systematically recorded. - Frequent project adjustments: sectoral ministries use adjustment options frequently, "up to ten times during a year per project." - Sample of 5 Social Solidarity Fund projects: average adjustments of 20 percent relative to initial cost. - SEGEPLAN issues new technical opinions when required but does not record cost overruns from adjustments or perform new cost/benefit analyses. - Recommendations: - Require designation of a person responsible for each project and record in SNIP. - SEGEPLAN to record adjustments greater than 10 percent on dashboard; conduct new cost/benefit analysis when adjustments exceed 20 percent of initial value. - CGC to introduce analysis elements for total project cost in ex-post audits. - Monitoring of public assets (Institutional Strength LOW; Effectiveness LOW; Reform Priority Medium): - No legal/regulatory requirement for systematic recording of non-financial fixed assets. - Directorate of Government Assets designated but no accounting/regulatory policy issued. - Registration decentralized; frequency of updates entity-specific. - IPSAS implementation in progress; financial statements disclose fixed assets and constructions in progress but accounting records not exhaustive. - Recommendations: - Issue public-sector-wide accounting policy for recognition, measurement, disclosure of fixed assets and depreciation/revaluation. - Apply IPSAS 17 criteria in the short term. - Integrate asset recording and control with central accounting system (SICOIN) or adopt stock control procedures and offline updates to ensure consistency between asset records and financial statements. - IPSAS 17 accounting model options: Cost Model and Revaluation Model (preserved verbatim). ### Alternative financing, PPPs, public corporations, and fiscal risks - PPPs and ANADIE: - Law on Partnerships for the Development of Economic Infrastructure (2010) establishes PPP rules. - Only one PPP contract signed; no concessions. - ANADIE: provides technical support, inspection directorate, pre-feasibility studies, prequalification, publishes portfolio with seven projects in study phase totaling 1.8 percent of GDP. - Portfolio status: five projects in design, one in tender prequalification, Escuintla Puerto Quetzal toll highway approved by Congress end-2021 (no government guarantees). - Role and coverage of public corporations (PCs): - PCs implement about one-quarter of public sector investment projects. - Eight national non-financial enterprises and sixteen municipal enterprises exist. - DCE receives annual financial statements of all PCs. - Fiscal Risks Report provides annual assessment of profitability, liabilities, liquidity but not review of PCs' investment plans. - 90 percent of total investment of PCs made by Santo Tomas de Castilla, Empresa Portuaria Quetzal, and INDE. - No dedicated process/unit to ensure coordination of PCs' investment plans with national priorities. - Gaps and suggested investigations on PPP rarity: - Investigate whether Parliament approval is an obstacle; whether ANADIE resources are insufficient; whether authorities lack knowledge about PPP tools. - Suggested study of Chile, Colombia, Mexico experiences. - Policy recommendations: - Define government's objectives as shareholder; establish active monitoring of PCs by dedicated unit; publish annual report outlining PCs' investment projects and outcomes. - Promote greater competition in infrastructure subsectors; use PPPs only when cost-benefit analysis demonstrates appropriateness. - Require legislation for PCs, subnational governments, PPPs/concessions to submit to MINFIN estimates of contingent liabilities; include consolidated contingent liability estimates in fiscal risks chapter of budget documents; enable MINFIN to run risk scenarios. ### Climate integration (C‑PIMA) — vulnerability, targets, and public investment role - Climate exposure and observed changes: - Guatemala high vulnerability: extreme rainfall, droughts, tropical cyclones, heat waves, frosts, floods, forest fires, earthquakes, tsunamis, volcanic activity, landslides. - Risk Report index 2023: Guatemala ranks 35th out of 191 countries (risk class: high). - Human Development Index: rank 135 out of 189 countries (2021 data). - Observed changes: increase in annual rainfall of 122 mm (sporadic/geographically dispersed); increase of 0.8°C over last 20 years. - Projected by end of century: temperature increase between 1°C and 4°C; annual rainfall decrease between 500 mm and 1100 mm across the country. - Around 75 percent of population lives in areas exposed to floods, droughts, landslides. - Economic losses due to hydrometeorological events: around USD 1.32 billion in 2010–2019. - From 1992 to 2022: 97 disasters caused by natural phenomena (previous 30 years: 22); losses 1992–2022 valued at USD 4.225 billion vs USD 605 million from 1961–1991 (inflation adjusted). - Guatemala ranks 144th globally in preparedness to face climate problems (ND-GAIN 2020). - Emissions and energy targets: - Guatemala's contribution to global GHG emissions negligible. - NDC target: 11.2 percent reduction in emissions projected by 2030. - With government resources plus international support, up to 22.6 percent total emissions reduction possible relative to estimated trend scenario for 2030. - ENE-3 requirement: "80 percent of electricity generation comes from clean energy by 2030." - National Energy Plan 2017–2032 (published 2016); Low Emission Development Strategy 2018. - Role of public investment: - Key role in decarbonizing infrastructure and mitigating climate impacts. - 2021 NDC Update: infrastructure adaptation has "no defined goals but a roadmap"; highlights guidelines for updating land use and development plans to include adaptation and resilience. - C‑PIMA scope and detailed findings: - C1 (planning): Government climate goals considered in infrastructure strategies but not prioritized; building regulations do not address climate risks; recommendation to adapt building codes and land-use plans and develop proactive adaptation strategy using vulnerability maps. - C2 (coordination): Highly decentralized planning; institutional coordination on climate investments weak; MARN has no activities to encourage/coordinate/monitor climate investments; recommendation: coordinate central, subnational, PCs, PPPs, communities; MARN to play central support/monitoring role; update UGAM Guide. - C3 (appraisal/selection): SNIP, FEPIP, Law on Climate Change include climate provisions; AGRIP tool includes climate form; PPP framework (Decree 16/2010) does not consider climate for risk allocation; recommendation: improve data quality, publish guidelines, ensure inclusion of emission abatement costs in evaluations where appropriate. - C4 (budgeting/portfolio): Thematic budget classifier designed and guide published in 2020 but "has not been adopted by ministries"; MARN budget program targets for 2023 show implementation shortfalls (Table 11 sample figures: Program 11 targets vs implementation as of April 2023; see source for exact figures). Recommendations: adopt thematic classifier; introduce climate lens into budgeting and ex-post reviews; record assets with depreciation valuations to assess disaster damages. - C5 (risk management): MINFIN negotiating contingent loan up to USD 190 million expected approved in 2024; Fondo Emergente appropriation GTQ 110 million activated with prior Congressional authorization; CCRIF parametric insurance renewed June 2022 with maximum coverage USD 7 million for 2022/23. - Financial strategy for disaster risk (2018) exists but analysis of economic effects on public infrastructure not yet available. - Recommendation: develop financial risk management approach incorporating public infrastructure exposure; complete mitigation plans following MPRES; extend adaptation criteria and financing to existing infrastructure. - Information systems and interoperability: - SINIP used for planning; georeferencing via Google Maps. - Guatecompras interoperable with SIGES; SIGES interoperates with SICOIN. - Municipalities not part of SIGES; use SICOIN-GL. - Data capture and parameterization issues: incomplete reflection of real project conditions; checklists sometimes marked complete incorrectly. - Climate change budget classifier operational in SICOIN but not implemented. - Recommendations: improve interoperability via standardized codes/catalogs; automate processes and controls; improve data structure/integrity; enable traceability at all stages; strengthen transparency and progressive disclosure. ### Capacity, staffing, and institutional strengthening priorities - Capacity findings: - SEGEPLAN and MINFIN strong in planning/formulation/programming; fiscal projections and monitoring resources limited. - DAPF small technical team of 9; requires frequent external support. - SEGEPLAN formulation team 36 vs monitoring team 9 (ratio ~4:1). - 2023 PIP includes 286 new projects; average of 8 projects per SEGEPLAN technician for formulation. - Low level of interaction and coordination at team level between MINFIN and SEGEPLAN despite system integration. - Recommendations: - Strengthen DAPF by increasing technicians for fiscal projections and risk analysis. - Increase articulation capacity of DTP with SEGEPLAN for medium-term projections of investment and operation. - Strengthen SEGEPLAN monitoring teams to produce effective reports influencing resource allocation. - Strengthen MARN teams to support role as secretariat of National Council on Climate Change and provide guidelines for climate criteria application in projects. ### Priority Action Plan — selected timeline and institutional roles (selected items) - Create and approve SNIP Governmental Agreement to define SEGEPLAN role in programming and monitoring (recommended institutions: SEGEPLAN, MINFIN; Reform priority High). - Improve linkage between planning and programming with plans aligned through performance targets and realistic costs (recommended institutions: MINFIN, SEGEPLAN; Reform priority Medium). - Restrict budget inclusion to projects with prior favorable SEGEPLAN technical opinion, except emergencies (MINFIN, SEGEPLAN; Reform priority High). - Estimate funds needed for capital and routine maintenance using international-standard methodology (DTP, implementing units; Reform priority Medium). - Publish pre-investment studies in SINIP and project costs with the draft budget (SEGEPLAN, DTP; Reform priority High). - Define criteria for "priority investment projects", prepare quarterly monitoring dashboard, require appointment of a person responsible for each project and record in SINIP, record adjustments exceeding initial amount of 20 percent with new cost/benefit assessment (SEGEPLAN; Reform priorities High/Medium). - Strengthen financial strategy for disaster risks by incorporating exposure of public infrastructure by asset type, location, vulnerability and mitigation plans (DAPF, MARN; Reform priority Medium). - Increase interoperability and automation of systems, digitize processes, consider digital signatures, and improve data quality and business rules (MINFIN, SEGEPLAN; Reform priority Medium). *International Monetary Fund — Technical Assistance Report (tarea2024021).* ### PREFACE _______________________________________________________________________ 8 ### PREFACE ### Mission mandate and timing - At the request of the Guatemalan Minister of Public Finance, between May 30 and June 19, 2023 a team from the IMF's Fiscal Affairs Department (FAD) and the IMF's Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic (CAPTAC-DR) conducted a public investment management assessment (PIMA) and the climate change module (C-PIMA). - The mission was carried out in hybrid mode, with an initial virtual phase and subsequently in person. ### Mission leadership and team composition - Team lead: Jean-Baptiste Gros (FAD Senior Economist). - Team members: Christophe Hemous (FAD Economist), Martha Cubillo (CAPTAC-DR Long-Term Expert), Noel Gallardo (FAD Project Manager), Eduardo Aldunate, Jorge Baldrich, Rui Monteiro, and Margarita Rosas (FAD Short-Term Experts). - Remote support: Letitia Li (Research Assistant). ### Workshops and presentation of results - A workshop to present the PIMA and C-PIMA was held remotely on April 13 with the participants of the mission and the authorities. - Preliminary results of the assessment were shared in an in-person workshop on June 13 and 14. - Ana Cristina Calderón (Inter-American Development Bank) and Monica Lehnhoff (World Bank) participated in the workshops and meetings that concerned them. - At the end of the mission, preliminary results and recommendations were presented to: - Minister of Environment and Natural Resources (MARN), Mr. Gerson Barrios - Deputy Minister for Revenue and Tax Assessment of the Ministry of Public Finance (MINFIN), Mr. Saúl Figueroa - Permanent Secretary for Planning and Programming of the Presidency (SEGEPLAN), Manuel Alonso Araujo ### Key meetings with central government counterparts - Ministry of Public Finance (MINFIN): - Marta Ríos, Director of the Technical Directorate of the Budget - Werner de Leon, National Treasurer - Clara Luz Hernández, Director of Government Accounting - Jorge Luis Garcia, Director of the Directorate-General of Government Procurement - William Morales, Deputy Director of Assistance to the Municipal Financial Administration (DAAFIM) - Jorge Escobar, Deputy Director of the Directorate of Fiscal Transparency - SEGEPLAN: - Permanent Secretary for Investment for Development, Marco Tulio Leonardo Bailón - Directors of Pre-Investment Planning, Investment, and Investment Monitoring areas - Ministry of Environment and Natural Resources (MARN): - Deputy Minister for Environment, Miguel Esteban Piedrasanta - Deputy Minister for Natural Resources and Climate Change, Hector Francisco Espinoza - Directorates of National Coordination, Climate Change, Water Basins, and Projects Unit - Ministry of Communications, Infrastructure, and Housing (MCIV): - Directorate-General of Roads, Directorate-General of Posts and Telegraphs, Directorate-General of Road Protection and Safety, Directorate-General of Transport - Ministry of Public Health and Social Welfare: - Strategic Planning Unit; Procurement and Maintenance Department ### Engagement with decentralized/autonomous entities and public corporations - National Agency for Partnerships for the Development of Economic Infrastructure (ANADIE) - National Coordinator for Disaster Reduction (CONRED) - National Institute of Seismology, Volcanology, Meteorology and Hydrology (INSIVUMEH) - National Council for Urban and Rural Development (CONADUR) - Empresa Portuaria Quetzal (Puerto Quetzal) - Empresa Portuaria Santo Tomas de Castilla (Puerto Barrios) - National Electrification Institute (INDE) - National Electricity Commission (CNEE) - Supervisory Authority for Communications (SIT) ### Acknowledgements - The mission team expressed appreciation for: - Excellent logistical organization in the office of the minister to facilitate the meetings. - Active participation of the different teams in discussions. - Coordination and support by Raimundo Rodas, Deputy Director of Economic Analysis of the Directorate of Analysis and Fiscal Policy of MINFIN, who coordinated meetings and deliveries of information and accompanied the mission to all sessions. - Availability of all authorities and officials who provided documentation and attended meetings. *International Monetary Fund — Technical Assistance Report* ### Executive Summary ### Executive Summary — tarea2024021 ### Overview and macroeconomic significance - Increasing the stock of public capital by the equivalent of 1 GDP percentage point would increase GDP by 0.3 percent in the short term and 0.8 percent in the medium term, thanks to the multiplier effect on foreign direct investment. - Guatemala has substantial growth potential that could be harnessed by increasing public investment. ### Current fiscal stance and public investment trends - The budget operates de facto under a sub-2 percent deficit rule and pursues the goal of keeping debt below 40 percent of GDP. - Central government public investment in relation to GDP has decreased over the last 15 years and has remained at a level close to 1 percent of GDP. - The percentage of total expenditure corresponding to investment has been less than 20 percent every year since 2015. - The stock of public capital represented the equivalent of 40.8 percent of GDP in 2019; this value was three times higher on average in emerging countries. - Per capita electricity production has improved but has not closed the gap with the average production of emerging economies. - Access to public educational infrastructure has been improving; access in the health sector has been decreasing. ### PIMA assessment — institutional strength and effectiveness - Overall finding: institutional design generally scores higher than effectiveness. - Notable institutional strengths: - High level of fiscal stability enabling a medium-term view of fiscal resources for investment. - Preparation of detailed assessment manuals (FEPIP) and inclusion of natural disaster risk analysis in project selection; coverage of project recording in SINIP. - Adoption of project financing rules that protect budgeted resources for investments and carryover projects; constitutional protection that funds allocated to investments cannot be used for other expenditure. - Main weaknesses in public investment management (impeding efficient spending): - Investment project planning does not adequately account for financial constraints, undermining prioritization. - Lack of continuity in existing projects and proliferation of new projects due to unclear budget space, frequent budget modifications, and prioritization of projects that do not meet selection criteria. - Insufficient resources for maintenance and absence of criteria to determine maintenance amounts and implementing agencies. - Low competitiveness in procurement processes and absence of an independent complaints body. - Lack of central-level monitoring for the life of projects: SEGEPLAN monitoring focuses on current-year financial and physical execution and does not provide a multi-year view; DTP lacks analysis to evaluate performance and costs. - Lack of available information on total project costs, modifications, cost overruns, and setbacks. ### Climate change integration (C‑PIMA) - Guatemala is highly vulnerable to floods (river, urban, coastal), earthquakes, tsunamis, volcanic activity, extreme heat, and landslides; the occurrence and cost of disasters have increased markedly in the last 30 years with the effects of climate change. - Progress and strengths: - Defined principles and norms to better consider natural disasters and climate change effects. - Development of mitigation and adaptation strategies for infrastructure; Law on Climate Change; FEPIP provisions for project formulation and review. - A climate change thematic budget classifier was created to identify expenditures that contribute to implementation of these strategies. - Significant progress in natural disaster review of investment projects and adoption of ex-ante financial instruments to manage infrastructure exposure to climate-related risks. - Gaps to address: - Strategies and plans are not implemented across all public sector actors (ministries, decentralized entities, subnational governments, public corporations). - High decentralization of public investment planning is not matched by climate coordination mechanisms. - Lead agency for climate change, MARN, has no activities to encourage, coordinate, or monitor climate investments; SEGEPLAN does not ensure application of climate provisions in land-use planning guide. - MINFIN analyzes fiscal risks from natural disasters but policy development to adapt infrastructure and public sector real assets to climate challenges is insufficient. - Need to promote use of the thematic budget classifier. ### PIMA and C‑PIMA summary findings (selected table highlights) - Planning phase: - Fiscal objectives and rules: Institutional Strength MEDIUM; Effectiveness MEDIUM; Reform priority Medium. - Project appraisal: Institutional Strength HIGH; Effectiveness MEDIUM; Reform priority Medium. - Allocation phase: - Multi-year budgeting: Institutional Strength LOW; Effectiveness MEDIUM; Reform priority Medium. - Investment budgeting: Institutional Strength HIGH; Effectiveness MEDIUM; Reform priority High. - Maintenance resources: Institutional Strength LOW; Effectiveness LOW; Reform priority High. - Project selection: Institutional Strength HIGH; Effectiveness MEDIUM; Reform priority High. - Implementation phase: - Procurement (The Agreement): Institutional Strength MEDIUM; Effectiveness MEDIUM; Reform priority High. - Investment portfolio management and supervision: Institutional Strength MEDIUM; Effectiveness LOW; Reform priority High. - Monitoring of public assets: Institutional Strength LOW; Effectiveness LOW; Reform priority Medium. - C‑PIMA module summary (institutional strength and reform priority): - C1 Planning for climate change: MEDIUM; Reform priority Medium. - C2 Coordination between entities: LOW; Reform priority High. - C3 Project appraisal and selection: MEDIUM; Reform priority Medium. - C4 Budgeting and portfolio management: LOW; Reform priority Medium. - C5 Risk management: MEDIUM; Reform priority Medium. ### Recommended objectives and priority actions - Seven major objectives: - Strengthen articulation of investment planning and programming. - Improve project formulation methodologies with risk analysis. - Increase transparency of the investment and maintenance budget. - Strengthen annual and multi-year budgeting to improve the public investment cycle and budget credibility. - Improve competitiveness and access to procurement information. - Establish a differentiated model for centralized monitoring and follow-up of investment projects. - Increase interoperability and automation of information systems, in particular between SINIP and financial management systems. - High-priority actions (selected): - Prepare and approve a governmental decision of the National Public Investment System (SNIP) that incorporates investment processes and defines the role of SEGEPLAN in programming and monitoring. - Prioritize completion of ongoing projects so that new project inclusion does not come at the expense of financing ongoing investments; include a calibration stage in the budget process to determine available budgetary space. - Restrict incorporation in the budget of projects lacking a favorable technical opinion from SEGEPLAN to emergency response projects only. - Add a clause to the Organic Budget Law (LOP) requiring projects added by Congress to be registered in SINIP and incorporated into the following year's budget based on fiscal space availability. - Estimate current and capital expenditure baselines to define multi-year fiscal space available for new projects and new spending initiatives. - Publish with the draft budget the costs of projects, including past-year expenditure, current-year expected expenditure, and planned future-year expenditure. - Prepare and publish a quarterly monitoring dashboard for priority investment projects showing cumulative physical and financial progress, cost overruns, and difficulties. - Strengthen mandate and capacity of MARN to coordinate and monitor climate investment against the country's climate objectives. ### Priority Action Plan — selected timeline and institutional roles - Create and approve SNIP Governmental Agreement to define SEGEPLAN role in programming and monitoring (recommended institutions: SEGEPLAN, MINFIN; Reform priority High). - Improve linkage between planning and programming with plans aligned through performance targets and realistic costs (recommended institution: MINFIN, SEGEPLAN; Reform priority Medium). - Restrict budget inclusion to projects with prior favorable SEGEPLAN technical opinion, except emergencies (recommended institutions: MINFIN, SEGEPLAN; Reform priority High). - Estimate funds needed for capital and routine maintenance using a methodology based on international standards (recommended institutions: DTP, implementing units; Reform priority Medium). - Publish pre-investment studies in SINIP and project costs with the draft budget (recommended institutions: SEGEPLAN, DTP; Reform priority High). - Define criteria for "priority investment projects", prepare a quarterly monitoring dashboard, require appointment of a person responsible for each project and record in SINIP, and record adjustments exceeding the initial amount of 20 percent with a new cost/benefit assessment where applicable (recommended institution: SEGEPLAN; multiple actions labeled High/Medium priority). - Strengthen financial strategy for disaster risks by incorporating exposure of public infrastructure by asset type, location, and vulnerability together with mitigation plans (recommended institutions: DAPF, MARN; Reform priority Medium). - Increase interoperability and automation of systems, digitize processes, consider digital signatures, and improve data quality and business rules (recommended institutions: MINFIN, SEGEPLAN; Reform priority Medium). *International Monetary Fund — Technical Assistance Report (Executive Summary).* ### 1. Public investment and capital stock have declined since 2009 and have been almost ### tarea2024021 - 1. Public investment and capital stock have declined since 2009 and have been almost ### Trends in public investment and public capital stock - Since 2009 there has been a gradual decline in capital stock. - Public investment peaked in 1999 at 6.41 percent of GDP. - Public investment reached a low of 2.69 percent of GDP in 2004 and recovered to 3.85 percent of GDP in 2009, after which a clear downward trend persisted. - The decline in public investment since 2009 has not been offset by private investment. - 98 percent of the country's public investments have been financed internally. ### Comparative positioning (region and peers) - Overall, Guatemala has had a lower level of public investment than other countries in Central America and the emerging market economies (EMEs). - Between 2000 and 2009, Guatemala’s public investment remained consistently below the EMEs and close to Central American region averages. - During 2010-2019, public investment decreased to a minimum of 0.99 percent (2016) and always remained lower than EMEs and Central America averages. - Guatemala is classified among Latin American countries with the lowest stock of public capital in relation to GDP. - The stock of public capital has been steadily declining since 1990 and remains below regional and EME averages; the upturn observed in EMEs in the last decade has not been observed in Guatemala. ### Financing, debt, and budgetary context - Over 2010–2022, central government debt and the deficit remained almost stable. - Over the past three years, debt has been close to 30 percent of GDP. - Fiscal deficits ranged from 3 percent to 1 percent of GDP during that period. - The contribution of public investment expenditures to central government expenditures fell from more than 25 percent in 2010 to 17 percent in 2022. - Guatemala has prioritized fiscal stability; given the decline in public investment, debt and deficits have predominantly financed other types of spending. ### Execution and composition of public investment - Under-execution of budgeted public investment contributed to low investment levels. - 2008–2022 average execution rate: 85.5 percent, range: 72 percent to 94 percent. - Execution rate lowest point: 72 percent (2015); highest point: 94 percent (2008). - Execution rate exceeded 90 percent only in 2008, 2012, and 2018. - 2016–2022 composition (2022 amounts and shares): - Economic infrastructure: 0.6 percent of GDP; 49 percent of total public investment. - Social sector: 0.3 percent of GDP; 26 percent of total public investment. - Defense, security, and justice: 0.1 percent of GDP; 6 percent of total public investment. - Other sectors (general services, disaster response, environment): 0.2 percent of GDP; 19 percent of total public investment. - Between 2014 and 2022, general government direct investment ranged from 1.5 to 2.5 percent of GDP. - Local governments accounted for an average of 67 percent of general government direct investment. - At the central government level, the Ministry of Communications, Infrastructure, and Housing (MCIV) contributed about 70 percent of central government investment in the sector. - As of June 2023, only 44 percent of the 18 projects with requests exceeding Q50 million in 2021 had an effective allocation. - Of more than 1,000 projects prioritized in the Road Development Plan (PDV), only 10 percent had resources allocated in the budget between 2018 and 2023. ### Infrastructure access, quality perception, and efficiency - Access progress: notable improvement in public education infrastructure compared to the 1990s; major setbacks in access to electricity and public health infrastructure. - Guatemala is below the regional average and below countries with similar levels of development on infrastructure access indicators. - Perception of infrastructure quality has declined since the beginning of the 2010s and, as of 2015, ranks below Central America and EMEs averages. - IMF PIMA assessment: - Guatemala’s hybrid efficiency score is below the efficient frontier. - Estimated public investment efficiency gap: 25 percent (i.e., for the same expense, benefits could be 25 percent higher). - The hybrid indicator (PIE-X) combines physical and survey-based indicators; indicators calculated with information from 2017. ### Public investment management institutions: strengths, effectiveness, and priorities - Institutional assessment covers 15 public investment management institutions across three phases: (i) ensuring sustainable investment levels through planning; (ii) allocating resources to the right sectors and projects; (iii) implementing projects to provide durable services and assets. - Overall finding: institutional design is relatively strong but institutional effectiveness is significantly weaker. - Specific institutional observations: - Stronger institutional design exists for standards on project assessment and selection (institutions 4 and 10), rules protecting earmarked investment funds, and rules on prioritizing ongoing projects (institution 8). - Weaknesses in institutional design exist for multi-year budgeting, institutional coverage of the investment budget, maintenance, procurement, and asset registration (institutions 6, 7, 9, 11, and 15). - Effectiveness is particularly weak in investment budgeting, project selection, management, and monitoring (institutions 8, 10, and 13). - Unusually, effectiveness of multi-year budgeting and budget coverage and unity is greater than institutional strength for those areas (institutions 6 and 7). - Comparative institutional ratings: - Guatemala’s average rating for institutional strength is higher than the EME average and that of South America, driven by project assessment and selection rules. - Effectiveness ratings are similar in pattern to strength ratings, but Guatemala’s advantage in project appraisal and selection over peers is less marked when assessing effectiveness. - Fiscal framework and MTFF: - MINFIN has a deficit target and a borrowing limit defined as an average for 5 years (the fiscal year plus the following four years). - MTFF 2023-2027 includes objective of achieving an average central government fiscal deficit of 1.3 percent of GDP and an average borrowing level of 40 percent of GDP. - No permanent fiscal rules exist; Guatemala has an implicit fiscal deficit target of 2 percent of GDP but lacks explicit permanent fiscal rules. - Since 2019 the MTFF is published but does not identify capital expenditure separately; operating and investment expenditure are presented in a single aggregate. - Recommendation (implicit in text): the MTFF should differentiate operating expenditure from capital expenditure and determine a path for public debt consistent with medium-term sustainable development goals to define multi-year commitments. ### Planning and sectoral strategy - National and sectoral planning: - National plans linked to five-year sectoral operational plans (MYOPs) are prepared by all sectors and include investment projects but projects are not always included in the budget. - MYOPs include institutional indicators, targets, and annual and multi-year programming of five-year national physical and financial budgets. - The MCIV MYOP includes projects with expenditure estimates per year. - A high percentage of projects in major public investment sectors included in plans are not prioritized for budget inclusion. - Reform priorities (as identified by institutional strength/effectiveness and text): - Differentiate capital and operating expenditure in MTFF projections. - Improve prioritization and effective allocation of resources from sectoral plans into the budget. - Strengthen execution rates and address under-execution causes. - Improve public investment management effectiveness in budgeting, project selection, management, and monitoring to reduce the estimated 25 percent efficiency gap. *International Monetary Fund. Technical Assistance Report (excerpts).* ### Box 2. Structure of Planning in Guatemala ### Box 2. Structure of Planning in Guatemala ### Cost projections and aggregate planning - The cost projections of the national plans, MYOPs, and PDVs are described as unrealistic and only the GGP has aggregate costs. - SEGEPLAN consolidated the costs of the GGP 2020-2024 at the strategy level and through the accountability report for the second quarter. - The estimated costs of the current GGP represent 1.1 times what was programmed between 2020 and 2023 in the operating and investment budget—without borrowing and government obligations payable by the Treasury. - The 2019-2023 MYOP of the MCIV projections are equivalent to 1.8 times the investment budget allocated in that period. - The 2018-2032 PDV estimates annual investments of Q4,385 million, equivalent to 2.3 times the MCIV investment budget for roads in 2023. Key figures from Analysis of Costs of GGP and MYOP by MCIV (in millions of quetzals) - 2019: Government General Policy 8,901.6; Draft Budget 4,379.1; Ratio = 2.0 - 2020: Government General Policy 26,556; Draft Budget 46,792; Ratio = 0.6; Investment Projects MYOP MCIV 2019–2023 = 7,421.4; MCIV PIP Allocated Investment = 3,718.1; Ratio = 2.0 - 2021: Government General Policy 66,906; Draft Budget 55,631; Ratio = 1.2; Investment Projects MYOP MCIV 2019–2023 = 4,797.9; MCIV PIP Allocated Investment = 3,977.1; Ratio = 1.2 - 2022: Government General Policy 76,048; Draft Budget 58,000; Ratio = 1.3; Investment Projects MYOP MCIV 2019–2023 = 2,304.8; MCIV PIP Allocated Investment = 3,001.4; Ratio = 0.8 - 2023: Government General Policy 81,817; Draft Budget 59,048; Ratio = 1.4; Investment Projects MYOP MCIV 2019–2023 = 1,461.8; MCIV PIP Allocated Investment = 2,970.2; Ratio = 0.5 - TOTAL: Government General Policy 251.327; Draft Budget 219,471; Ratio = 1.1; Investment Projects MYOP MCIV 2019–2023 = 24,887.4; MCIV PIP Allocated Investment = 13,666.8; Ratio = 1.8 - Note: Draft Budget figures are presented “* without borrowing and government obligations payable by the Treasury”. ### Linkage between projects, programs, and national goals - Investment projects are linked to output and outcome targets, but linkage to sectoral, strategic, and national planning goals is often general and indirect. - The program and results-based budgeting system covers the entire national budget; each project has a programmatic classification connected to the K'atun Plan, the pillars of the GGP and the PND, but connections can be weak. - For infrastructure, all measures are associated with the national priority of "jobs and investment." - The MCIV is linked to four GGP targets, which do not include transport-sector results such as mobility, safety, or economic impact. - Analysis of major road projects with resources allocated in 2023 shows: - All road projects have output objectives measured in kilometers of road built or included in measures. - The country-level indicator “progress in increases in the country's paved roads” is an output indicator rather than an outcome indicator. - Recommended outcome indicators would include reduction in mobility time, road safety, economic development, or promotion of tourism. Recommendations to improve planning-programming linkage - Develop sectoral and/or national investment plans aligned through outcome goals and include strategic projects with realistic costs. - Produce adequate costing of NDP and GGP objectives and targets that includes all sources of financing to define achievable and bankable output and result targets. - Use investment plans during budget programming to strengthen SEGEPLAN and MINFIN roles in assigning institutional ceilings aligned with plan fulfillment. - Improve sectoral investment plans (road, education, health, water) with horizons of more than four years linked to medium- and long-term plan output targets (NDP, GGP, K'atun Plan). - Ensure capital investment plans and MYOPs account for infrastructure gaps by sector, absorption capacity, and medium-term fiscal constraint. - Improve PDV linkage between physical progress and expected country-level outcomes: road safety, travel time, people with access to paved roads, economic growth, and tourism. ### Coordination between entities (Institutional Strength: Medium; Effectiveness: Medium; Reform Priority: Low) Findings on coordination - Most municipal and national investment projects and plans can be consulted in an integrated system, but only one-third are coordinated through a formal discussion mechanism. - One-third of municipal investment resources are coordinated with the national level under the formal mechanism of the CODEDE. - About two-thirds of total municipal investment resources correspond to projects registered in the Public Investment Information System (SINIP) but not formally discussed. - Municipalities receive 2.5 percentage points of VAT (VAT rate is 12 percent): - 1.5 percentage points go directly to municipalities. - 1 percentage point goes to Departmental Development Councils (CODEDE). - For 2023, resources allocated to the CODEDE amount to Q 3.392 billion, representing 29 percent of total resources transferred for investment. - The five levels of government in prioritization and linkage are national, regional, departmental, municipal, and community. Municipal transfer timing and predictability - There are five types of municipal transfers: Income from the CODEDE Peace Tax, the Municipal Peace Tax, the Constitutional Contribution, the Tax on the Distribution of Petroleum Derivatives, and the Tax on the Circulation of Vehicles. - For CODEDE Peace VAT resources: - An indicative distribution is delivered in February of the previous year. - A definitive distribution is delivered before June 30. - For constitutional contribution resources: - Pre-calculations are made in September for use in budget distribution. - Final allocation is communicated once the fiscal year has begun. - For 2022 and 2023, the total distribution of the pre-calculated amount remained unchanged compared to the final calculation; some municipalities showed variations of less than 1 percent between September reports and final allocations during the first five days of the fiscal year. ### Fiscal risk mapping and consolidation - The national government lacks a clear map of fiscal risks from investment projects requiring government intervention. - There is no legal requirement for systematic reporting of contingent liabilities of investment projects of municipalities, public corporations (PCs), concessions, or PPPs. - Institutions are not required to report or maintain information on contingent liabilities of investment projects; MINFIN does not request information or prepare analyses of contingent liabilities arising from investment projects. Policy recommendation on fiscal risks - Require legislation for PCs, subnational governments, and investments with private participation (PPPs or concessions) to submit to MINFIN an estimate of contingent liabilities of projects. - Include consolidated estimates of contingent liabilities by sector, entity, and project in the fiscal risks chapter of the budget documentation. - Enable MINFIN to run risk scenarios (growth, inflation, terms of trade, exchange rates) and itemize fiscal risks associated with guarantees, legal rulings, trust funds, investments by PCs, concessions and PPPs, and subnational governments. ### Assessment of projects (Institutional Strength: High; Effectiveness: Medium; Reform Priority: Medium) - Project assessments are required to analyze benefits, costs, and contribution to national/sectoral objectives; ideally conducted before budget inclusion. - Guatemala uses SNIP regulations and the Public Investment Project Formulation and Assessment Guide (FEPIP): - SNIP regulations define four cost ranges and levels of study required to obtain a technical opinion from SEGEPLAN: two profile types, pre-feasibility study, feasibility study. - Government Investment Agencies (EPI) carry out studies and register them in the SINIP; studies are not published. - Not all project appraisals address all aspects required by the FEPIP Guide. - The FEPIP Guide is the standard methodology and is effectively used across project types and study levels; it aligns with international best practices. - Sector-specific methodologies are generally absent except for HDM-4 for road projects. - Some accounting price ratios (RPCs) have been calculated; key social prices such as the social discount rate and the value of time have not been determined or published. - SEGEPLAN provides training and technical assistance for FEPIP application. Risk analysis in project appraisal - The FEPIP methodology includes a chapter on risk analysis, sensitivity analysis, and is complemented by the AGRIP tool. - AGRIP includes forms for risk analysis on volcanic events, landslides or cave-ins, floods, hurricanes, climate change, and other threats; an Excel application aggregates results to verify project location and disaster adaptation. - SNIP regulations and FEPIP require natural disaster risk mitigation measures to be costed and included in the assessment. - Sensitivity analysis captures other risks (cost or demand variation); review of feasibility studies shows sensitivity analysis is performed in most, but not all, studies. Good-practice gaps and recommendations - International best practice indicates pre-investment studies should be public; in Guatemala they are not published. - FEPIP can be improved to better analyze non-disaster implementation risks. - Publish and regularly update implicit costs for all key parameters to standardize social assessments. Box 6 — Content of Pre-Investment Studies (as required by SNIP regulations 2023) - 1. Assessment of the current situation - 2. Identification of the project including an analysis of alternatives - 3. Market survey - 4. Technical Analysis - 5. Study of administrative aspects - 6. Legal analysis - 7. Financial study, analysis, and assessment - 8. Analysis of the social and economic benefits to be obtained from implementation of the project - 9. Environmental study in accordance with the provisions of MARN, including the mitigation measures in the technical study - 10. Risk analysis with the AGRIP tool, incorporating what is appropriate into the technical study (including climate change analysis) ### Alternative financing of infrastructure (Institutional Strength: Medium; Effectiveness: Low; Reform Priority: Medium) - The assessment covers private sector participation, concessions, PPPs, and public corporations (PCs) in infrastructure and the need to monitor and manage accompanying fiscal risks. Market structure and regulatory framework findings - Effective competition exists in telecommunications and electricity subsectors; these are open to private initiative. - There is no general competition law; sectoral laws govern infrastructure sectors. - In water, ports, roads, and airports, public corporations or ministry operators operate directly with little or no private involvement, though some transport subsectors permit private participation through concessions. - Ports can grant container operations to private companies via concessions; concessions can also be granted for highways. - Telecommunications: mobile services market players include Tigo and Claro; Internet sector has more than one hundred companies. - Electricity sector: competition favored in subsectors, especially generation, under a regulator; public corporations (mainly INDE) and private companies compete through tenders. Design of Electricity and Telecommunications Markets (high-level) - Electricity: - Sectoral law: General Law on Electricity (Decree 93/96 and Government Decisions 68/2007 and 69/2007) - Technical Regulatory Body: Comisión Nacional de Energía Eléctrica - Main competitors and market shares: More than 60 companies operate in generation including INDE (~15%), Jaguar (~15%), Renace (~7%), San José (~57%), Caribe (~5%), Oraaluz (~53%), Caribe (~5%), Renace (~5%), Biomass (~5%), among others. - Telecommunications: - Sectoral law: General Law on Telecommunications (Decree 94/96, as amended by Decrees 115/97 and 3/23) - Technical Regulatory Body: Superintendency of Telecommunications (MCIV agency) - Main competitors and market shares: In mobile services: Tigo and Claro. In the Internet sector: more than one hundred companies. Policy implications - Strengthen regulatory frameworks where private participation is desirable and ensure supervisory mechanisms for PCs align investments with national priorities. - Implement mechanisms to monitor and manage fiscal risks from alternative financing modes (concessions, PPPs, PCs). *Source: Adapted by the mission based on the Normative, Conceptual, and Methodological Framework of the Planning System of Guatemala, SEGEPLAN 2022; mission analyses and official documents contained in the source content.* ### 37. Although there is a legal and institutional framework for PPPs and concessions, the ### tarea2024021 - 37. Although there is a legal and institutional framework for PPPs and concessions, the ### Public-private partnerships (PPPs) legal and institutional framework - Law on Partnerships for the Development of Economic Infrastructure, passed in 2010, establishes rules for competitive tendering, award of contracts, supervision and operation of PPPs. - Only one PPP contract signed; no concessions. - National Agency for Partnerships for the Development of Economic Infrastructure (ANADIE): - Provides technical support to government entities that want to contract a PPP. - Has an inspection directorate that monitors compliance with service levels. - Conducts a pre-feasibility study, organizes prioritization among projects, and carries out a prequalification process with public corporations. - Publishes a portfolio with seven projects in the study phase, total investment value estimated at 1.8 percent of GDP (Table 4). - Portfolio status: five projects in design phase, one in tender prequalification phase, only the Escuintla Puerto Quetzal toll highway project approved by Congress at the end of 2021. - The Escuintla Puerto Quetzal toll highway project does not provide for government guarantees. ### Role of public corporations (PCs) and infrastructure management - Infrastructure management examples: - Water sector: options for private participation exist, but in practice provided by municipal public corporations. - Railways: public corporation FEGUA. - Ports: several public corporations; 90 percent of total investment of public corporations made by Santo Tomas de Castilla, Empresa Portuaria Quetzal, and INDE. - La Aurora International Airport: managed by the Directorate-General of Civil Aeronautics. - Electricity: INDE responsible for the electricity grid and generation of part of the country's electricity. - Distribution subsector: only two private companies and more than ten municipal enterprises. - PCs implement about one-quarter of all public sector investment projects. - Eight national non-financial enterprises and sixteen municipal enterprises exist. - Directorate of State Accounts (DCE) receives annual financial statements of all PCs (national and municipal). - Fiscal Risks Report provides annual assessment of PCs' profitability, financial liabilities, and financial liquidity, but does not include review of PCs' investment plans. - PE boards staffed by government and ministry representatives, but there is no dedicated process or unit to ensure coordination of PCs' investment plans with national priorities and central-level investments. ### Gaps, causes, and suggested investigations on PPP rarity - Need to investigate reasons for rarity of PPPs and concessions in Guatemala, including whether: - Parliament's approval of PPPs is an obstacle. - Insufficient ANADIE resources constrain PPP use. - Authorities lack knowledge about PPP tools and use scenarios. - Suggested study of experiences from Chile, Colombia, and Mexico for lessons and necessary changes. ### Strengthening alternative financing and policy recommendations - Improve coordination of PCs' investments with national priorities by: - Defining government's objectives as a shareholder. - Establishing active and effective monitoring of PCs by a dedicated unit. - Publishing an annual report outlining PCs' investment projects and outcomes. - Increase private investment in infrastructure by: - Promoting greater competition in infrastructure subsectors. - Using PPPs only when cost-benefit analysis demonstrates appropriateness. ### Multi-Year Budgeting (Institutional Strength: Low; Effectiveness: Medium; Reform Priority: Medium) - Purpose: assess transparency and predictability of investment by ministries, programs, and projects in the medium term. - Budget and multi-year budget: - Budget includes the budget for the following fiscal year and the multi-year budget. - Presents projection of aggregate capital expenditure for the budget year and the following four years, without distribution by ministries or sectors. - Multi-year budget projects aggregate central government investment expenditure for the next 4 years by classification by type and subgroup of expenditure. - Multi-year capital expenditure projections began with the 2021 budget and the 2022-2025 multi-year budget. - Comparison for 2023: - Budget 2022 projection for 2023: 4,416 (Million GTQ). - Capital Expenditure Appropriation Approved: 4,388 (Million GTQ) for 2022 and 4,371 (Million GTQ) for 2023. - Appropriation 2023 budget / Projection made in 2022 budget: -1.02%. - Note: Budget 2021 not approved; governed by previous year's budget. - Deficiencies: - Multi-year budget does not distribute capital expenditure by ministries or sectors. - Estimates of construction costs for major projects are not published; draft budget only includes costs to be accrued in the fiscal year. - PIP published by SEGEPLAN presents programmed amounts but does not include estimates of projects' total cost. - PIP and budget figures for 2023: - Projects presented in the 2023 PIP amount to Q 14.398 billion. - Investment projects in the budget of the same year total Q 3.352 billion for budget entities and Q 3.392 billion for the Development Councils. - Recommendations for MTFF and budgeting: - Distinguish between operating and capital expenditure in the MTFF. - Include breakdown of capital expenditure projections by ministries or sectors. - Communicate aggregate investment ceilings and institutional ceilings consistent with MTFF funding constraints. - Disclose project costs (past, current, and future expected expenditure) in budget documents. ### Budget Coverage and Unity (Institutional Strength: Low; Effectiveness: Medium; Reform Priority: Low) - Capital expenditure through trusts: - Regulatory framework allows trusts to make capital expenditure but does not require inclusion in budget documents. - Capital expenditure of trusts in 2022 was less than 1 percent of central government capital expenditure. - Capital expenditure by trusts in 2022 equivalent to 0.03 percent of central government capital expenditure. - Number of current central government trusts fell from 36 in 2015 to 19 in March 2023. - Budget execution of trusts as percentage of central government fell from 4.9 percent in 2014 to 0.7 percent in 2022. - Investment levels 2022: central government Q4.61 billion; trusts Q537 million. Budget execution 2022: central government Q108.593 billion; trusts Q760 million. - Externally financed capital expenditure: - LOP provides that items of budget expenditure must identify their source of financing; externally financed capital expenditure can be identified at project level in the Investment Program accompanying the budget. - Investments made by PCs, concessions, and PPPs are not included or commented on in budget documents. - Coordination gaps: - Current and capital budgets are presented under programmatic and functional classification and are coordinated, but coordination does not cover investment projects added by Congress at time of voting. - Congress added projects to 2023 budget: Q 499 million (7.4 percent of total Q 6.744 billion for projects included in the Budget) and elsewhere noted as Q499 million representing 11 percent of investment projects in the budget bill sent by the Presidency. - Practice of Congress incorporating projects during budget approval prevents DTP from analyzing them at budget preparation stage. - Trust establishment process: - To establish a public trust, MINFIN must issue an opinion following technical opinions from Directorate of Trusts and DTP; opinion must be drafted by the Ministry's Legal Department. - Recommendations on budget coverage and unity: - Make investment projects added by Congress part of the budget process; require projects added by Congress when budget is voted to enter SEGEPLAN for evaluation if not evaluated. - Publish investment projects to be executed by trusts, PPPs, and public corporations in the budget documents. - In the medium term, modify regulations so extrabudgetary entities cannot make public investment. - Incorporate PPPs, concessions, and PCs as entities whose financing of capital expenditure is reported in budget documents. - Restrict practice of Congress incorporating projects whose budget programming has not been carried out; example: in 2022, budget voted included investment expenditure of GTQ 4.388 billion, and in March Congress issued Decree 21 adding investment projects amounting to GTQ 3.191 billion. - Proposed reform: projects added by Congress when budget is voted must not be included in the budget being voted but be incorporated into the following year's budget bill; such projects should be evaluated by SEGEPLAN and have financing in the following year. *International Monetary Fund — Technical Assistance Report* ### 8. Investment Budgeting (Institutional Strength: High; Effectiveness: Medium; Reform ### 8. Investment Budgeting (Institutional Strength: High; Effectiveness: Medium; Reform Priority: High) ### Reporting of project total costs and budget presentation - Regulations require budget documents to report on the total costs of projects. - LOP provides that, for investment projects whose execution exceeds one fiscal year, the budget must include information on the amounts executed in the past and those expected to be executed in the future.54 - However, this information is not published in the budget documents. The budget includes investment projects, but only the amount that is expected to accrue in the fiscal year and not their total cost. ### Constitutional and legal protections against transfers and reductions - The Constitution of the Republic of Guatemala provides that funds may not be transferred from investment programs to operating programs or to pay off government debt. Consequently, the overall amounts appropriated for investment cannot be reduced during execution and this is effectively complied with. - MINFIN must authorize transfers between investment items when they involve transfers between programs. ### Actual allocation and execution (Table 7) - Table 7. Allocated, Current, and Accrued Investment Budget for 2021 and 2022 (Million GTQ) — Source: MINFIN / DTP. - Lands and Properties — 2021: Assigned 153; Actual 34; Accrued 7. 2022: Assigned 0; Actual 36; Accrued 9. - Production Machinery & Equipment — 2021: Assigned 2; Actual 3; Accrued 0. 2022: Assigned 22; Actual 18; Accrued 18. - Office furnishings and equipment — 2021: Assigned 50; Actual 56; Accrued 33. 2022: Assigned 33; Actual 45; Accrued 30. - Medical and laboratory equipment — 2021: Assigned 217; Actual 215; Accrued 133. 2022: Assigned 148; Actual 232; Accrued 174. - Educational, cultural, and recreational equipment — 2021: Assigned 27; Actual 85; Accrued 56. 2022: Assigned 59; Actual 82; Accrued 70. - Transportation equipment — 2021: Assigned 172; Actual 217; Accrued 86. 2022: Assigned 443; Actual 237; Accrued 209. - Communications equipment — 2021: Assigned 20; Actual 40; Accrued 14. 2022: Assigned 52; Actual 24; Accrued 17. - Construction machinery and equipment — 2021: Assigned 21; Actual 12; Accrued 12. 2022: Assigned 13; Actual 38; Accrued 37. - Computer equipment — 2021: Assigned 89; Actual 188; Accrued 81. 2022: Assigned 147; Actual 324; Accrued 295. - Other machinery and equipment — 2021: Assigned 179; Actual 419; Accrued 197. 2022: Assigned 506; Actual 415; Accrued 364. - Construction of national assets for common use — 2021: Assigned 2,936; Actual 3,106; Accrued 2,850. 2022: Assigned 2,031; Actual 3,140; Accrued 2,578. - Construction of national assets for non-common use — 2021: Assigned 652; Actual 454; Accrued 158. 2022: Assigned 631; Actual 952; Accrued 701. - Intangible assets — 2021: Assigned 5; Actual 5; Accrued 2. 2022: Assigned 3; Actual 0; Accrued 0. - Military and security equipment — 2021: Assigned 269; Actual 15; Accrued 14. 2022: Assigned 294; Actual 7; Accrued 6. - Military Construction — 2021: Assigned 0; Actual 14; Accrued 14. 2022: Assigned 0; Actual 6; Accrued 6. - Other — 2021: Assigned 0; Actual 0; Accrued 0. 2022: Assigned 1; Actual 1; Accrued 0. - Total — 2021: Assigned 4,791; Actual 4,861; Accrued 3,655. 2022: Assigned 4,386; Actual 5,557; Accrued 4,514. ### Multi-year commitments and CDP mechanism - The Constitution provides that when multi-year works are procured, future budgets must provide sufficient funds for the completion of these works.55 The LOP lays down a similar requirement.56 - In practice, a high percentage of ongoing projects do not receive sufficient funding. MCIV officials explained to the Mission that between 30 and 40 percent of carryover projects are not sufficiently funded. - Article 29a of the LOP requires UDAFs to issue a CDP prior to contracting construction, transportation equipment, and computer equipment. For multi-year works, the CDP for the fiscal year must be issued for the amount of the budget appropriation for that year; for subsequent years it will be issued for each fiscal year indicating the amounts executed in previous years. CDPs are a requirement for entities to execute the financial commitment quotas. ### Recommendation: integrate investment planning with the budget (from paragraph 54) - Improve integration of the investment plan with the budget by estimating current and capital baselines that serve to determine the available fiscal space. - DTP and DAPF should jointly define and project baselines of current and capital expenditures to project the fiscal space available to incorporate new investment projects on a multi-year basis. - SEGEPLAN should be provided a multi-year perspective of the expected financing for new investment projects. ### Integration Model — Box 7: Steps to integrate investment plan and budget - Step 1: Projection of budget revenues. - Step 2: Determination of the budget constraint (aggregate ceiling). - Step 3: Analysis, quantification, and projection of the current expenditure baseline. - Step 4: Analysis, quantification, and projection of the capital expenditure baseline. - Requirements: line entities include, for each year, a financial appropriation reflecting the technical schedule; at the end of the year all committed and unaccrued capital expenditure should be allocated to the following year's budget appropriations. - Step 5: Determination of fiscal space (subtract current and capital baselines from the aggregate budget constraint). - Step 6: Distribution of fiscal space between new current expenditures and new projects. - Two methodologies: ministries choose projects from an economically assessed eligible list; or planning secretariat ranks projects by cost effectiveness. - Step 7: Issuance of a budget circular communicating the ceilings for current expenditure and capital expenditure. --- ### 9. Resources for Maintenance (Institutional Strength: Low; Effectiveness: Low; Reform Priority: High) ### Focus and dimensions assessed - Institution assesses how government estimates maintenance needs for major infrastructure assets when preparing the budget: - Existence of methodologies/guidelines for regular/routine maintenance (current expenditure). - Methodologies/guidelines for capital maintenance (renovations, reconstructions, expansions). - Availability of budget information on funds allocated to maintenance. ### Current situation and data gaps - There is no standard methodology to assess resources needed for routine maintenance of major public assets. Sectoral ministries report they do not have methodologies, guides, or manuals for routine maintenance. - The FEPIP Guide only provides that pre-investment studies should determine maintenance costs and gives examples of maintenance expense flow schedules. MINFIN indicates they do not follow the maintenance costs of each project.57 - Lack of transparency and practices relating to depreciation of government assets make precise quantification difficult. A mission estimate shows that total maintenance expenditures (including regular and capital) per km of the road network are one third of the average for a representative sample of countries (taken from the PIMA guide).58 ### Recent strengthening and tools - Government has recently strengthened funding for maintenance of strategic infrastructure; the K'atun development plan prioritizes improvement of infrastructure, notably school buildings and transportation.59 - Government has a recovery plan for the road network and a law to strengthen maintenance and construction of strategic infrastructure approved in March 2022. - At least four of the twelve largest current public investment projects concern transport infrastructure and 60 percent of the expenditure of the Directorate-General of Roads of the MCIV (DGC) is for highway reconstruction. - DGC and COVIAL are implementing the HDM-4 tool to evaluate new investment projects and maintenance costs of the road network.60 ### Classification and transparency problems - Maintenance spending is often misclassified, affecting measurement of fiscal outcomes and transparency. Regular maintenance costs are identified in the budget at a detailed level between lines 161 and 176. - In practice: - COVIAL carries out regular and capital maintenance projects, recording both only between lines 161 and 176. - DGC carries out capital and regular maintenance projects, recording them only in lines dedicated to public investment. - There is no consolidated report separating regular maintenance expenditure and capital maintenance expenditure, preventing a transparent and consolidated view for decision-making. ### Table 8 summary (recording and responsible units) - Current/regular maintenance: - Dedicated lines: 161 to 176 (operating expenses). - Lines used in practice: 161 to 176 (operating expenses) and other lines. - Main units: DGC, Covial, Government building construction unit, Social Solidarity Fund. - Capital (improvement, replacement): - Dedicated lines: within lines 331 and 332 (capital expenditures for construction). - Lines used in practice: 161 to 176 (operating expenses) and 331 and 332 (capital expenditures for construction). - Main units: DGC, Covial. ### Recommendation: establish standard methodologies and improve transparency - With support of specialized advisors, sectoral ministries should establish standard methodologies quantifying necessary expenditure for regular and capital maintenance according to international standards (e.g., HDM-4 for roads). - Identify different types of maintenance expenses with greater transparency within the budget to allow maintenance reporting and tracking. --- ### 10. Selection of Project (Institutional Strength: High; Effectiveness: Medium; Reform Priority: High) ### Required features of selection - Portfolio of duly evaluated and prepared projects should exist from which budget inclusions are selected. - Defined procedures should select projects that best contribute to development plan objectives. - Projects in the portfolio should have been duly assessed and assessments analyzed in detail to provide reliable data and indicators for selection methodology. - Centralized selection for major projects is desirable to avoid parallel selection pathways. ### Appraisal and SEGEPLAN review - Project appraisals are analyzed in detail by SEGEPLAN, which issues a reasoned technical opinion on them.62 - Mission analysis of unfavorable technical opinions showed the review is detailed and demanding, focused on conformity with SNIP regulations and the FEPIP Guide. - Effectiveness demonstrated by the low percentage of projects that obtained a favorable opinion on first admission in 2022 (see Table 9). ### Inclusion of projects without favorable opinion and classification gaps - Some projects are included in the budget without having yet obtained a favorable prior technical opinion from SEGEPLAN, especially from Congress during the budget discussion, weakening the process. - In the case of COVIAL some capital maintenance expenditure items are classified as operational, so SNIP regulations do not apply and such projects are not assessed; these represent a small percentage of total investment.63,64 ### Table 9. Projects that Received a Favorable Technical Opinion from SEGEPLAN in 2022 — Source: SINIP SEGEPLAN - Central Government: - Favorable opinion on first admission to the SNIP: Number 4; Percent 1.67% - Favorable opinion after two or more admissions to the SNIP: Number 235; Percent 98.33% - Development Tips: - Favorable opinion on first admission to the SNIP: Number 455; Percent 15.19% - Favorable opinion after two or more admissions to the SNIP: Number 2,541; Percent 84.81% - National Public Corporations: - Favorable opinion on first admission to the SNIP: Number -; Percent 100.00% (after two or more admissions: Number 186) - Non-Enterprise Autonomous Entities: - Favorable opinion on first admission to the SNIP: Number -; Percent 100.00% (after two or more admissions: Number 2) - Non-Enterprise Decentralized Entities: - Favorable opinion on first admission to the SNIP: Number -; Percent 100.00% (after two or more admissions: Number 10) - Legal-Administrative Control Bodies: - Favorable opinion on first admission to the SNIP: Number -; Percent 100.00% (after two or more admissions: Number 9) - Overall total: - Favorable opinion on first admission to the SNIP: Number 459; Percent 13.34% - Favorable opinion after two or more admissions to the SNIP: Number 2,983; Percent 86.66% ### Selection criteria, prioritization, and practice - Criteria a project must meet to be selected are published in the SNIP regulations and verified by SEGEPLAN, with results recorded in the SINIP. - Choice of projects to be included in an EPI draft budget is the responsibility of the EPI, complying with established requirements. - The document "Project Prioritization Criteria for the Public Investment Program Fiscal Year 2023 and Multi-year Budget 2023-2027" defines the criteria and procedure65 to prioritize projects, but there is no record of their use. - EPIs consider their own priorities when selecting which projects registered in SINIP will be included in the draft budget. Inclusion of projects without a favorable technical opinion further affects effectiveness. - Projects included without a favorable SEGEPLAN technical opinion cannot be executed until they fulfill SNIP requirements and obtain a favorable technical opinion. *Source: Mission.* ### Box 9. Project Selection and Prioritization Criteria ### Box 9. Project Selection and Prioritization Criteria ### Necessary documentation and criteria to be met to obtain a favorable technical opinion from SEGEPLAN - Letter requesting a technical opinion - Funding request - Project document - Endorsement by the sectoral entity - Certification of property ownership - Environmental certificate - Resolution of CONAP (National Council of Protected Areas) - AGRIP Analysis - Care for people with disabilities - Opinion of the Ministry of Culture - Water Quality Certificate - Compliance with technical criteria: - It demonstrates its link with current planning guidelines, Government General Policy, and National Development Priorities, and indicates how the project contributes to the achievement of the outcome to which it is associated (baseline). - It demonstrates that the project is registered in strategic and operational planning. - All digital information is recorded in the system; it must correspond to the name of the proposed project. - The investment proposal corresponds to the sector of the EPI and/or has the endorsement of the lead entity. - The problem to be solved, the unsatisfied demand, and the population to be benefited are identified. - It demonstrates its legal and technical feasibility, in accordance with regulatory requirements, according to the type of project. - It complies with the priorities defined by CONADUR for projects contributed by the Development Councils. ### Prioritization criteria to be used (technical evaluation by SEGEPLAN) - Technical evaluation by SEGEPLAN - Linkage with PGGs, National Development Priorities, and RED - Territorial disparities approach - Linkage to development plans - Relationship with public policies and other instruments - Prevention of natural disasters _Source: SNIP 2023 rules and Guide to Project Prioritization Criteria for the Public Investment Program_ ### Registration, prioritization capacity, and transparency (findings) - All projects proposed by entities at the central and subnational levels are registered in SINIP, regardless of the financing modality and cost. - Some institutions do not have enough projects properly prepared to carry out prioritization; the administration finances all those that meet the selection requirements and have the favorable opinion of SEGEPLAN. - Other sectors have a large portfolio of ready-to-implement projects that exceeds the availability of resources, allowing for medium-term programs. - It is good practice for the criteria for the selection and prioritization of projects and the process followed in the selection of projects and their prioritization to be clearly established and publicly known; this contributes to transparency. - In Guatemala, projects are incorporated into the budget that, although registered with the SNIP, do not have the favorable technical opinion of SEGEPLAN; this distorts the selection process and affects its transparency. - Recommendation/observation: eliminate or limit incorporation of projects without SEGEPLAN favorable opinion to emergency projects duly classified as such by the competent authorities. ### Public Procurement (Institutional Strength: Medium; Effectiveness: Medium; Reform Priority: High) — findings and issues - The regulatory framework (Law on Government Procurement, LCE, and its implementing regulation) promotes competitive and transparent open tendering. - The number of bids in public works tenders is low. Between January 2022 and April 2023, out of a sample of 13 projects tendered by the MCIV for amounts exceeding GTQ 200 million: - nine received only one bid, - two received two bids, - one received four bids. - Rules include automatic elimination of abnormally low tenders, without verification of their feasibility, which facilitates collusion. - Effective competition for major projects has been identified only in the electricity sector, where auctions are used without eliminating bidders. - The procurement process is carried out on the Guatecompras computer platform; it is a very complete database but: - it does not have analytical reports that allow the degree of efficiency to be determined and support transparency; - statistical information is not exportable and does not present analysis that facilitates understanding; - search and filter use requires prior knowledge of its structure and is not geared to citizen oversight; - it is not possible to find information on public investment projects if the NOG or SNIP codes are not known beforehand; in some cases projects are not identified by the SNIP. - Positive: it is linked to the financial management system (SIGES) feeding into budgeting and accounting processes. - The LCE provides a mechanism for submission of complaints, but: - the procurement system does not require an independent body to receive, analyze, and resolve complaints; - each procuring entity resolves applications for review through administrative channels; complainants may resort to judicial challenge after exhaustion of administrative avenues; - over the past three years, the percentage of complaints upheld at the administrative stage varied between 23 percent and 25 percent; - complaints are published in Guatecompras and are resolved and implemented by the procuring entity without an independent opinion. - Short-term recommendation: produce an analysis and report on causes of very low competition in major public works, with proposals for correction. - System improvements suggested: - Guatecompras should enable generation of periodic information with indicators to facilitate procurement analysis and monitoring; - improve information filtering routines and enable prevention flags or alarms to detect inconsistencies and avoid irregular activities; - in an upcoming revision of public procurement regulations, consider incorporation of independence for the complaints resolution body and greater timeliness in the response. ### Availability of Resources (Institutional Strength: Medium; Effectiveness: Medium; Reform Priority: Low) — findings and recommendations - This institution evaluates systems, processes, and tools to ensure availability of cash when needed to make payments for public investments: - first dimension: cash flow forecasting process; - second dimension: existence of cash management arrangements to ensure timely payments; - third dimension: whether external financing flows are integrated with the government's bank account structure under the supervision of the Treasury or the Ministry of Finance. - Capital expenditure should be committed in accordance with reliable cash flow forecasts; lack of timely payments delays project implementation and could lead to arrears, damaging the government's financial reputation and increasing costs. - Implementing units may initiate administrative procurement supported by a certificate of budgetary availability (CDP); cash plans incorporate disbursement requests, but actual payment is subject to resource availability. - For multi-year projects, the CDP is issued by the annual content of the approved budget. - Committee for the Programming of Budget Implementation (COPEP) defines implementation and payment installments; resolutions are established in minutes of meetings; commitment quotas are established quarterly, with monthly periodicity for accrued and paid quotas; entities may request release of higher quota than amount allocated for the following four-month period. - Payment deadlines and electronic deposit standards: - Administrative procurement regulations lay down 30 days for payment once the good or service has been accepted. - National Treasury (TN) quality standard: maximum of 78 hours for a bank deposit to the account of the final beneficiary once it has been ordered in SIGES by the corresponding entity. - TN monitors through SICOIN a liquidity indicator that reflects payment response time; the average for the month of April 2023 was 1.27 days. - The LOP allows unpaid accruals at the end of the fiscal period to be paid in the following year from the budgetary availability of each entity. - Gaps: - No systematic monitoring that allows identification of payment arrears from receipt of the invoice to ordering of payment; - Lack of information prevents measurement of system efficiency and detection of irregular conduct. - External financing: - External financing for investment projects is fully incorporated into the Treasury Single Account (TSA); - TSA classifies external resources into individual registry accounts by implementing unit and source of financing; - monetary deposits supporting these records are held at the Bank of Guatemala (BANGUAT) in accounts separate from national resources or treasury resources and are kept in the original currency of disbursement (dollars, quetzals, and euros); - disbursements are processed without delays; - TN indicates payments for externally financed infrastructure projects are not determined by overall liquidity of the treasury; resources from external disbursements are kept in separate accounts at BANGUAT; - funds from donations are incorporated into the TSA only if agreements with donors allow it; otherwise deposited in commercial bank accounts in the name of the beneficiary entity. - Recommendation/observation: - SIGES must allow traceability of payments from issuance of the invoice to actual payment by the TN to measure effective availability of financial resources; - identification of delays and their causes will improve transparency and strengthen accrual and cash quota scheduling; - analyze deviations from financial programming with implementing entities to strengthen financial programming practices. ### Management and Supervision of the Investment Portfolio (Institutional Strength: Medium; Effectiveness: Low; Reform Priority: High) — findings - The institution analyzes management and monitoring of the investment portfolio: - first dimension: whether major projects are centrally tracked against financial and physical goals; - second dimension: rules and regulations for reallocating funds between projects; - third dimension: existence of ex-post reviews of major projects to adjust policies and procedures. - SEGEPLAN monitors implementation of public investment projects but: - monitoring lacks a multi-year vision of cumulative execution and a formal assessment of cumulative physical and financial execution explaining delays and overspending; - monitoring focuses on annual budget execution and does not specifically focus on larger projects nor identify them as such. - SEGEPLAN reporting: - provides Parliament with a quarterly report on fulfilment of targets; - produces a monthly report dedicated to monitoring public investments, aggregating data on projects in the SNIP showing financial and physical execution at the aggregate level by sector, department, and entity; - at project level, SNIP shows the stage of the cycle (registration, ongoing, finished). - Reallocation of funds: - Article 32 of the LOP governs budgetary transfers and modifications, including reallocation of funds between investment projects and works during execution; - reallocation process requires DTP approval for transfers between different institutions and, within an institution, for transfers affecting investment projects from different programs; - transfers between works within the same investment project or subprogram require only sectoral ministry approval; - all transfers must be notified to Congress and the Office of the Comptroller General of Accounts; - sectoral ministries can request up to four transfers per month; - there are no ceilings on the authorized amount of transfers; - in practice, amounts of transfers are significant and MINFIN approves most transfers checking only whether they meet legal framework conditions without analyzing their economic rationale; - it is not possible to establish a link between transfers and speed of project implementation. - Table 10. Reallocation of Funds during Budget Implementation (Million GTQ) — selected entries (Source: Mission according to MINFIN data): - Construction of the northern highway Agua Caliente-Sanarate section: - 2017 Initial budget: 0 - 2017 During year: 2 - 2018 Initial budget: 0 - 2018 During year: 0 - 2019 Initial budget: 0 - 2019 During year: 3 - 2020 Initial budget: 0 - 2020 During year: 0 - 2021 Initial budget: 0 - 2021 During year: 0 - 2022 Initial budget: 0 - 2022 During year: 0 - Construction of the northern highway between Sanarate and El Rancho: - 2017 Initial budget: 330 - 2017 During year: 177 - 2018 Initial budget: 330 - 2018 During year: 280 - 2019 Initial budget: 234 - 2019 During year: 168 - 2020 Initial budget: 234 - 2020 During year: 169 - 2021 Initial budget: 234 - 2021 During year: 158 - 2022 Initial budget: 0 - 2022 During year: 31 - Construction of the northern coast-to-coast highway: - 2017 Initial budget: 150 - 2017 During year: 80 - 2018 Initial budget: 150 - 2018 During year: 49 - 2019 Initial budget: 92 - 2019 During year: 35 - 2020 Initial budget: 92 - 2020 During year: 67 - 2021 Initial budget: 92 - 2021 During year: 3 - 2022 Initial budget: 108 - 2022 During year: 45 - Widening of the highway to four lanes in the CA2 Tecun Uman section: - 2017 Initial budget: 0 - 2017 During year: 0 - 2018 Initial budget: 0 - 2018 During year: 0 - 2019 Initial budget: 0 - 2019 During year: 21 - 2020 Initial budget: 0 - 2020 During year: 0 - 2021 Initial budget: 0 - 2021 During year: 0 - 2022 Initial budget: 0 - 2022 During year: 0 - Chimaltenango highway construction: - 2017 Initial budget: 190 - 2017 During year: 183 - 2018 Initial budget: 190 - 2018 During year: 225 - 2019 Initial budget: 38 - 2019 During year: 107 - 2020 Initial budget: 38 - 2020 During year: 16 - 2021 Initial budget: 38 - 2021 During year: 0 - 2022 Initial budget: 0 - 2022 During year: 0 - Expansion of the CA2 east highway Escuintla - Pedro de Alvarado: - 2017 Initial budget: 0 - 2017 During year: 0 - 2018 Initial budget: 0 - 2018 During year: 0 - 2019 Initial budget: 0 - 2019 During year: 0 - 2020 Initial budget: 0 - 2020 During year: 0 - 2021 Initial budget: 18 - 2021 During year: 0 - 2022 Initial budget: 0 - 2022 During year: 0 - Observation: large and frequent reallocations, with MINFIN approval focused on legal compliance rather than economic rationale; lack of linkage between transfers and project implementation speed indicates governance and prioritization gaps. *Italic: Source: tarea2024021 - Box 9. Project Selection and Prioritization Criteria (excerpt).* ### 78. There are no ex-post reviews of projects that could improve public investment ### tarea2024021 - 78. There are no ex-post reviews of projects that could improve public investment ### Ex-post reviews and multi-year monitoring of projects - Findings: - The FEPIP Guide mentions using ex-post reviews to measure compliance with results and analyse relevance, effectiveness, and impact, but ex-post reviews are not carried out. - SEGEPLAN's Directorate of Analysis and Monitoring focuses on on-site visits to projects that have been completed. - Sectoral ministries do not carry out ex-post reviews; their internal audit units monitor implementation of the AOPs and compliance with standards relevant to projects, without assessing costs and outcomes. - Policy recommendations: - SEGEPLAN should establish a list of the country's major projects or priority investment projects according to several criteria, including the amounts and priorities of the "Guatemala Moving Forward" agreement. - Every quarter, SEGEPLAN should publish a monitoring dashboard presenting accumulated physical and financial progress, not only for the current year, for at least the country's major public investment projects. - Implement an ex-post review process with a results-based management approach as a priority of SEGEPLAN's Directorate of Analysis and Monitoring. ### Management of Project Implementation (Institutional Strength: Medium; Effectiveness: Low; Reform Priority: Medium) - Findings: - The institutional framework requires implementation plans before project approval but does not require identification of individual project owners, although in practice they are assigned. - The FEPIP Guide and SNIP regulations require implementing entities to submit detailed schedules for financial and physical implementation before SEGEPLAN approval; FEPIP mentions the administering entity must be clearly identified but does not require appointing a person responsible for administering and supervising implementation for each project. - In practice, sectoral ministries appoint a person responsible for day-to-day monitoring for each project, though their name is not systematically included in the SNIP form. - Rules exist for adjusting project costs with SEGEPLAN authorization, but in practice adjustments increase initial costs considerably without a new assessment. - Sectoral ministries use adjustment options with great frequency, "up to ten times during a year per project." - In a sample of 5 projects of the social solidarity fund, adjustments of an average amount of 20 percent in relation to the initial cost are recorded. - SEGEPLAN issues new technical opinions when required by regulations but does not record cost overruns caused by adjustments or carry out new cost/benefit analyses. - The Office of the Comptroller General of Accounts (CGC) conducts ex-post audits of expenditure including public investment, measuring compliance with legal and financial requirements and providing information on physical realization, but CGC reports do not systematically analyze total project cost against initial contract data. - There is no evidence of parliamentary debates on CGC reports or practice changes directly related to CGC findings. - Policy recommendations: - The institutional framework should require designation of a person responsible for each project; the FEPIP Guide could include this requirement. - For major projects, SEGEPLAN should record all adjustments greater than 10 percent on a dashboard. - SEGEPLAN should conduct new cost/benefit analyses when adjustments represent, for example, more than 20 percent of the initial value of the project. - The CGC could introduce analysis elements for the total cost of projects. ### Monitoring of Public Assets (Institutional Strength: Low; Effectiveness: Low; Reform Priority: Medium) - Findings: - There is no legal or regulatory requirement for systematic recording of non-financial fixed assets. - MINFIN designated the Directorate of Government Assets as responsible for a consolidated register, but it has not issued an accounting or regulatory policy for recording non-financial fixed assets. - Registration is decentralized by public entities and frequency of updates is specific to each entity. - The Directorate of Government Accounting (DCE) indicates IPSAS implementation is in progress, which includes recognition and recording policy for property, plant, and equipment (PPE). - Financial statements disclose fixed assets and constructions in progress, but accounting records for fixed assets are not evidently exhaustive; some ad hoc records exist (for example, DGC inventory of roads by type and mileage without recorded value). - The registry of government assets is partial, not systemic, and does not follow standards on accounting, update frequency, revaluation, or deregistration. - The absence of accounting policies for fixed assets leads to failure to record decreases in value of these assets. - IPSAS 17 summary (as presented in the source): - Objective: establish rules for initial recognition and subsequent accounting (determination of carrying amount and depreciation charges and impairment losses) for PPE so users can discern information about an entity’s investment in its PPE and changes in such investment. - Recognition criterion: PPE items are recognized as assets if, and only if, it is probable that future economic benefits or service potential will flow to the entity and the cost or fair value can be measured reliably. - Accounting model options for an entire class of PPE: - Cost Model: asset carried at cost less accumulated depreciation and impairment losses. - Revaluation Model: asset carried at revalued amount (fair value at revaluation date less subsequent depreciation). - Policy recommendations: - Issue accounting policy of general application across the public sector for recognition, measurement, and disclosure of fixed assets; depreciation, amortization, or depletion; revaluation; and decrease to recoverable value — identified as a medium-priority reform. - Apply IPSAS 17 criteria in the short term as part of IPSAS implementation. - Integrate recording and control of assets in or interoperable with the central accounting system (SICOIN) so stock updates automatically reflect in accounting; where integration is not possible, adopt stock control procedures and offline updates to promote consistency between asset records and financial statements. ### Climate-Public Investment Management Assessment (C-PIMA) — Climate context and implications for public investment - Climate vulnerability and exposure (findings and figures): - Guatemala is highly vulnerable to threats: extreme rainfall, droughts, tropical cyclones, heat waves, frosts, floods (river, urban, coastal), forest fires, earthquakes, tsunamis, volcanic activity, and landslides. - Risk Report index for 2023 ranks Guatemala 35th out of 191 countries with a risk class characterized as high. - Guatemala ranks 135th out of 189 countries in the Human Development Index (2021 data). - An increase in annual rainfall of 122 mm has been observed, but it has been sporadic and geographically dispersed and has not mitigated the increase in temperatures. - An increase of 0.8°C has been recorded over the last 20 years. - By the end of the century, temperature is expected to increase by between 1°C and 4°C, while annual rainfall will decrease by between 500 mm and 1100 mm across the country. - It is estimated that around 75 percent of the population lives in areas exposed to floods, droughts, and landslides. - Economic losses due to hydrometeorological events are around USD 1.32 billion in the last decade (2010-2019). - From 1992 to 2022, Guatemala experienced 97 disasters caused by natural phenomena compared to 22 in the previous 30 years; losses from 1992 to 2022 were valued at USD 4.225 billion, compared to USD 605 million from 1961 to 1991 adjusted for inflation. - Guatemala ranks 144th globally in terms of preparedness to face climate problems (ND-GAIN 2020). - Emissions and energy: - Guatemala's contribution to global greenhouse gas (GHG) emissions is negligible. - With growing energy imports, GHG emissions are likely to grow. - National targets and plans cited: - NDC targets an 11.2 percent reduction in emissions projected by 2030. - With the government's own resources and international technical and financial support, up to 22.6 percent of its total emissions could be reduced with respect to the estimated trend scenario for 2030. - ENE-3 requires that "80 percent of electricity generation comes from clean energy by 2030." - The National Energy Plan 2017-2032 (published in 2016) presents measures for sustainable use of renewable resources and energy efficiency. - The Low Emission Development Strategy for Guatemala (2018) presents mitigation options by sector and economic analyses. - Role of public investment: - Public investment will play a key role in decarbonizing infrastructure and mitigating climate impacts. - The 2021 Update of the NDC notes infrastructure adaptation has "no defined goals but a roadmap" and highlights preparation of guidelines for updating land use and development plans to include "adaptation to climate change and resilience." - C-PIMA framework note: - The Climate-Public Investment Management Assessment (C-PIMA) assesses five key public investment management practices from a climate change perspective and extends the existing PIMA framework; institution 5 in C-PIMA (risk management) has no equivalent in PIMA. *Source: tarea2024021 - 78. There are no ex-post reviews of projects that could improve public investment* ### 97. C-PIMA covers the following specific issues (the detailed C-PIMA questionnaire is ### tarea2024021 - 97. C-PIMA covers the following specific issues (the detailed C-PIMA questionnaire is ### C-PIMA scope (listed issues) - C1. Climate-aware planning: Aligning national and sectoral plans and associated investment portfolios with climate goals is essential to transform public sector infrastructures towards climate resilience and sustainability. The planning phase is especially relevant for incorporating climate into land use regulations and building codes. - C2. Coordination between Entities: Public investment can involve various levels of government, public corporations, and PPPs. Integrating green considerations into the management of public investment therefore means coordinating all levels and entities of the public sector, as well as joint initiatives with the private sector. - C3. Project Appraisal and Selection: This is a crucial phase in the decision-making process for major infrastructure projects. It determines which projects are carried out and ensures that the most effective and efficient investments are prioritized. It is essential that climate-related analyses on the impacts of mitigation and adaptation investments are included in this phase. - C.4 Budgeting and Portfolio Management: Green investment and funds for the maintenance of public infrastructure should be budgeted and reported through the annual budget and other fiscal instruments such as the medium-term expenditure framework and the government's financial statements. Asset management as well as ex-post audits and reviews should also take climate objectives into account. - C5. Risk management: Climate change brings with it risks that could have an impact on public infrastructure and the budget. It is important that natural disaster management strategies and fiscal risk analyses incorporate such risks and that risk mitigation strategies also take into account climate considerations. ### C. Detailed Assessment and Recommendations — C1. Climate-Aware Planning - Institutional Strength: Medium; Reform Priority: Medium - Objective: assess extent to which public investment planning takes into account adaptation to and mitigation of climate change. - Dimensions assessed: - Consistency of public investment strategies and plans with government's climate objectives and expected outcomes. - Whether central/subnational regulations require spatial and urban planning and building codes to take climate risks into account. - Existence of centralized support for public investment planning that considers climate change. - Key findings: - Government's climate goals and targets are considered in infrastructure strategies but "do not constitute any of the government's priorities." - Elements cited: 2014 K'atun Plan; National Energy Plan 2017-2032; National Plan on Climate Change (NAPCC) approved in 2016; CONRED disaster risk reduction plan objectives; Climate Change Adaptation Plans (2022) prepared by MARN and SEGEPLAN for each of the 22 departments (do not include infrastructure adaptation, only recovery objectives). - Building regulations do not address climate risks and there is no legal obligation to do so; SEGEPLAN included climate in its land use planning guide. - NAPCC goal for municipalities to "update and apply building and maintenance standards and regulations for social-vital and strategic infrastructure," but no evidence of updated building regulations; many municipalities have not adopted building regulations. - CONRED's Disaster Reduction Standard (2021) does not yet have a climate focus. - SEGEPLAN "Guide for the implementation of the Municipal Development and Territorial Planning Plan" (PDM-OT) (2021) refers to mitigation and adaptation, but most municipalities have not revised PDM-OT in light of the guide. - Low Emission Development Strategy published in 2018; MARN has no guidelines and does not provide support for investment planning from a climate perspective; no guidelines for adaptation plans. - SEGEPLAN provides guides and training on resilient public investment projects but not on adaptation planning; some ministries (e.g., DGC) have Environmental Technical Specifications with climate focus on projects not plans. - Given Guatemala's very high vulnerability to climatic events, a proactive strategy for infrastructure adaptation is necessary; current strategies focus on new infrastructure resilience without leveraging vulnerability maps to prioritize interventions in existing built infrastructure. - Recommendation highlights: - Adapt building codes and land-use plans at municipal level to climate risks. - Develop proactive adaptation strategy for existing infrastructure using vulnerability maps to identify priorities. ### C2. Coordination Between Entities - Institutional Strength: Low; Reform Priority: High - Objective: coordinate decision-making on climate-related public investments across central government, subnational governments, and public corporations (PCs), PPPs, concessions, and communities. - Key findings: - Highly decentralized public investment planning lacks a climate-focused coordination mechanism. - Lead agency for climate change, MARN, "has no activities to encourage, coordinate, or even monitor climate investments," and no other entity is active in this area; existing initiatives (e.g., DGC support to municipalities) are voluntary. - No sharing of information or coordination of public climate investment between central and subnational governments; MARN trains subnational governments in general climate adaptation/mitigation (no particular focus on public investment). - Municipal Environmental Management Units (UGAMs) have adaptation responsibilities, but the 2010 Guide focused on mitigation/adaptation does not address infrastructure or public investment. - Regulatory/supervisory framework for PCs does not ensure their climate-related investments are consistent with national climate policies. - MARN's environmental licensing verifies actions but not inaction; no evidence of ministries coordinating with PCs or monitoring their investments from a climate perspective. - Recommendation highlights: - Coordinate public investment from a climate perspective integrating central government, municipalities, communities, public corporations, PPPs, and concessions to maximize climate impact. - MARN should play a central role in supporting climate investment planning, monitoring implementation, and monitoring results. - Update the Guide for UGAMs to introduce a climate approach to municipal public investment. ### C3. Project Appraisal and Selection - Institutional Strength: Medium; Reform Priority: Medium - Objective: ensure project appraisal and selection include climate-related analysis and criteria so priority is given to most effective and efficient investments considering climate change. - Dimensions assessed: - Whether ex-ante assessment of major infrastructure projects requires climate-related analysis according to a standard methodology. - Whether PPPs and concession frameworks include climate-related elements. - Whether climate-related elements are included in selection criteria for public investment projects. - Key findings: - Project formulation and evaluation reference: Law on Climate Change, SNIP regulations, and FEPIP Guide. - Law on Climate Change requires climate variability and change to be taken into account in provision of services and goods and adoption of new practices. - SNIP regulations include a section on risk analysis and adaptation to climate change plus a detailed annex on risk analysis, management, and adaptation in public investment projects. - FEPIP Guide requires project formulation to consider climate change impacts, mitigation measures, and resilience in design; such measures "must be paid for and included in the evaluation of the project." - AGRIP tool includes a specific form (Box 11) for climate change aspects to be completed during pre-investment location analysis. - Framework for PPPs and concessions (Decree 16/2010) does not consider climate change for risk allocation or contract management. - Only one PPP contract has been signed (Rehabilitation, Administration, Operation, Maintenance, and Complementary Works of the Escuintla – Puerto Quetzal Highway with Toll Collection). - Article 10 of the Law on Climate Change states "SEGEPLAN and MINFIN must give priority to the allocation of economic resources to government entities that formulate their plans, programs, and projects as established in this article," i.e., including climate aspects. - To receive favorable technical opinion from SEGEPLAN, public investment projects must comply with SNIP and FEPIP climate provisions. - Recommendation highlights: - Improve data quality and define established public guidelines (ideally public) on how to introduce mitigation and adaptation into project selection. - Ensure evaluation of projects, including PPP candidates, incorporates costs and benefits of emission abatement where appropriate. ### C4. Budgeting and Portfolio Management - Institutional Strength: Low; Reform Priority: Medium - Objective: assess management of government's portfolio of climate-related public investment from budgeting to asset management and ex-post review. - Dimensions assessed: - Level of detail of planned climate-related projects presented in budget and related documents. - Whether ex-post reviews analyze performance with respect to adaptation and mitigation. - Whether asset management policies/practices address climate-related risks. - Key findings: - Thematic budget classifier for climate change was designed; MARN published a guide in 2020 for implementation by line entities. - The classifier "has not been adopted by ministries" and thus not used to classify investment projects during the budget process. - Various environmental expenditures are identified in the 2023 budget (MARN programs), but "no investment projects related to climate change are envisaged" despite their existence; GHG mitigation projects by public corporations are not included in the budget. - Table 11. MARN Budget Programs Related to Climate Change (targets for 2023 and implementation as of April 2023): - Program 11. Environmental management with an emphasis on climate change - train 14,843 people → 2,608 people were trained - produce 656 reports → 134 reports were produced - benefit 3,279 people with adaptation measures → no measures were implemented - Program 12. Conservation and protection of natural resources and the environment - carry out 477 pollution control events → 73 events were carried out - produce 30 advisory reports → 5 reports were produced - advise 5 entities on waste management → no entities were advised - Program 13. Socio-environmental sensitivity and citizen participation - train 70,909 people in socio-environmental responsibility → 19,084 people were trained - train 2,835 people in socio-environmental issues → 750 people were trained - Regulations and methodological guidelines do not provide for ex-post reviews or audits analyzing results of public investments for adaptation or mitigation; sectoral ministries do not conduct ex-post reviews and CGC audits lack a climate focus. - MARN capacities are very limited and do not allow short-term ex-post reviews from mitigation/adaptation approach. - No regulations for registration or maintenance of assets that consider climate risks; absence limits information on risk exposure, vulnerability, and past damage impacting asset values and maintenance costs. - Scheduled depreciation of asset value is not taking place, and accelerated depreciation for weather-affected assets is not applied. - SEGEPLAN has evaluated damages and losses related to natural disasters; these evaluations could guide adaptation projects and inform accounting regulations that consider climate risks. - Recommendation highlights: - Introduce a climate approach into budgeting and project portfolio management processes. - Adopt and use the thematic classifier developed for investment expenditures. - Implement ex-post reviews of projects with adaptation/mitigation lens. - Record fixed assets with depreciation valuations to enable assessment of disaster damages and guide adaptation investments. ### C5. Risk Management - Institutional Strength: Medium; Reform Priority: Medium - Objective: assess how government identifies and manages fiscal risks related to public assets threatened by climate/disaster events. - Dimensions assessed: - Publication of national mitigation risk management strategy incorporating public infrastructure exposure. - Existence of financing mechanisms to address costs of climate-related damage to public infrastructure. - Conduct of fiscal risk analyses that take into account climate-related risks for public infrastructure assets. - Key findings: - There is a climate change-related disaster risk reduction strategy and a general financial strategy, "but they do not include the specific risks associated with public assets." - Current risk management regulations (Legislative Decree 109/96 and Government Decision 49/2012) "do not have a financial risk management approach and do not require a disaster risk management financial strategy." - CONRED's national strategy for the reduction of risks associated with climate change (2016) identifies general sector risk considerations but does not analyze specific risks associated with public assets; includes actions to generate climate risk information and vulnerability maps but public assets are not specifically taken into account. - In 2017, the World Bank applied its MPRES methodology for risk analysis of public infrastructure asset networks, but mitigation plans have not been developed. - The Financial Strategy for Disaster Risk (2018) prepared by MINFIN aims to strengthen economic and fiscal resilience and proposes six strategies including increasing knowledge of risk and estimating economic/fiscal risk; however, "an analysis of the economic effects of disasters on public infrastructure is not yet available." - Despite absence of cost analyses, adaptation criteria are being adopted for new infrastructure but not for existing infrastructure. - Recommendation highlights: - Develop financial risk management approach that incorporates disaster risk management financial strategy and specific risks to public assets. - Complete mitigation plans following MPRES analysis and produce analysis of economic effects of disasters on public infrastructure. - Extend adaptation criteria and financing approaches to existing infrastructure, not only new projects. *International Monetary Fund — Technical Assistance Report (excerpt).* ### 120. Guatemala has ex-ante financial instruments to manage the exposure of public ### tarea2024021 - 120. Guatemala has ex-ante financial instruments to manage the exposure of public ### Ex-ante financial instruments and fiscal buffers - MINFIN is negotiating with the World Bank for a contingent loan for emergencies caused by natural disasters for up to USD 190 million, which is expected to be approved in 2024. - Guatemala has a budget appropriation of GTQ 110 million, known as the Fondo Emergente (Emerging Fund), which is activated in the event of a natural disaster and with prior authorization from the Congress of the Republic. - Parametric insurance against excess rainfall associated with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) was renewed in June 2022; effective for the year 2022/23 and maximum coverage of USD 7 million. ### Fiscal risk coverage in the budget and gaps - The budget incorporates a chapter on fiscal risks including climate-related risks but does not analyze the consequences of the materialization of climate and macroeconomic shocks on infrastructure and real assets of the public sector. - Directorate of Fiscal Analysis and Policy (DAPF) has focused on macroeconomic shock risk analyses on fiscal flows and financial liabilities; inclusion of real assets is pending. - The budget chapter focuses on effects of a drop in tax revenue due to decreased economic activity and increased public spending in response to emergencies. - CONRED has maps identifying landslide and flood threats; the World Bank estimated fiscal costs of infrastructure damage associated with disaster scenarios in 2017. ### Priority and components of a disaster/climate risk management strategy - Adoption of a risk management strategy that incorporates exposure of public infrastructure to disaster and climate risks is a medium priority. - Climate change is expected to increase variability and incidence of extreme weather events such as droughts, floods, and heavy rainfall, increasing risk given existing vulnerability. - The strategy should include at least three types of risks: - (i) risks of higher capital costs of public infrastructure with low GHG emissions; - (ii) transition risks to the value of public infrastructure assets arising from changes in technology, markets, and government policy in the context of global and national climate commitments; - (iii) climate and disaster risks in public infrastructure, which should be systematically assessed and monitored to facilitate adequate and effective mitigation. ### Legal and regulatory framework: strengths and shortcomings - The legal framework covers a significant percentage of the public investment cycle, with strong coverage for budget programming and implementation, procurement, transfers and coordination with municipalities, the comptroller's office, and PPPs. - There is no law on fiscal responsibility, including the control of contingent liabilities of capital projects. - Absence of a comprehensive framework for planning, programming, and monitoring of projects; provisions are fragmented across instruments (LOP, Law on the Executive Branch Decree 114/97, Law on Urban and Rural Development Councils Decree 11/2002). - No organic law regulating the government's role in management and supervision of PCs, limiting comprehensive oversight of companies and their investment projects. - Medium-priority recommendation: complement and integrate the legal framework for fiscal management and planning/programming of public investments for central government and PCs; consider a governmental decision on the SNIP to provide a more comprehensive legal framework and require strategic control of PCs for asset disclosure, accountability, performance supervision, transparency, control, and governance mechanisms. ### Climate change legal framework and recommended enhancements - There is a comprehensive legal framework on climate change for reducing vulnerability and for disaster adaptation and reduction, but not for water regulation. - Framework Law on Climate Change creates the National Council on Climate Change, designates MARN as secretariat with support of SEGEPLAN (Article 8), and empowers social urban development councils and SEGEPLAN to verify introduction of the climate variable in public investment policies, plans and projects (Article 10). - The law obliges adoption of standards for design and construction of physical works that take climate change into account and creates a national fund. - Identified gap: absence of a regulatory framework that regulates provision of water management infrastructure and addresses wastewater and river pollution. - Recommendations: - Empower the coordinating role of MARN and SEGEPLAN. - Issue a governmental decision on the SNIP to develop incentives for coordination and monitoring of investments with climate change criteria, operationalizing Article 10 of the framework law. - Develop a regulatory framework around water investments to incorporate climate change concepts into regulatory and investment decisions. - Supplement legal framework with a financial strategy for disaster risks focused on public assets to identify transmission channels of adaptation and mitigation risks and medium- and long-term costs. ### Information systems supporting public investment and disaster response - Public investment is managed in the planning phase in SINIP (used by SEGEPLAN), integrated through interconnection with GUATECOMPRAS, SIGES, and SICOIN to complete procurement, implementation, and asset registration cycle. - SINIP integrates georeferencing via Google Maps to locate projects by year of execution, department, municipality, and institution. - Procurement is carried out in Guatecompras with online interoperability with SIGES; SIGES handles budgetary and financial implementation and interoperates with SICOIN, which records financial movements and returns information to SIGES, Guatecompras, and SNIP. - Municipalities are not part of SIGES; they use the Integrated Financial Administration System (SIAF) for Local Governments (SICOIN-GL) to enter budget execution information. - SINIP is partially interoperable with financial management systems but has significant weaknesses: - Data captures may not reflect real project conditions and can be limited to form field completion. - Some checklists are inapplicable but marked as complete due to inadequate parameterization. - Systems cannot generate periodic and analytical reports for process effectiveness, traceability from formulation to implementation and closure, or support concurrent control and audit processes with IT intelligence. - CONRED information platform is the only tool dedicated to natural disasters but is not equipped to manage disaster coordination and response processes; it has limited public access. - Climate change budget classifier (tagging) is operational in SICOIN but not implemented; DTP must coordinate with SEGEPLAN and MARN for implementation. - Recommended reforms for information systems: - Improve interoperability via standardized codes, catalogs, and data exchange. - Automate processes and controls, improve data structure and integrity, and enable traceability at all investment stages. - Enhance accessibility, completeness, parameterization, and analytical reporting. - Strengthen transparency through timely publication and progressive disclosure. *INTERNATIONAL MONETARY FUND Technical Assistance Report* ### 132. The processes of planning, formulation, and programming of investment have strong ### tarea2024021 - 132. The processes of planning, formulation, and programming of investment have strong ### Capacity and resource findings - SEGEPLAN and MINFIN have strong teams for planning, formulation, and programming of investment, while processes of fiscal projections and monitoring of projects have more limited resources. - A limited level of internal resources was identified at the DAPF, MINFIN, and the monitoring units of SEGEPLAN. - The DAFP has a small team of people dedicated to technical work (9) and it requires frequent external support to develop advanced forecasting models. - SEGEPLAN has a team assigned to formulation and technical opinion that is 4 times larger than the one assigned to project monitoring (36 and 9 respectively). - For formulation in 2023, the PIP includes 286 new projects, which means that each technician analyzes an average of 8 projects. - Despite the integration of information systems between MINFIN and SEGEPLAN, there is evidence of a low level of interaction and coordination at the team level. ### Recommendations to strengthen medium-term programming and monitoring - Strengthen the DAPF team by increasing the number of technicians assigned to fiscal projections and risk analysis. - Increase the articulation capacity of the DTP with SEGEPLAN in order to make medium-term projections at the level of investment and operation that allow better planning and programming of projects. Expected outcomes of this increase in articulation: - SEGEPLAN and the sectors can plan with realistic resource scenarios and prioritize the formulation of projects. - EPIs can procure the implementation of projects while optimizing costs and implementation timeframes. - A more active role for SEGEPLAN in the allocation of multi-year ceilings can improve the coordination of the public investment cycle. - Strengthen SEGEPLAN's monitoring teams to improve investment programming and produce effective reports on the progress of projects that influence resource allocation decisions. ### Climate integration and verification capacity - The capacity to verify the introduction of the climate variable in public investment policies, plans, and projects at the sectoral, public, and territorial levels must be strengthened. - There is an instrument for analyzing climate change risks within SINIP: AGRIP. - In conjunction with MARN, SEGEPLAN has defined the climate change thematic classifier, but they have not applied it effectively. - Priorities for climate integration: - Make progress in the application of the climate change classifier at the national and territorial levels. - Strengthen the MARN teams to support its role as secretary of the National Council on Climate Change and as entity responsible for providing guidelines on the general application of climate change criteria in policies and plans and public investment projects at the national and territorial levels. *International Monetary Fund — Technical Assistance Report (excerpt).* ### 10. Project Selection: Are there institutions and procedures in place to guide project selection? ### 10. Project Selection: Are there institutions and procedures in place to guide project selection? ### 10.a. Central review of major project appraisals - Question: Does the government undertake a central review of major project appraisals before decisions are taken to include projects in the budget? - Response options: - Major projects (including donor- or PPP-funded) are not reviewed by a central ministry prior to inclusion in the budget. - Major projects (including donor- or PPP-funded) are reviewed by a central ministry prior to inclusion in the budget. - 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. Published criteria and required process for project selection - Question: Does the government publish and adhere to standard criteria, and stipulate a required process for project selection? - Response options: - There are no published criteria or a required process for project selection. - There are published criteria for project selection, but projects can be selected without going through the required process. - There are published criteria for project selection, and generally projects are selected through the required process. ### 10.c. Pipeline of appraised investment projects - Question: Does the government maintain a pipeline of appraised investment projects for inclusion in the annual budget? - Response options: - The government does not maintain a pipeline of appraised investment projects. - The government maintains a pipeline of appraised investment projects but other projects may be selected for financing through the annual budget. - 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. ### 11. Delivering Productive and Durable Public Assets — Procurement 11.a. Procurement openness and transparency - Question: Is the procurement process for major capital projects open and transparent? - Response options: - Few major projects are tendered in a competitive process, and the public has limited access to procurement information. - Many major projects are tendered in a competitive process, but the public has only limited access to procurement information. - Most major projects are tendered in a competitive process, and the public has access to complete, reliable and timely procurement information. 11.b. Procurement monitoring system - Question: Is there a system in place to ensure that procurement is monitored adequately? - Response options: - There is no procurement database, or the information is incomplete or not timely for most phases of the procurement process. - There is a procurement database with reasonably complete information, but no standard analytical reports are produced from the database. - There is a procurement database with reasonably complete information, and standard analytical reports are produced to support a formal monitoring system. 11.c. Procurement complaints review - Question: Are procurement complaints review process conducted in a fair and timely manner? - Response options: - Procurement complaints are not reviewed by an independent body. - 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. - Procurement complaints are reviewed by an independent body whose recommendations are timely, published, and rigorously enforced. ### 12. Availability of Funding: Is financing for capital spending made available in a timely manner? 12.a. Cash-flow forecasting and commitment ceilings - Question: Are ministries/agencies able to plan and commit expenditure on capital projects in advance on the basis of reliable cash-flow forecasts? - Response options: - Cash-flow forecasts are not prepared or updated regularly, and ministries/agencies are not provided with commitment ceilings in a timely manner. - Cash-flow forecasts are prepared or updated quarterly, and ministries/agencies are provided with commitment ceilings at least a quarter in advance. - Cash-flow forecasts are prepared or updated monthly, and ministries/agencies are provided with commitment ceilings for the full fiscal year. 12.b. Timeliness of cash releases for project outlays - Question: Is cash for project outlays released in a timely manner? - Response options: - The financing of project outlays is frequently subject to cash rationing. - Cash for project outlays is sometimes released with delays. - Cash for project outlays is normally released in a timely manner, based on the appropriation. 12.c. Integration of external (donor) funding in government bank account structure - Question: Is external (donor) funding of capital projects fully integrated into the main government bank account structure? - Response options: - External financing is largely held in commercial bank accounts outside the central bank. - External financing is held at the central bank, but is not part of the main government bank account structure. - External financing is fully integrated into the main government bank account structure. ### Annex 4. C-PIMA Questionnaire — Climate-aware planning and risk management (C1–C5) - Scale: Score 1 = To no or a lesser extent 2 = To some extent 3 = To a greater extent ### C1. Climate-aware planning: Is public investment planned from a climate change perspective? C.1.a. Consistency with NDC or overarching climate strategy - Question: Are national and sectoral public investment strategies and plans consistent with Nationally Determined Contribution (NDC) or other overarching climate change strategy on mitigation and adaptation? - Response options: - National and sectoral public investment strategies and plans are not consistent with NDC or other overarching climate change strategy. - National public investment strategies and plans are consistent with NDC or other overarching climate change strategy for some sectors. - National and sectoral public investment strategies and plans are consistent with NDC or other overarching climate change strategy for most sectors. C.1.b. Spatial/urban planning and construction regulations - Question: Do central government and/or sub-national government regulations on spatial and urban planning, and construction address climate-related risks and impacts on public investment? - Response options: - Central government and/or sub-national government regulations on spatial and urban planning, and construction do not address climate-related risks and impacts on public investment. - Central government and/or sub-national government regulations on spatial and urban planning, or construction (through building codes) addresses climate-related risks and impacts on public investment. - Central government and/or sub-national government regulations on spatial and urban planning, and construction (through building codes) address climate-related risks and impacts on public investment. C.1.c. Centralized guidance/support for climate-aware investment preparation and costing - Question: Is there centralized guidance/support for government agencies on the preparation and costing of climate-aware public investment strategies? - Response options: - There is no centralized guidance/support for government agencies on the preparation and costing of climate-aware public investment strategies. - There is centralized guidance/support for government agencies on the preparation of climate-aware public investment strategies. - There is centralized guidance/support for government agencies on the preparation and costing of climate-aware public investment strategies. ### C2. Coordination between entities: Is there effective coordination of decision making on climate change-related public investment across the public sector? C.2.a. Coordination across central government - Question: Is decision making on public investment coordinated across central government from a climate-change perspective? - Response options: - Decision making on public investment is not coordinated across central government from a climate-change perspective. - Decision making on public investment is coordinated across budgetary central government from a climate-change perspective. - Decision making on public investment is coordinated across all central government, including externally financed projects, public-private partnerships (PPPs) and extra-budgetary entities, from a climate-change perspective. C.2.b. Coordination with subnational governments (SNGs) - Question: Is the planning and implementation of capital spending of subnational governments (SNGs) coordinated with the central government from a climate-change perspective? - Response options: - The planning and implementation of capital spending of SNGs is not coordinated with the central government from a climate-change perspective. - The central government issues guidance on the planning and implementation of capital spending from a climate-change perspective and information on major climate-related projects of SNGs is shared with the central government and is published alongside data on central government projects. - The central government issues guidance on the planning and implementation of capital spending from a climate-change perspective, information on major climate-related projects of SNGs is shared with the central government and is published alongside data on central government projects, and there are formal discussions between central government and SNGs on the planning and implementation of climate-related investments. C.2.c. Regulatory oversight of public corporations - Question: Does the regulatory and oversight framework for public corporations ensure that their climate-related investments are consistent with national climate policies and guidelines? - Response options: - The regulatory and oversight framework for public corporations does not promote consistency between their climate-related investments and national climate policies and guidelines. - The regulatory and oversight framework for public corporations promotes consistency between their climate-related investments and national climate policies and guidelines. - The regulatory and oversight framework for public corporations requires that their climate-related investments be consistent with national climate policies and guidelines. ### C3. Project appraisal and selection: Do project appraisal and selection include climate-related analysis and criteria? C.3.a. Requirement for climate-related analysis in appraisals - Question: Does the appraisal of major infrastructure projects require climate-related analysis to be conducted according to a standard methodology with central support? - Response options: - The appraisal of major infrastructure projects does not require climate-related analysis to be conducted according to a standard methodology. - The appraisal of major infrastructure projects requires climate-related analysis to be conducted according to a standard methodology. - The appraisal of major infrastructure projects requires climate-related analysis to be conducted according to a standard methodology, and a summary of appraisals is published or subject to independent external review. C.3.b. Framework for longer-term contracts (PPPs) and climate - Question: Does the framework for managing longer-term public investment contracts, such as Public-Private Partnerships (PPPs), explicitly address climate-related challenges? - Response options: - The referred framework does not include explicit consideration of climate change for risk allocation or contract management. - The referred framework includes explicit consideration of climate change with respect to how risks are allocated between the parties in infrastructure contracts. - The referred framework includes explicit consideration of climate change with respect to how risks are allocated between the parties in infrastructure contracts, and contract managers in government departments and agencies are mandated to address climate-related challenges. C.3.c. Inclusion of climate elements among selection criteria - Question: Are climate-related elements included among the criteria used by the government for the selection of infrastructure projects? - Response options: - Either there are no explicit selection criteria or climate-related elements are not included among the criteria used by the government for the selection of projects for financing. - Climate-related elements are included among the criteria used by the government for the selection of all major budget-funded projects, and the criteria are published. - Climate-related elements are included among the criteria used by the government for the selection of all major projects, including externally financed projects, projects financed by extra-budgetary entities, and PPPs, and the criteria are published. ### C4. Budgeting and portfolio management: Is climate-related investment spending subject to active management and oversight? C.4.a. Identification, monitoring, and reporting in the budget - Question: Are planned climate-related public investment expenditures, sources of financing, outputs and outcomes identified in the budget and related documents, monitored, and reported? - Response options: - Planned climate-related public investment expenditures are not identified in the budget and related documents. - Some planned climate-related public investment expenditures are identified in the budget and related documents, including investment expenditures funded externally, by extra-budgetary entities, and PPPs. - Most planned climate-related public investment expenditures, sources of financing, and outputs and outcomes are identified in the budget and related documents, including investment expenditures funded externally, by extra-budgetary entities, and PPPs, and expenditure on these projects is monitored and reported. C4.b. Ex-post reviews or audits of mitigation and adaptation outcomes - Question: Are ex-post reviews or audits conducted of the climate change mitigation and adaptation outcomes of public investments? - Response options: - No ex-post reviews or audits are conducted of the climate change mitigation and adaptation outcomes of public investments. - Ex-post reviews or audits are conducted for selected major public investments of either the climate change mitigation or adaptation outcomes. - Ex-post reviews or audits are conducted and published for selected major public investments of both the climate change mitigation and adaptation outcomes. C4.c. Asset management policies addressing climate-related risks - Question: Do the government’s asset management policies and practices, including the maintenance of assets, address climate-related risks? - Response options: - Neither the government’s asset management policies and practices nor methodologies for estimating the maintenance needs of climate change-exposed infrastructure assets address climate-related risks. - Methodologies prepared by the government for estimating the maintenance needs of some climate change-exposed infrastructure assets address climate-related risks. - Methodologies prepared by the government for estimating the maintenance needs and associated costs of most climate change-exposed infrastructure assets address climate-related risks, and government asset registers include climate-related information of these assets. ### 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? C5.a. National disaster risk management strategy - Question: Does the government publish a national disaster risk management strategy that incorporates the potential impact of climate change on public infrastructure assets and networks? - Response options: - Either there is no published national disaster risk management strategy, or the strategy does not identify the key climate-related risks to public infrastructure assets and networks. - The government publishes a national disaster risk management strategy that identifies the key climate-related risks to public infrastructure assets and networks in terms of hazards, exposure, and vulnerability. - The government publishes a national disaster risk management strategy that identifies and analyses the key climate-related risks to public infrastructure assets and networks in terms of hazards, exposure and vulnerability, and includes the government’s plans to mitigate and respond to these risks. C5.b. Ex ante financing mechanisms for climate-related damages - Question: Has the government put in place ex ante financing mechanisms to manage the exposure of the stock of public infrastructure to climate-related risks? - Response options: - The government has not put in place any ex ante financing mechanisms to manage the exposure of the stock of public infrastructure to climate-related risks. - There is an annual contingency appropriation in the budget or other financing mechanisms that is available to meet the costs of climate-related damages to public infrastructure. - There is an annual contingency appropriation in the budget and other financing mechanisms that are available to meet the costs of climate-related damages to public infrastructure. C5.c. Fiscal risk analysis incorporating climate-related risks - Question: Does the government conduct and publish a fiscal risk analysis that incorporates climate-related risks to public infrastructure assets? - Response options: - The government does not conduct a fiscal risk analysis that incorporates climate-related risks to public infrastructure assets. - The government conducts and publishes a fiscal risk analysis that incorporates a qualitative assessment of climate-related risks to public infrastructure assets over the medium term. - The government conducts and publishes a fiscal risk analysis that incorporates 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 the risks that may arise over the long-term. *Source: tarea2024021 - 10. Project Selection: Are there institutions and procedures in place to guide project selection?* --- _Source: https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024021.pdf_