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### Mission and scope
- IMF Fiscal Affairs Department mission: Public Investment Management Assessment (PIMA) and Climate PIMA (C‑PIMA), November 30−December 13, 2023.
- Mission led by Bryn Battersby; team members included Ian Hawkesworth, Imran Aziz, Anjum Israr, Gregory Kisunko, Thomas Ekeli, David Gentry, and Joe Taylor.
- Engagements: Senior-level meetings (Office of the President, MoF, SCISPM, MoEDT, Agency for Financial Control and Anti-Corruption); consultations with MDAs and Development Partners; site visit to Rogun Hydropower Plant.
- Objective: Assess public investment management and climate-sensitive public investment processes and provide prioritized recommendations.

### Infrastructure investment, composition, and Rogun Hydropower project
- Public investment trends and composition:
  - Public investment per capita surged since the mid-2000s and is notably higher than regional counterparts and emerging markets.
  - Around 60 to 70 percent of public investment is undertaken through the Public Investment Program (PIP); remaining 30 to 40 percent is undertaken through the budget and linked to the State Borrowing Plan.
  - PIP for 2021-25: contains 898 projects totaling US$19.1 billion.
  - PIP included 48 loan agreements, with a total disbursed loan cost of US$622.5 million as of January 1, 2023.
- Rogun Hydropower Plant specifics and fiscal footprint:
  - 3.6GW hydroelectric power facility on the Vakhsh River; dam site approximately 6.5km from Rogun town and approximately 110km from Dushanbe; planned embankment dam height: 335 meters.
  - Project history: started in the early 1970s; expected to be completed by 2035.
  - Since 2007, Government invested around US$3.5 billion (40 percent of 2021 GDP).
  - Remaining cost to complete the project currently estimated at between US$4.0 billion and US$6.0 billion.
  - Rogun spending peak: largest allocation reaching 8.6 percent of GDP in 2017.
  - Major financing sources: state budget (most funding); Rogun Joint Stock Company bond issuances: domestic SM 900 million (US$80 million) in 2010; US$500 million sovereign Eurobond in 2017; National state pension fund acquired an SM 900 million bond issued by Rogun Joint Stock Company in 2021.
- Other large projects noted: Turkmenistan-China gas pipeline; Tajik Aluminum Company plant modernization; Central Asia-South Asia 1000 regional power project; Obigarm highway; broader road network stabilization (2024 Budget highlights).
- PPPs and private investment:
  - Five PPP projects launched between 2005 and 2011; by 2023 PPP portfolio comprised nine projects with total value around US$33.8 million (0.3 percent of GDP).
  - Private investment remains smaller, focused on retail, real estate, and small manufacturing.

### Infrastructure outcomes and efficiency
- Access and outcome indicators:
  - 8.2 secondary teachers per 1,000 people.
  - Electricity access universal, but production rate only 2kWh per 1,000 people.
  - Hospital beds per 1,000 people declined from 8.9 to 4.7.
  - 82 percent of population has access to basic drinking water.
  - In 2019, 21 percent of the rural population relied on surface water as main drinking water source.
- Perceived quality and rankings:
  - Electricity supply ranked 107th in quality.
  - Transport infrastructure positioned at 111th.
  - Airport connectivity ranked 121st.
  - 2023 World Bank Logistics Performance Index: Tajikistan ranked 97 of 139 countries overall and 80th on trade and transport-related infrastructure.
- Public investment efficiency gap:
  - Estimated around 22 percent, indicating scope to improve infrastructure quality and accessibility for the existing capital stock per capita.
- Capital spending patterns and fiscal implications:
  - Capital spending has represented more than half of total public expenditure over the past 20 years.
  - Ratio of capital to current expenditure reached 150 percent in 2019.
  - Capital spending as percent of GDP was among the highest in the world from 2014 to 2019.

### PIMA institutional findings (planning, allocation, delivery)
- Overall diagnostic:
  - Institutional design generally stronger than effectiveness; notable effectiveness weaknesses in project appraisal, project selection, and maintenance funding.
  - Dual/parallel processes for externally financed (PIP) and internally financed (budget) projects create fragmentation and weaken central oversight.
- Strengths (selected):
  - Fiscal targets and rules: Institutional Strength — MEDIUM; Effectiveness — MEDIUM.
  - Multi-year budgeting (MTEF) exists with a three-year horizon and indicative capital ceilings; MTEF published early each calendar year.
  - Some institutional design for maintenance funding and monitoring of public assets: Institutional Strength — MEDIUM.
- Weaknesses (selected):
  - Project appraisal: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
    - Externally financed projects are systematically appraised; internally financed projects are not systematically and rigorously appraised; no internally financed project fully benefits from methodology in Resolution 161.
    - MoEDT capacity constrained: investment unit currently consists of seven staff and cannot fully implement appraisal regulation.
  - Project selection: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
    - CSIP is mandated to select projects for PIP but is not required to produce ranked lists; selection criteria are general and pipeline is unprioritized.
    - Internally financed projects effectively exit PIM after MoEDT review and are subject to bilateral negotiation between line ministry and MoF.
  - Portfolio management and oversight: Institutional Strength — LOW; Effectiveness — LOW; Reform priority — High.
    - No consolidated and systematic monitoring across externally and internally financed projects; no systematic data on portfolio delays and cost overruns; no formal ex-post review process for major projects.
  - Alternative infrastructure financing and oversight (PPPs, SOEs): Institutional Strength — LOW; Effectiveness — MEDIUM; Reform priority — Medium.
    - PPP law does not address fiscal risk management, budgeting, or accounting procedures; no legal requirement for SOEs to report investment plans; large SOEs have incurred substantial losses.
  - Maintenance funding: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
    - Routine maintenance identified under economic classification item 2.2.1.5 but funding likely substantially below needs; Table 3 routine maintenance actual spending as a percent of the total budget:
      - 2022: State budget 3.5; Republic budget 1.7; Local budget 8.9
      - 2021: State budget 4.0; Republic budget 2.1; Local budget 8.4
      - 2020: State budget 3.1; Republic budget 1.6; Local budget 6.5
- Multi-year budgeting performance:
  - Forecast accuracy metrics (past four years until 2024):
    - revenues and expenditures in the annual budget law turned out to be on average 6-8 percent different from the projections for that particular budget a little more than a year earlier.
    - the forecast error on a two-year horizon was 13-14 percent.
    - the forecast errors for capital spending alone were slightly higher than for total spending.
  - Example: annual capital budgets passed by parliament in the past three years until 2024 were on average around 15 percent higher than the projections one year out in preceding MTEFs.

### Project appraisal, selection, and procurement
- Appraisal regulation and practice:
  - Government Resolution 161 (March 27, 2018) calls for systematic technical, economic and financial analysis for major projects and requires an ecological section and risk assessment but does not require risk mitigation plans; no requirement for publishing project documents.
  - Project documentation required: introductory (estimated cost and demand/socio-economic significance); technical; financial; economic; social; ecological.
  - Appraisal stages and tailoring by project size: concept note; pre-feasibility; feasibility; implementation preparation; budget application.
- Procurement:
  - Law on public procurements (March 15, 2023, No. 1955) requires competitive procurement with exceptions; Agency for State Procurement manages e-procurement portal.
  - Portal-reported activity in 2022: close to SM 3.2 billion worth of works and goods publicly tendered.
  - Interdepartmental Commission of Review of Complaints not yet established (expected 2024); highest-priority reform is operationalization and independence of this commission.

### Cash management, availability of funding, and IT systems
- Cash forecasting and performance:
  - Treasury Instructions: quarterly cash-flow forecasts and commitment ceilings; consolidated cash plan excludes externally financed projects.
  - For the past four years, actual net cash flow forecasts deviated by, on average, 7 percent from outturns.
  - Arrears as percentage of total expenditure accounted for less than 2 percent of total expenditure (three-year trend).
- Public financial management information systems:
  - SGB.net operational (budget, revenue, treasury, accounting); externally financed expenditures do not go through the system.
  - Debt Management and Financial Analysis System introduced in 2022; expected fully operational in early 2024.
  - e-procurement system operational since 2019.
  - SCISPM asset management system operational in 2022.
  - Links between systems are limited; MoEDT lacks a modern electronic system for long- and medium-term planning or the PIP.

### Asset register and monitoring of public assets
- SCISPM central asset register: legally mandated since January 2022; data updated annually; includes replacement value and depreciation but not condition.
- Current limitations:
  - Data materially incomplete due to non-reporting by budget entities.
  - Simple identification code not designed for analysis; lacks classification codes for planning, maintenance, climate needs.
  - Access restricted; entities outside SCISPM cannot register or access data.
- Planned actions:
  - Asset management module to SGB.net planned; coordination between SCISPM register and SGB.net module unclear.
- Tabled recommendations:
  - Expand SCISPM asset register functionality by classifying assets for analytical purposes and allowing entities outside SCISPM to access and register data. (MoEDT and SCISPM, by mid-2025 for use during 2026 budget preparation).

### Climate vulnerabilities, projections, and macro-fiscal impacts
- Climate projections:
  - Annual average temperatures projected to increase by 1.6 to 2.3°C in 2050 and between 1.8 and 3.3°C in 2070 across the 1-2.6 and 3-7.0 SSP emission scenarios.
  - In a high-emission, fast-warming scenario (SSP3-7.0 90th percentile), temperatures could increase by 4.1°C by 2070.
- Physical impacts and exposure:
  - Increased likelihood of drought, accelerated land degradation and glacial retreat, changes to water flows, increased hydrological variability, intensification of flooding, landslides, and mudslides.
  - Most vulnerable areas are glacier-dependent river catchments and basins.
  - Renewable hydropower accounts for approximately 40 percent of energy and 93 percent of electricity generation.
  - Agriculture employs almost 46 percent of the population.
- Disaster frequency and losses:
  - Government analysis: 3,460 natural disasters occurred between 1997 and 2018 (almost 160 a year).
  - Annual average losses due to floods estimated at US$60.8m (0.7 percent of GDP).
  - A 100-year flood would incur economic losses of US$550m (6.5 percent of GDP).
  - Damages from all types of natural disasters have been estimated to cost up to 3 percent of GDP each year.

### Climate PIMA findings (C1–C5) and institutional gaps
- Policy and strategy:
  - NDS-2030, Medium-Term Development Programs, Green Economic Development Strategy for 2023-37, and updated NDC (2021) exist.
  - NDC commitments: reduce emissions by 30-40 percent of pre-industrial levels by 2030 (unconditionally) and 40−50 percent (conditional on adequate international support).
  - NDC Implementation Plan (adopted 2022): 34 unconditional mitigation actions and 16 conditional mitigation actions; 40 adaptation actions plus 6 cross-sectoral adaptation actions.
    - Table 5 summary (mitigation actions): Unconditional — Energy 10; IPPU 0; AFOLU 13; Waste 11. Conditional — Energy 3; IPPU 1; AFOLU 12; Waste 0.
    - Table 6 summary (adaptation actions): Energy 6; Water 9; Agriculture 9; Forestry 7; Transport 5; Industry and construction 4; Cross-sectoral 6.
  - NDC Implementation Plan actions are not costed; costing expected in forthcoming Climate Finance Plan.
- C-PIMA institutional scores and priorities (selected):
  - C1 Climate-aware planning: Institutional Strength — MEDIUM; Reform priority — Medium.
  - C3 Project appraisal and selection: Institutional Strength — LOW; Reform priority — High.
  - C4 Budgeting and portfolio management: Institutional Strength — LOW; Reform priority — High.
  - C5 Risk management: Institutional Strength — MEDIUM; Reform priority — Medium.
- Key climate-process gaps:
  - Spatial and urban planning and construction legislation do not adequately address climate-related risks.
  - No centralized technical guidance for climate considerations; limited capacity to prepare and cost climate-aware investment plans.
  - Budget documents do not identify climate-related investment expenditures; no methodology for defining climate-related spending.
  - Statement of Fiscal Risks (latest 2021) focuses on SOE contingent liabilities and does not include climate-related fiscal risks.
  - No systematic ex-post reviews or audits of climate mitigation/adaptation outcomes for public investments.

### Fiscal context and macro figures
- Fiscal deficit: 1.4 percent of GDP in 2022.
- Committed fiscal deficit limit: 2.5 percent of GDP.
- Public debt projected to be around 36 percent of GDP in 2022.
- IMF Article IV: public debt assessed as sustainable but with high risk of debt distress.

### Prioritized recommendations (selected, with responsible entity and timeline where given)
- Investment Planning and Appraisal
  - Recommendation 1: Distinguish between new and ongoing capital projects in the MTFF and include an analysis of fiscal space available for new projects in the medium term in budget documents. (MoF by end-2024 for use in 2025 budget). Reform priority — Medium.
  - Recommendation 2: The PIP should include all projects funded from all financing sources, including external, internal, and PPP sources, and become the central repository for all proposed and ongoing projects in Tajikistan. (President’s Office and MoEDT, by end-2024). Reform priority — High.
  - Recommendation 3: Update the appraisal process so that all projects, irrespective of financing – external, internal, and PPP – are appraised and prioritized according to the strategic policies and needs of the country and project quality. Enhance the role of MoEDT and CSIP as effective gatekeepers. (President’s Office and MoEDT, by end-2024). Reform priority — High.
  - Recommendation 4: Expand the scope of the Statement of Fiscal Risks from large SOEs to include measurement and analysis of fiscal risks posed by PPPs. (MoF, by end-2024 for inclusion in the 2025 Statement of Fiscal Risks). Reform priority — Medium.
- Investment Allocation and Selection
  - Recommendation 5: Identify and explain changes in costs for public investment projects in medium-term budget documents, including changes in capital investment costs in aggregate projections, by sector ceilings and on a project level for major projects. (MoF, by end-2024). Reform priority — Medium.
  - Recommendation 6: Update Resolution 161 governing selection with more precise methodology and guidance; strengthen CSIP role in project selection. (President’s Office and MoEDT, by end-2024). Reform priority — High.
  - Recommendation 7: Provide supplements to budget documents with analysis of maintenance needs and summarize budget spending for routine maintenance and major improvements. (MoF, Mid 2025, for inclusion in the 2026 budget preparation instructions). Reform priority — Medium.
- Investment Implementation and Oversight
  - Recommendation 8: Establish an overarching framework for portfolio oversight and management that encompasses all investment projects, regardless of funding source. (MoEDT, by end-2024). Reform priority — High.
  - Recommendation 9: Establish an ex-post evaluation process and require these evaluations for all large projects. (MoEDT, by mid-2025). Reform priority — Medium.
  - Recommendation 10: Expand SCISPM asset register functionality by classifying assets for analytical purposes and allowing entities outside the SCISPM to access and register data. (MoEDT and SCISPM, by mid-2025 for use during 2026 budget preparation). Reform priority — Medium.
- Climate-sensitive public investment management
  - Recommendation 11: Update legislation to incorporate climate mitigation and adaptation measures across spatial and urban planning and construction. (CoEP, mid-2025). Reform priority — Medium.
  - Recommendation 12: Update appraisal and selection regulations to include climate mitigation and adaptation criteria; update PPP and concession regulations to take climate-related risks into account. (MoEDT with CoEP, by end-2024). Reform priority — High.
  - Recommendation 13: Report climate-related investment expenditure in an annual climate budget statement accompanying detailed budget documentation and follow up as part of ex-post review. (MoF, Department of Budget, mid-2025 for inclusion in the 2026 budget). Reform priority — Medium.
  - Recommendation 14: Expand the Statement of Fiscal Risks to include long-term fiscal risk analysis under different climate scenarios and assess exposure of infrastructure, SOEs, and PPPs to changing climatic conditions (such as accelerated glacial melting) and policy transition risks. (MoF with CoEP, mid-2025 for inclusion in the 2026 budget). Reform priority — Medium.
- Cross-cutting capacity and systems
  - Recommendation 14 (staffing/capacity): Take stock of skills, guidance, and capacity gaps across government ministries, agencies, and sub-national government and develop a capacity-building action plan; provide guidelines and technical support on climate in sectoral planning and preparation/costing of climate-related public investment strategies. (MoEDT and CoEP, Immediately). Reform priority — Medium.
  - IT and systems priority: Develop linked electronic systems for PIP, project and asset management, and reconcile Debt Management System with SCISPM externally financed project data.

### Implementation priorities (high level)
- Bring externally and internally funded projects into a single cohesive pipeline and central repository (PIP).
- Clarify and enforce appraisal and selection procedures for all financing sources; strengthen MoEDT and CSIP gatekeeping roles.
- Incorporate climate change aspects into appraisal requirements and selection criteria; update PPP/concession regulations to address climate risks.
- Implement comprehensive portfolio oversight and ex-post evaluation to prevent cost overruns and capture lessons.
- Expand fiscal risk reporting to include PPPs, SOEs, natural disaster and climate-related long-term scenarios.
- Address capacity and staffing gaps, and operationalize IT systems to support integrated planning, budgeting, implementation, and asset management.

*IMF Technical Assistance Report — Executive Summary and selected excerpts*

### Preface ____________________________________________________________________________ 7

### Preface

### Mission overview
- At the request of the Ministry of Finance (MoF) of Tajikistan, a team from the IMF’s Fiscal Affairs Department (FAD) undertook a Public Investment Management Assessment (PIMA) and Climate PIMA (C-PIMA) during the period November 30−December 13, 2023.
- The mission team was led by Bryn Battersby and comprised:
  - Ian Hawkesworth (FAD)
  - Imran Aziz (CCAMTAC Regional Advisor)
  - Anjum Israr (Asian Development Bank)
  - Gregory Kisunko (World Bank)
  - Thomas Ekeli (FAD)
  - David Gentry (FAD)
  - Joe Taylor (FAD)

### Senior-level engagement
- The mission met with senior officials at the outset and close of the mission, including:
  - Senior Economic Adviser in the Office of the President, Mr. Amirjon Ubaidulloev
  - Deputy Minister of Finance Mr. Majidi Yusuf
  - Deputy Minister of State Investment and State Property Management Committee, Mr. Khurshed Mirzo
  - Deputy Minister of Economic Development and Trade Mr. Ubaidulloev Ahliddin
  - First Deputy Chairman of Agency for Financial Control and Anti-Corruption, Mr. Safarzoda Suhrob
- These officials provided helpful guidance on public investment management priorities in Tajikistan.

### Stakeholder consultations and site visits
- The mission conducted meetings with ministries, departments and agencies (MDAs) involved in public investment and climate change in Tajikistan, including:
  - Within MoF: Macro Fiscal Department, Central Treasury Department, Budget Department, Department for State Owned Enterprise (SOE) Oversight and Fiscal Risk Management
  - Ministry of Economic Development and Trade (MoEDT)
  - Ministry of Health and Social Protection
  - Ministry of Transport and Communications
  - Ministry of Energy
  - State Committee on Investment and State Property Management (SCISPM)
  - Agency on Public Procurement of Goods, Works and Services
  - Agency for State Financial Control and Combatting Against Corruption
  - Committee on Environmental Protection (CoEP)
  - Asian Development Bank (ADB)
  - World Bank
- The mission team also met with the project management team at the Rogun Hydropower Plant as part of a project site visit and met with Development Partners at the close of the mission.

### Acknowledgements
- The mission team expressed thanks to the Tajikistan government for its cooperation and the participation of officials in constructive discussions during the mission.
- Special thanks were provided to:
  - Nailya Menlasheva (IMF Local Economist)
  - Jami Chiniev (IMF Local Economist)
- Translation support acknowledged from:
  - Saidmusayab Alyamov
  - Muhiddin Tojiev
  - Janna Yunosova

*IMF Fiscal Affairs Department mission, PIMA and C-PIMA, November 30−December 13, 2023.*

### Executive Summary

### Executive Summary — tarea2024094-print-pdf

### Infrastructure investment and strategic projects
- Public investment per capita has surged since the mid-2000s and is notably higher than regional counterparts and emerging markets.
- The Rogun Hydropower Plant:
  - Started in the early 1970s.
  - Expected to be completed by 2035.
  - Upon completion will be the largest hydropower station in Central Asia and significantly boost the country’s energy capacity.
- Despite increased investment, capital stock continued to decline through the 2010s and into the 2020s due to:
  - Disproportionate allocation of resources to the Rogun Hydropower project at the expense of broader capital maintenance and development.
  - The lag between investment in the dam and anticipated completion in 2035.
- Tajikistan’s Vision 2030 and National Development Strategy (NDS) 2030 (adopted in 2016) prioritize:
  - Energy security and electricity efficiency.
  - Transport links, food security, nutrition quality, and expanding productive employment.
  - Leveraging hydropower and coal resources to spur industrial and agricultural growth.
- Tajikistan has committed to 17 of the United Nations’ Sustainable Development Goals.

### Infrastructure quality and efficiency gap
- Infrastructure quality shows some improvements but ongoing challenges remain in:
  - Electricity supply and transport infrastructure (rank relatively low globally).
  - Airport connectivity, which is a significant concern for this landlocked country.
- Public investment efficiency gap:
  - Around 22 percent, indicating substantial room to enhance infrastructure quality and accessibility through improved public investment management processes.

### Public investment management institutional assessment (PIMA)
- Institutional strengths:
  - Fiscal targets, multi-year budgeting, maintenance funding design, and monitoring of public assets show relative strength in design.
- Critical gaps and weaknesses:
  - Alternative infrastructure financing, portfolio management and oversight are relatively weak compared to peers.
  - Parallel processes for externally and internally funded projects cause disjointed national and sectoral planning.
  - Lack of comprehensive monitoring and no systematic data on project delays and cost overruns.
  - Appraisal, selection, and maintenance funding effectiveness lag intended institutional design.
- Specific assessment highlights from Table 1 (selected items and reform priority):
  - Fiscal targets and rules: Institutional Strength — MEDIUM; Effectiveness — MEDIUM; Reform priority — Low.
  - National and sectoral planning: Institutional Strength — MEDIUM; Effectiveness — MEDIUM; Reform priority — High.
  - Project appraisal: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
  - Alternative infrastructure financing: Institutional Strength — LOW; Effectiveness — MEDIUM; Reform priority — Medium.
  - Maintenance funding: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
  - Project selection: Institutional Strength — MEDIUM; Effectiveness — LOW; Reform priority — High.
  - Portfolio management and oversight: Institutional Strength — LOW; Effectiveness — LOW; Reform priority — High.
  - Monitoring of public assets: Institutional Strength — MEDIUM; Effectiveness — MEDIUM; Reform priority — Medium.

### Climate-sensitive public investment management (C-PIMA)
- Country vulnerabilities and planning:
  - Tajikistan is glacier-fed and especially susceptible to climate change, heightening the need for climate-sensitive public investment.
  - A comprehensive Nationally Determined Contribution (NDC) Implementation Plan exists.
- Gaps in integration:
  - Substantial gap between climate commitments and public investment management processes.
  - Spatial and urban planning and construction legislation do not adequately address climate-related risks.
  - Lack of centralized technical guidance for climate considerations, hindering preparation and costing of climate-aware public investment plans.
- C-PIMA summary (Table 2; selected items and reform priority):
  - C1 Climate-aware planning: Institutional Strength — MEDIUM; Reform priority — Medium.
  - C3 Project appraisal and selection: Institutional Strength — LOW; Reform priority — High.
  - C4 Budgeting and portfolio management: Institutional Strength — LOW; Reform priority — High.
  - C5 Risk management: Institutional Strength — MEDIUM; Reform priority — Medium.

### Systemic issues from parallel financing processes
- External and internal financing operate on parallel tracks:
  - Project appraisal and selection apply different standards by funding source.
  - Portfolio oversight exists only for development partner projects; no formal oversight for internally funded projects.
- Consequences:
  - Inconsistent appraisal standards and lack of strategic alignment across the investment pipeline.
  - Incomplete central monitoring and weak mechanisms for oversight and review of internally funded projects.

### Key fiscal and macro figures
- Fiscal deficit was 1.4 percent of GDP in 2022.
- Committed fiscal deficit limit: 2.5 percent of GDP.
- Public debt was projected to be around 36 percent of GDP in 2022.

### Recommendations (selected, from report)
Investment Planning
- 1 Distinguish between new and ongoing capital projects in the MTFF and include an analysis of fiscal space available for new projects in the medium term in budget documents. Reform priority — Medium.
- 2 The PIP should include all projects funded from all financing sources, including external, internal, and PPP sources, and become the central repository for all proposed and ongoing projects in Tajikistan. Reform priority — High.
- 3 The appraisal process should be updated so that all projects, irrespective of financing – external, internal, and PPP – are appraised and prioritized according to the strategic policies and needs of the country and project quality. Reform priority — High.
- 4 Expand the scope of the Statement of Fiscal Risks from large SOEs to include measurement and analysis of fiscal risks posed by PPPs. Reform priority — Medium.

Investment Allocation
- 5 Identify and explain changes in costs for public investment projects in medium-term budget documents, including changes in capital investment costs in aggregate projections, by sector ceilings and on a project level for major projects. Reform priority — Medium.
- 6 Update Resolution 161 governing selection with more precise methodology and guidance; strengthen CSIP role in project selection. Reform priority — High.
- 7 Provide supplements to budget documents with analysis of maintenance needs and summarize budget spending for routine maintenance and major improvements. Reform priority — Medium.

Investment Implementation
- 8 Establish an overarching framework for portfolio oversight and management that encompasses all investment projects, regardless of funding source. Reform priority — High.
- 9 Establish an ex-post evaluation process and require these evaluations for all large projects. Reform priority — Medium.
- 10 Expand SCISPM asset register functionality by classifying assets for analytical purposes and allowing entities outside the SCISPM to access and register data. Reform priority — Medium.

Climate-Sensitive Public Investment Management
- 11 Update legislation to incorporate climate mitigation and adaptation measures across spatial and urban planning and construction. Reform priority — Medium.
- 12 Update appraisal and selection regulations to include climate mitigation and adaptation criteria; update PPP and concession regulations to take climate-related risks into account. Reform priority — High.
- 13 Report climate-related investment expenditure in an annual climate budget statement accompanying detailed budget documentation and follow up as part of ex-post review. Reform priority — Medium.
- 14 Expand the Statement of Fiscal Risks to include long-term fiscal risk analysis under different climate scenarios and assess exposure of infrastructure, SOEs, and PPPs to changing climatic conditions (such as accelerated glacial melting) and policy transition risks. Reform priority — Medium.

Cross-Cutting Issues
- 14 Take stock of skills, guidance, and capacity gaps across government ministries, agencies, and sub-national government and develop a capacity-building action plan; provide guidelines and technical support on climate in sectoral planning and preparation/costing of climate-related public investment strategies. Reform priority — Medium.

### Implementation priorities
- Bring externally and internally funded projects into a single cohesive pipeline.
- Clarify and enforce appraisal regulations for all financing sources.
- Incorporate climate change aspects into appraisal requirements and selection criteria.
- Implement a comprehensive framework for portfolio oversight and management covering all projects.
- Expand fiscal risk reporting to cover all contingent liabilities, including climate-related risks.
- Address capacity and staffing gaps, including climate-related technical capacity, as part of the action plan (Annex 1).

*IMF Technical Assistance Report — Executive Summary*

### 4.      Investment in Tajikistan, particularly in the public sector, has seen a notable increase

### 4.      Investment in Tajikistan, particularly in the public sector, has seen a notable increase

### Investment levels and Rogun Hydropower project
- Public investment has been higher than in other countries in the region and in emerging market economies; this reflects significant expenditure on the Rogun Hydropower project.
- Rogun spending was especially high between 2014 and 2017, with the largest allocation reaching 8.6 percent of GDP in 2017.
- Rogun Hydropower Plant specifics:
  - 3.6GW hydroelectric power facility under construction on the Vakhsh River.
  - Dam site approximately 6.5km from Rogun town and approximately 110km from Dushanbe.
  - Planned embankment dam height: 335 meters.
  - Since 2007, Government invested around US$3.5 billion (40 percent of 2021 GDP).
  - Remaining cost to complete the project currently estimated at between US$4.0 billion and US$6.0 billion.
  - Major financing sources:
    - State budget (most funding).
    - Rogun Joint Stock Company bond issuances: domestic SM 900 million (US$80 million) in 2010; US$500 million sovereign Eurobond in 2017.
    - National state pension fund acquired an SM 900 million bond issued by Rogun Joint Stock Company in 2021.

### Composition and financing of public investment
- Public investment composition:
  - Dominated by large infrastructure projects in energy and transportation; Rogun is a cornerstone project expected to be completed by 2035.
  - Other projects noted: Turkmenistan-China gas pipeline, Tajik Aluminum Company plant modernization, Central Asia-South Asia 1000 regional power project, Obigarm highway, and broader road network stabilization (2024 Budget highlights).
- Financing structure:
  - Around 60 to 70 percent of public investment is undertaken through the Public Investment Program (PIP).
  - PIP mobilizes external financial resources and covers externally and directly (off-budget) funded investments across sectors including energy, agriculture, healthcare, and education.
  - Most PIP projects funded by ADB, World Bank, and bilateral partners.
  - The remaining 30 to 40 percent of public investment is undertaken through the budget and is linked to the State Borrowing Plan (includes government’s investment in Rogun).
  - PIP included 48 loan agreements, with a total disbursed loan cost of US$622.5 million as of January 1, 2023.

### Private investment and PPPs
- Private investment remains a smaller portion of total investment, focused on retail, real estate, and small manufacturing.
- Public-private partnerships (PPPs):
  - Short but intense PPP period from 2005 to 2011; limited follow-up thereafter.
  - Five PPP projects launched between 2005 and 2011.
  - By 2023, PPP portfolio: nine projects with total value around US$33.8 million (0.3 percent of GDP).
  - Five PPP projects in health and social sector; largest PPP in energy is construction of transmission lines in Danghara.

### Public capital spending patterns and fiscal implications
- Capital spending as a share of public expenditure has consistently represented more than half of total public expenditure over the past 20 years.
- Capital spending as percent of GDP was among the highest in the world from 2014 to 2019.
- Ratio of capital to current expenditure reached 150 percent in 2019 — the highest in the region and among the highest globally.
- Risk highlighted: dominance of Rogun presents an opportunity and a risk for efficient creation of infrastructure versus becoming a recurrent fiscal burden due to maintenance and operational costs.

### Efficiency of public investment and infrastructure outcomes
- PIMA efficiency assessment methodology: compares capital stock per capita to outputs and outcomes; constructs an efficiency frontier from countries with highest infrastructure access and quality perception.
- Infrastructure access indicators:
  - 8.2 secondary teachers per 1,000 people.
  - Electricity access universal, but production rate only 2kWh per 1,000 people.
  - Hospital beds per 1,000 people declined from 8.9 to 4.7.
  - 82 percent of population has access to basic drinking water.
  - In 2019, 21 percent of the rural population relied on surface water as main drinking water source.
- Perceived infrastructure quality and rankings:
  - Electricity supply ranked 107th in quality.
  - Transport infrastructure positioned at 111th.
  - Airport connectivity ranked 121st.
  - 2023 World Bank Logistics Performance Index: Tajikistan ranked 97 of 139 countries overall and 80th on trade and transport-related infrastructure.
- Public investment efficiency gap:
  - Estimated around 22 percent, indicating significant scope to improve infrastructure quality and accessibility for the existing capital stock per capita.

### Public Investment Management Assessment (PIMA) — institutional findings
- PIMA framework assesses 15 institutions across planning, allocation, and delivery stages; each assessed on institutional design, effectiveness, and reform priority.
- Overall assessment highlights:
  - Institutional design generally stronger than effectiveness, with notable exceptions.
  - Effectiveness weaknesses observed in project appraisal, project selection, and maintenance funding:
    - Ineffective implementation of appraisal processes, especially for internally funded projects.
    - Lack of comprehensive and functional criteria for project selection.
    - Maintenance funding affected by ineffective allocation and identification of essential resources.
  - Areas where effectiveness outperforms design: alternative infrastructure financing, budgeting for investment, and availability of funding (due to pragmatic adaptation and resource management).
- Comparative performance:
  - Relatively strong: institutional design of fiscal targets and rules, project appraisal, maintenance funding, and monitoring of public assets.
  - Weaknesses relative to comparators: institutional design for alternative infrastructure financing (notably portfolio management and oversight) and effectiveness in project appraisal and project selection.
- Identified chain of weaknesses:
  - From planning through appraisal and selection to portfolio monitoring — exacerbated by dual processes for externally and internally funded projects.
  - Recommendation emphasis: better integration of processes for externally and internally funded projects to ensure fiscal and economic resources are allocated to highest priority projects and are closely monitored and evaluated.

*IMF Technical Assistance Report — Excerpt*

### 1. Fiscal Targets and Rules (Strength: Medium; Effectiveness: Medium; Reform Priority:

### 1. Fiscal Targets and Rules (Strength: Medium; Effectiveness: Medium; Reform Priority: Low)

### Role and current framework
- Clear objectives and fiscal rules help protect public investment from the economic cycle and promote fiscal sustainability.
- A medium-term fiscal framework (MTFF) sets multiyear targets for leading fiscal indicators and supports medium-term planning for public investment.

### Existing rules and targets in Tajikistan
- Public Finance Management Strategy until 2030 (approved by Presidential Decree in 2020) specifies:
  - total state and state guaranteed debt is not to exceed 60 percent of GDP.
  - the deficit of the state budget is not to exceed 1 percent of GDP.
- Authorities have emphasized commitment to a medium-term fiscal deficit target of 2.5 percent of GDP.
- MTFF is anchored in the law on state finances and the law on strategies and programs of socio-economic development.
- MTFF publication timing and scope:
  - Published early in the calendar year.
  - Contains forecasts of fiscal revenues and expenditures for the following budget year and two more years ahead.
  - Distinguishes between recurrent and capital spending according to economic and functional classifications.
  - Does not distinguish between new and ongoing capital projects.
  - Does not include analysis of fiscal space available for new projects.
  - Does not include explanations of key factors behind changes in forecasts for a budget year relative to previous forecasts or explanations for deviations between forecasts and approved budgets for a given budget year.

### Performance relative to rules and forecasts
- Fiscal balances and budget allocations have broadly aligned with fiscal rules and MTFF forecasts.
- Historical events affecting fiscal balances: deterioration in 2016-17 and 2020 related to counter-cyclical policies including strong investment spending on the Rogun Hydropower Project, two bank bailouts, and the pandemic.
- Debt ratio has stayed well within the 60 percent of GDP limit since 2018.
- MTFF medium-term revenue and spending projections have been broadly in line with subsequent budget allocations.
- Forecast accuracy metrics (past four years until 2024):
  - revenues and expenditures in the annual budget law turned out to be on average 6-8 percent different from the projections for that particular budget a little more than a year earlier, with budget outcomes in the past three years all turning out higher than the projections.
  - the forecast error on a two-year horizon was 13-14 percent.
  - the forecast errors for capital spending alone were slightly higher than for total spending.

### Analysis and risks
- IMF Article IV consultation: public debt assessed as sustainable but with high risk of debt distress.
- Improving the efficiency of public investment is essential given tight fiscal constraints.
- Large single projects (e.g., Rogun Hydropower Project) represent significant fiscal risk when they constitute a large share of the budget and the economy.

### Recommendations
- Develop the MTFF further by:
  - distinguishing between new and ongoing capital projects.
  - including an analysis of fiscal space available for new projects to support strategic prioritization of new public investment.
  - including explanations of key factors behind changes of forecasts for a budget year relative to previous forecasts and explanations for deviations between forecasts and approved budgets for a given budget year.

*Italic: IMF Technical Assistance Report — excerpt on Fiscal Targets and Rules*

---

### 2. National and Sectoral Planning (Strength: Medium; Effectiveness: Medium; Reform Priority: High)

### Principles
- National and sectoral public investment should be based on clear goals and objectives, cost estimates, and measurable targets to track progress and impact.
- Strategies and plans should be published and cover all projects regardless of financing source, including costing of individual major investment projects within overall financial constraints and measurable output and outcome targets.

### Current situation and coverage
- Institutional framework: Government Resolution 161 (2018) provides for two financing tracks:
  - foreign‑financed projects to be included in the PIP;
  - internally financed projects managed by the MoF ordinary budget process.
- NDS-2030 (adopted 2016) outlines general direction; Medium-Term Development Programs set goals aligned with SDGs with output and outcome indicators and estimated costs but do not include specific projects and their costs.
- Public Investment Program (PIP) for 2021-25:
  - contains 898 projects totaling US$19.1 billion.
  - sets out a list of specific projects, including estimated project costs.
  - covers projects eligible for external financing only and therefore omits internally-financed projects.
- Sector strategies exist and are publicly available for major sectors (example: National Strategy for Education Development of the Republic of Tajikistan until 2030 provides detailed needs and an output/outcome indicator matrix).
- Three sectors—energy, transport, and agriculture and irrigation—represent over 75 percent of required investment by volume.

### Limitations and outcomes
- PIP’s focus on external financing gives a partial view of projects, missing fiscally important internally-financed projects.
- Inclusion in the PIP does not reflect a commitment to implement a project:
  - Government data: 72 percent of projects in the PIP for 2016−20 did not secure funding and were rolled over to the next period.
  - Over 93 percent of projects in the 2021−25 PIP are from 2016−20 PIP.

### Opportunities and recommendations
- Transform public investment planning through a unified framework covering both internally and externally funded projects.
- Improve links and feedback mechanisms between medium-term funding needs and government strategies and plans to reduce misalignment and fragmentation.
- Increase selectivity by including externally funded projects in the PIP only if they have identified a source of funding.
- A centralized PIP aligning national objectives, investment plans, and budgets would support more efficient coordination among central ministries, line ministries, sub-national government, and development partners, and enable a common monitoring and evaluation framework.

*Italic: IMF Technical Assistance Report — excerpt on National and Sectoral Planning*

---

### 3. Coordination Between Entities (Strength: Medium; Effectiveness: Medium; Reform Priority: Low)

### Importance and governance
- Coordination between national and local governments ensures infrastructure is delivered in the right areas and with appropriate funding, aligns development objectives, exploits complementarities, and avoids duplication.
- SNGs depend heavily on transfers and need reasonable certainty about budget resources for investment.
- Disclosure and monitoring of project-related contingent liabilities (SNGs, SOEs, PPPs) are important for fiscal risk management.

### Current arrangements in Tajikistan
- The annual state budget law approves the general government budget, including total spending, revenues, and tax-sharing rates for SNGs.
- Institutional framework operates on a dual-track system distinguishing internally funded projects (state budget) and externally funded projects (PIP).
- Government Resolution 161 mandates SNGs to propose projects to:
  - MoF for state budget funding;
  - MoEDT for financing through the PIP supported by development partners.
- SNG capital spending plans are published alongside central government investment plans in budget documents.
- Formal discussions occur between central government and SNGs on investment priorities.

### Gaps and risks
- No transparent, rule-based system for making capital transfers to SNGs to ensure predictable funding.
- SNGs primarily funded by shared taxes and transfers, with little notification before the start of the budget year.
- Legal frameworks exist for reporting contingent liabilities from major projects of SNGs, SOEs, and PPPs, and there is an SOE monitoring unit in the MoF, but:
  - requirements for comprehensive disclosure of contingent liabilities in central government budget documents remain absent.
  - gaps exist regarding the quality and comprehensiveness of data reported and presentation within central government budget documents.

### Statistics on subnational and SOE roles
- About 35 percent of total public resources in Tajikistan are channeled through and managed by SNGs.
- More than 80 percent of SNG revenues are contributed by the central government.
- SOEs:
  - employ around 24 percent of the labor force.
  - account for about 17 percent of GDP.
  - operate in many sectors relevant for public capital investment.
  - the three largest SOEs – the electric company Barki Tojik, Tajik Railways and Tajik Aluminum Holding – hold over 80 percent of SOE assets.

### Recommendations
- Establish a transparent, rule-based system for capital transfers to SNGs to provide predictable funding for planning and implementation of capital investment.
- Improve reporting and disclosure of contingent liabilities and consider developing a fiscal risk statement that includes all public sector contingent liabilities to strengthen MoF’s monitoring of government financial exposure and risk mitigation.

*Italic: IMF Technical Assistance Report — excerpt on Coordination Between Entities*

---

### 4. Project Appraisal (Strength: Medium; Effectiveness: Low; Reform Priority: High)

### Best practice
- Investment projects should undergo rigorous appraisal before allocation of budget resources, covering technical, financial, and economic evaluation using standard methodologies.
- Ex-ante risk assessment should be included to identify uncertainties and mitigation measures so that project realization does not materially affect economic and social impact.

### Current institutional roles (Box 2 summary)
- Commission for Selection of Investment Projects (CSIP):
  - Chaired by the First Deputy Prime Minister.
  - Tasked with competitively selecting projects for inclusion in the Public Investment Program based on analysis by the MoEDT.
  - Since all PIP projects are meant to be donor-funded, they are de-facto included in a non-prioritized manner.
- MoEDT’s State Investment Program and Centralized Capital Investment Department:
  - Main gatekeeper of the public investment program.
  - Reviews project documentation, assesses quality of studies, recommends to CISP whether projects should be included in the PIP.
  - Intended to ensure the fiscal envelope set by the MoF is not exceeded with new investment projects, but this task is limited in scope since the PIP is donor-funded.
- MoF:
  - Responsible for setting the overall investment envelope, considering the medium fiscal path, donor financing, and other budget needs.
  - Sets the investment envelope for each line ministry for internally financed projects and negotiates selection of projects with line ministries prior to inclusion in the annual budget.
  - Monitors project implementation.
- State Commission on Investment and State Property Management (SCISPM):
  - Intended to act as internal coordination unit and monitor donor financed projects, supervise PPPs, and maintain a registry of projects.
  - Does not appear to monitor internally financed projects.
  - Responsible for supervision of the PPP Center and implementation of the PPP Law; the PPP track is divorced from the ordinary investment process.
  - Expected to maintain and update the Investment Project Registry, though this function appears somewhat weak.

### Diagnosis
- Public investment management is characterized by a high number of institutions with overlapping roles and responsibilities, which does not always support a stringent, transparent, and effective appraisal process.
- The donor‑funded PIP structure limits the MoEDT’s and MoF’s ability to impose fiscal constraints and prioritization on projects intended for external financing.

### Reform priority
- Strengthen project appraisal procedures and institutional roles to ensure rigorous, transparent, and prioritized appraisal covering technical, financial, economic, and risk assessments prior to budget allocation.

*Italic: IMF Technical Assistance Report — excerpt on Project Appraisal*

### 34.      Appraisal regulation calls for systematic and rigorous assessments, contains

### 34.      Appraisal regulation calls for systematic and rigorous assessments, contains

### Appraisal regulation and documentation requirements
- Government Resolution 161 (‘About the procedure for the development of state investment projects and the implementation of the state investment program of the Republic of Tajikistan’ March 27, 2018 Government Resolution No. 161) calls for systematic, rigorous technical economic and financial analysis for all major projects, irrespective of whether financing is domestic or foreign.
- PPPs are not part of the PIP process, but equivalent regulation is found in the PPP and Concessions Law (Law of the Republic of Tajikistan on Public-Private Partnership, #907, from December 28, 2012. Law on Concessions, No. 783 2017).
- Required sections in project documentation under Resolution 161:
  - Introductory section including the estimated project cost and a quantitative analysis of the demand for the project or socio-economic significance.
  - Technical section on design and cost.
  - Financial section on suggested financing and alternatives.
  - Economic section on the overall impact of the project and possible risks.
  - Social section on impact on users and society.
  - Section discussing ecological impact.
- Large and complex projects require special studies by independent experts.
- A standardized methodology is issued by the government that is applicable to all projects in the capital budget at a relatively general level, but:
  - No detailed manuals are available to support budget users.
  - No guidance on analysis needed for different types of projects.
  - The MoEDT’s investment unit is not formally required to support budget users in development of projects.
  - Resolution 161 requires a risk assessment to be included, but there are no requirements for risk mitigation plans.
- There is no requirement for publishing project documents.

### Appraisal practice: externally financed vs internally financed projects
- Externally financed projects:
  - Are systematically and rigorously appraised.
  - Make up the bulk of non-Rogun infrastructure investment.
- Internally financed projects:
  - Are not systematically and rigorously appraised.
  - Do not fully benefit from the specified appraisal methodology nor stringent analysis of project risks.
  - No internally financed projects fully benefit from the methodology set out in Resolution 161.
  - No internally financed project includes stringent risk analysis.
- MoEDT capacity constraints:
  - MoEDT lacks sufficient capacity in people and tools to ensure appraisal regulation is implemented as intended.
  - Incomplete project documentation is, in practice, returned to line ministries by MoEDT, but no projects are filtered out by the appraisal process.
  - The standard methodology in Resolution 161 consequently has a limited impact on project appraisal.

### Suggested appraisal process and pipeline inclusion
- Objective: Ensure all projects, irrespective of financing mechanism, are appraised and included into a pipeline (the PIP) from which the Committee for Selection of Investment Projects (CSIP) can select projects for budgeting.
- Suggested process (summary of steps):
  - Line ministries propose projects in line with strategic planning documents.
  - MoEDT reviews proposals and possibly returns them for further work.
  - MoEDT decides whether projects can be included in the PIP.
  - Projects proceed to pre-feasibility and full feasibility stages, possibly with donor financing for the feasibility study.
  - Appraisal phase ends with MoEDT assessing, scoring, and ranking projects to provide a basis for selection for funding.

### Tailoring appraisal to project size (Box 3)
- General principle: Appraisal should be structured according to project size and risk.
- Definitions:
  - Large Projects: major infrastructure with i) major risks, e.g., rail, tunnels, dams; ii) higher task complexity; iii) projects with more than a two-year construction phase.
  - Medium Projects: i) significant risks; ii) medium impact, important to reach strategic plan; iii) one to two year span.
  - Small Projects: i) conceptualized in a few weeks with development and design done within a few months; ii) execution time frame up to a year.
- Stages and elements for comprehensive appraisal of a large project:
  - Stage 1: Project Concept Note.
  - Stage 2: Pre-feasibility: Needs and demand analysis with specified outputs; Option analysis.
  - Stage 3: Feasibility: Demand analysis; Technical engineering analysis *; Environmental analysis *; Socio-economic analysis *; Legal and regulatory due diligence; Financial analysis *; Economic analysis; Risk assessment and sensitivity analysis *.
  - Stage 4: Implementation preparation: Detailed implementation plan and readiness confirmation *; Institutional capacity *; Procurement plan *.
  - Stage 5: Budget application: Project concept note (summary of appraisal information to apply for funding) *.
- Requirements for medium-sized projects are indicated by *. Small projects only require needs assessment, terms of reference with description and key outputs, and financial assessment.

### Alternative infrastructure financing: markets, PPPs, SOEs
- Market structure observations:
  - Markets for major infrastructure are defined in law for electricity, water, and telecommunications.
  - Legal and policy framework generally does not support competitive markets; tariffs and sector financing constraints limit private investment in some sectors (example: electricity tariffs kept low; sector not self-financed).
  - Water supply for domestic consumption remains in state ownership and operation per the Water Code updated in 2020.
  - State-owned Tajiktelecom dominates the fixed line market; mobile telecommunications are allowed to be competitive.
  - Transport market: trucking largely private and price competitive; railways are state-owned.
  - Regulators are respective central government ministries and are not independent.
- Public-private partnerships (PPPs):
  - Law on PPPs passed in 2012 and updated in 2017; provides framework for preparation, approval, procurement, and contract management.
  - The law does not address fiscal risk management, budgeting, or accounting procedures.
  - There are currently nine PPPs under implementation in Tajikistan, with a combined value of US$33.8 million (0.3 percent of GDP).
- SOEs:
  - The Law on State Finances authorizes MoF to monitor financial position and economic activities of large SOEs.
  - Large SOEs have consistently incurred substantial losses in recent years.
  - MoF SOE Monitoring Department focuses on fiscal risk posed by SOE financial losses.
  - No legal requirements or formal procedures to report SOE investment plans to the government.
  - There is an annual consolidated report on large SOE financial positions but no consolidated report on SOE investment projects.
- Private investment uptake:
  - Private ownership exists where legal framework is conducive: two hydropower plants, one electricity transmission line, six private mobile telecommunication services, and almost all trucking services are privately owned.
  - Coordination with major SOE investment plans occurs outside formal procedures (example: government closely monitors Rogun Hydropower project and regional electricity transmission infrastructure).

### Policy options to better coordinate alternative financing with public investment
- Two recommended actions:
  - Expand analysis: Consider expanding the coverage of the existing Statement of Fiscal Risks from Large SOEs to include presentation and analysis of PPP risk to restrict the nature, number, size, or sector of PPPs and minimize fiscal risk.
  - Improve SOE information: Collect and report information on major SOE capital projects reflected in financial statements to inform subsequent public investment. (Ex-post disclosure is less effective than ex-ante influence but avoids injecting non-commercial considerations into SOE decisions.)

### Key recommendations (preserve exact text and implementation timelines)
- Issue: Budget planning documents do not distinguish between new and ongoing capital projects.
  - Recommendation 1: Distinguish between new and ongoing capital projects in the MTFF and include an analysis of fiscal space available for new projects in the medium term in budget documents. (MoF by end-2024 for use in 2025 budget).
- Issue: The links between the Medium-Term Development Programs, PIP, medium-term expenditure framework (MTEF), and annual budgets are neither defined nor effective.
  - Recommendation 2: The PIP should include all projects funded from all financing sources, including external, internal, and PPP sources, and become the central repository for all proposed and ongoing projects in Tajikistan. (President’s Office and MoEDT, by end-2024).
- Issue: The appraisal process does not produce a pipeline of quality projects that aligns with the country's strategic priorities, covering internal, external, or PPP financing mechanisms.
  - Recommendation 3: The appraisal process should be updated to ensure that all projects, irrespective of financing – internal, external, PPP – are appraised and prioritized according to the strategic policies and needs of the country and project quality. This requires an enhancement of the role of the MoEDT and the CSIP to act as an effective gatekeeper. (President’s Office and MoEDT, by end-2024).
- Issue: Fiscal risks related to PPP infrastructure projects are neither documented nor known.
  - Recommendation 4: Expand the scope of the Statement of Fiscal Risks from Large SOEs to include measurement and analysis of fiscal risks posed by PPPs. (MoF, by end-2024 for inclusion in the 2025 Statement of Fiscal Risks).

### Multi-year budgeting and budget comprehensiveness (key findings)
- MTEF:
  - Government prepares a rolling MTEF with a three-year horizon and indicative capital spending ceilings, disaggregated by economic and functional classifications and by internal or external funding sources.
  - Investment projects funded internally have lower transparency than externally financed projects, where PIP publishes projects annually with expected drawdown over a three-year horizon.
  - The MTEF informs annual budget preparation which must be passed by parliament and published before the start of the budget year on 1 January.
- Budget appropriations and explanations:
  - Capital spending allocations in annual budgets have been reasonably aligned with prior MTEF ceilings.
  - The MTEF does not include explanations of key factors behind changes to MTEF forecasts and capital budget allocations.
  - Projections of and changes to project costs for major capital investments are not consistently identified and explained in budget documentation.
  - Example numeric note: For example, the annual capital budgets passed by parliament in the past three years until 2024 were on average around 15 percent higher than the projections one year out for those individual years in preceding MTEFs.
- Budget comprehensiveness and unity:
  - Law on State Finances requires expenditures financed from external sources and special funds to be included in the budget; legal framework specifying no extra-budgetary entities is respected.
  - PPPs and SOE investment plans are not required to be presented in the budget except if government contributions are needed.
  - Investment projects are prepared by line ministries; appraisal is split by financing source: internally financed projects appraised and selected by MoF, externally financed projects appraised by MoEDT.
  - Line ministries submit budget requests presenting current costs of proposed projects; all projects regardless of financing source are presented together in the line ministry budget request submitted to the MoF.
  - The budget classification includes a function segment aligning both current and investment expenditures.
- Coordination gap:
  - Coordination between internally and externally financed projects is not clearly defined; in practice coordination is performed by line ministries in their budget proposals.
  - The total size of quasi-fiscal activities provided by SOEs (services like health, social protection, culture) is not known.

*IMF Technical Assistance Report*

### 48.      Budget unity is placed largely in the hands of line ministries, but there are limits on how

### Budget unity is placed largely in the hands of line ministries, but there are limits on how well line ministries can perform this function

### Budget unity and line ministry roles
- Line ministries have wide latitude in the budget process, including authority to distribute their budget ceiling allocation across current and investment budgets.
- Line ministries can coordinate projects under their remit regardless of financing source, but:
  - There is no mechanism for them to assess the effect of their investment plans on other sectors or to coordinate with investment plans across sectors.
  - Cross-sector coordination can occur only after line ministries present their consolidated budget request to MoF.
- Line ministries can assess operating and maintenance costs against medium-term budget ceilings, but:
  - The MoF should provide a challenge function to ensure costs are realistic and do not lead to line ministries exceeding their ceilings.

### Budgeting for Investment (Strength—Medium; Effectiveness: Medium; Reform Priority: Medium)
- Good practices aim to:
  - Appropriate on an annual basis and commit for the entire duration of major projects.
  - Protect funding for ongoing projects.
  - Finance projects as approved by legislatures.
- Major public investment projects are typically implemented over multiple years, requiring multiyear financing commitments, while appropriations usually cover one fiscal year.
- Commitment procedures help ensure funds are available when needed across the construction cycle.
- Appropriations for investment projects should be used only for capital spending and not transferred to recurrent expenditures.
- Current framework and practices:
  - Government Decree to implement the PIP prioritizes completion of ongoing projects to match contractual commitments and expenditure needs (Decree 161 Section 9).
  - Transfers between capital and current spending generally require MoF approval (Article 55 of the State Law on Public Finance).
  - Project outlays are appropriated annually at the level of economic classification as part of an annex to stage 3 of the budget.
  - Neither multi-year commitments nor total or multiyear cost estimates at the project level are published as part of appropriated budget documentation (Law on State Finances Article 53; stage 2 budget instructions).
- Execution and disclosure:
  - Investment projects are generally well-protected during budget implementation, with minimal net virements from the capital budget over the past ten years.
  - Domestically funded projects executed at an average rate of 95 percent for the past three years (based on budget performance of code 28 for 2020, 2021 and 2022).
  - In the most recent PIP, ongoing projects account for less than a third of total projects; all ongoing projects are foreign-financed (PIP 2021-2025: 59 active out of 203).
  - Information on total project cost is included in the PIP but not broken down over a multiyear period and thus cannot be aligned with MTEF resources.

- Medium-priority reform measure:
  - Include information on multiyear commitments and project costs in the PIP and publish these numbers as part of the appropriated budget.
  - Implementation actions include:
    - Adapting costing forms in budget instructions and automation processes.
    - Design changes to the PIP document.
    - Updates to relevant laws and regulations.
  - Annex 6 provides options to record project costing; Annex 7 illustrates a project profile for the PIP (as noted in the source).

### Maintenance Funding (Institutional Strength: Medium; Effectiveness: Low; Reform Priority: High)
- Purpose: Adequate maintenance preserves infrastructure quality and ensures services through intended useful life; requires asset-condition assessment, translation into routine maintenance and major improvement needs, and cost estimates.
- Current arrangements and practices:
  - Standard methodologies exist for some routine maintenance; some maintenance funding can be identified in budget documents.
  - Responsibility:
    - Roads: Ministry of Transport and Communication (maintenance includes routine maintenance and major improvements unless otherwise specified).
    - Buildings: budget entities using them.
  - Road maintenance needs are estimated through standardized road infrastructure surveys conducted annually by district-level road departments and state unitary enterprises for building maintenance; no equivalent procedures for buildings.
  - Unified Chart of Accounts (adopted in 2015 by Ministry of Finance Order No. 173 dated January 26, 2015) includes routine maintenance under economic classification item 2.2.1.5.
  - No coding to systematically identify major improvements or analysis in budget documents of spending on major improvements.
- Funding adequacy and information gaps:
  - Current funding levels are likely substantially below needs; only some maintenance funding can be identified in the budget.
  - Estimation methods bias toward visible problems rather than preventive maintenance; quality varies with assessor knowledge.
  - Routine maintenance costs are reflected in economic classification item 2.2.1.5 and are shown as a percentage of total budget expenditures in Table 3.
  - Internally financed investment projects are not identified individually in budget documents, complicating identification of major improvements.
  - Improvements in estimating maintenance needs are underway (example: Ministry of Transport and Communications adopting the Road Asset Management System with ADB support), but few achievements to date.
  - Anecdotal evidence suggests substantial shortcomings in current funding levels compared to need.
- Table 3 — Routine Maintenance: Actual Spending as a Percent of the Total Budget (Source: Ministry of Finance)
  - 2022: State budget 3.5; Republic budget 1.7; Local budget 8.9
  - 2021: State budget 4.0; Republic budget 2.1; Local budget 8.4
  - 2020: State budget 3.1; Republic budget 1.6; Local budget 6.5
- Recommendations and short-term actions:
  - Greater disclosure of maintenance needs and funding is a high priority.
  - Interim measures: use rough estimates (e.g., depreciation rates as proxy for annual maintenance needs) until full asset-condition systems are operational (see Box 4).
  - Budget process should include guidance in annual budget preparation instructions for amounts or priorities given to maintenance and require analysis of maintenance needs and funding in the budget explanation annex (aggregate or key sectors) to show long-term trends.
  - Some guidance was included in the 2024-26 budget preparation instructions, but more detail would be useful.

### Project Selection (Strength: Medium; Effectiveness: Low; Reform Priority: High)
- Purpose: Select projects for funding based on reliable information on project quality through transparent and consistent mechanisms; link project appraisal to budget prioritization.
- Current design regulation and pipeline:
  - Formal central review process exists for all major projects prior to budget inclusion (Government Resolution 161 requires MoEDT review and submission to CSIP).
  - PPP process is separate and managed by SCISPM (Law references: Law on Public-Private Partnership #907 from December 28, 2012; Law on Concessions, No. 783 2017).
  - MoEDT assessments for CSIP recommendation include: suitability, organizational readiness, technical/social/ecological quality, economic feasibility, and assessment of physical and financial risks.
  - CSIP is chaired by the First Deputy Prime Minister and mandated to consider projects competitively based on published selection criteria (Box 5). CSIP is not required to produce a ranked list of projects.
- Shortcomings:
  - Selection criteria in Resolution 161 are general and do not provide clear guidance on prioritization; pipeline is unprioritized and lacks strategic direction.
  - Central review by MoEDT and CSIP is mostly formalistic and cursory due to weak MoEDT capacity.
  - A substantial proportion (20-40 percent) of the 100-150 projects submitted yearly are returned by MoEDT for additional information; most are accepted within the year after updates.
  - Externally financed projects are processed through CSIP and included in the PIP; internally financed projects effectively exit the PIM process after MoEDT review and are subject to bilateral bargaining between line ministry and MoF.
  - For internally financed projects, there is no pipeline of appraised projects from which to select for budgeting.
- Box 5 — Selection Criteria for Projects (CSIP tasks and specific criteria from Government Resolution 161, March 27, 2018)
  - CSIP tasks include evaluation of selection quality, relevance to priority areas, viability and impact, economic efficiency indicators, attracted funds and sources, job creation assessment, and welfare impact.
  - Specific criteria include:
    - compliance with investment project priorities of the Government;
    - the budget holder’s need for the investment;
    - a minimum level of US$5 million for concessional loans and US$100,000 for grants;
    - relevance and perspective of the project, its results, and potential positive influence on industry, region, and population;
    - indicators of economic efficiency;
    - expected attraction of investment funds from development partners;
    - number of planned new workplaces and validity of their creation;
    - impact on the level of welfare of the population.
- Proposed strengthening:
  - Upgrade the role of CSIP so it selects projects for funding regardless of financing source.
  - Change regulation so MoEDT acts as a gatekeeper for projects joining the PIP, and CSIP decides which projects can be funded (covering internal, external, or PPP mechanisms).
  - Make selection criteria clearer and provide more guidance (scoring, ranking, prioritization).

### Explicit recommendations (with responsible agencies and timelines preserved)
- Recommendation 5:
  - Issue: Changes to project costs are not consistently identified and explained, hampering monitoring of financing needs and prevention of cost overruns.
  - Recommendation: Identify and explain changes in costs for public investment projects in medium-term budget documents. Published MTEF budget documents should include changes in capital investment costs in aggregate projections, by sector ceilings, and on a project level for major projects.
  - Responsible: MoF, by end-2024 for inclusion in the MTFF in 2025.
- Recommendation 6:
  - Issue: Resolution 161 governing selection is vague on selection criteria, lacks guidance on prioritization, and does not specify how to score and rank projects.
  - Recommendation: Update Resolution 161 and accompany it with more precise methodology and guidance, including on how to score, rank, and prioritize projects, and strengthen the role of CSIP in project selection.
  - Responsible: President’s Office and MoEDT, by end-2024.
- Recommendation 7:
  - Issue: Accurate information about maintenance needs and funding is not readily available.
  - Recommendation: Provide as supplements to budget documents analysis of maintenance needs (using approximations) and summarize budget spending for routine maintenance and major improvements.
  - Responsible: MoF, Mid 2025, for inclusion in the 2026 budget preparation instructions.

*IMF Technical Assistance Report — excerpt*

### 11. Procurement (Strength: Medium; Effectiveness: Medium; Reform Priority: Low)

### 11. Procurement (Strength: Medium; Effectiveness: Medium; Reform Priority: Low)

### Legal and institutional framework
- Law of the Republic of Tajikistan of March 15, 2023, No. 1955 "About public procurements." requires competitive procurement for all public procurements, with exceptions: projects fully or partially financed by development partners, procurements regulated by the law on PPPs, and purchases made by the Directorate for Construction of Government Facilities (Article 2).
- Authorized state body: Agency for State Procurement of Goods, Works, and Services.
- Law calls for establishment of an Interdepartmental Commission of Review of Complaints for timely and independent review (Article 61); the commission’s “regulations and staff will be approved by the Government of the Republic of Tajikistan,” but this approval has not occurred and the commission does not legally exist.

### Operational practice and data
- Many major projects are subject to clearly perceived effective competition; externally funded projects follow development partners’ procurement rules and monitoring procedures.
- Internally financed procurements are required to be published on the e-procurement website maintained by the agency; portal contains a database with detail consistent with procurement process steps.
- Portal-reported activity in 2022: close to SM 3.2 billion worth of works and goods were publicly tendered; this total includes investments and current expenditures and is comparable to an average annual non-energy investment of SM 3.0 billion.
- About half of public investments outside of the energy sector are donor-funded.
- The Agency for State Procurement produces portal-based reports for the government at least bi-annually; standard reports are limited and easy to generate for specific periods.
- There is neither an automated monitoring system nor a formal monitoring requirement to draw conclusions and make recommendations for improvements.

### Gaps and reform priorities
- Interdepartmental Commission of Review of Complaints is not yet established and is therefore not functioning; creation is ongoing and expected to be completed in 2024.
- Current procurement law does not address potential conflicts of interest that might exist in the commission.
- Medium-priority improvements: fix mistakes in the e-procurement database; allow distinction between procurement for current expenditures and investments; enhance analytical reporting capabilities; institutionalize procurement monitoring rules and frequency.
- Highest-priority reforms: operationalization, securing independence, and addressing potential interdepartmental conflicts of interest of the Interdepartmental Commission of Review of Complaints.

---

### 12. Availability of Funding (Institutional Strength: Medium; Effectiveness: Medium; Reform Priority: Low)

### Importance and risks
- Certainty of timely funding is critical for contractors to progress projects and avoid delays, degraded assets, government penalties, interest and arrears, and loss of contractors' trust.

### Cash forecasting framework
- Article 40 of the Treasury Instructions requires quarterly cash-flow forecasts and commitment ceilings for the full fiscal year.
- These can be updated by Budget Organizations with MoF approval to ensure Central Treasury liquidity for the coming month.
- The consolidated cash plan excludes externally financed projects (loans and grants) that hold project accounts in commercial banks and pay contractors directly when specific standards on the phasing of road construction have been met (based on FIDIC approved international standards).
- Guidelines referenced: Resolution of the Ministry of Finance, No. 64 dated April 27, 2021.

### Performance and observations
- For the past four years, actual net cash flow forecasts have deviated by, on average, 7 percent from outturns.
- Based on a three-year trend, arrears as a percentage of total expenditure accounted for less than 2 percent of total expenditure.
- MoF plays no active role in release and payment processing of externally financed projects; payments are made directly to contractors, but information on when payments are made is readily available to the MoF.
- Externally financed projects account for almost two-thirds of capital investment spending.

### Recommendation
- Encourage integration of externally financed projects in the single treasury account for a more comprehensive picture of cash flow projections, particularly for co-financed projects.

---

### 13. Portfolio Management and Oversight (Strength—Low; Effectiveness: Low; Reform Priority: High)

### Concept and importance
- Portfolio = sum of all capital projects previously approved (budget, development partner financing, PPPs).
- Portfolio management enables systemic monitoring, data collection and analysis to determine time/budget performance and need for high-level intervention; supports optimizing allocation to best-performing projects.

### Current framework and shortcomings
- No legal or regulatory framework for systematic monitoring of major internally funded capital projects.
- Government Resolution 95 provides broad guidance for externally funded projects but does not cover internally funded initiatives.
- External project portfolio monitoring responsibilities are fragmented among SCISPM, MoEDT, and MoF.
- Implementing agencies of externally funded projects must submit monthly, quarterly, six-monthly, and annual progress reports, but no formal guidance exists on reallocation of funds for internal or external projects.
- No formal requirements for ex-post reviews of major capital projects; Government Resolution 95 requires project completion reports, which differ from ex-post reviews.

### Evidence of weak outcomes
- No consolidated and systematic portfolio monitoring report covering externally and internally funded investment projects.
- No systematic data on portfolio delays and cost overruns.
- Rogun Hydropower project: example of substantial cost increases and implementation delays highlighting need for comprehensive portfolio monitoring.
- Existing portfolio reviews are limited, primarily led by development partners and focused on major externally funded projects; internally funded projects are not covered.
- No evidence of a system for reallocating funds between projects or that reallocations occur.
- Relying on implementing agencies’ completion reports is inadequate for comprehensive evaluation and learning.

### Recommendations
- Strengthen portfolio oversight and management practices to:
  - promptly address issues and reduce delays and cost overruns;
  - establish accountability for project outcomes;
  - institutionalize comprehensive monitoring and ex-post reviews to capture lessons learned;
  - increase transparency and stakeholder confidence, including with development partners.

---

### 14. Management of Project Implementation (Strength: Medium; Effectiveness: Medium; Reform Priority: Medium)

### Project management requirements and gaps
- Effective implementation requires managing time, money, and quality; clear scope, roles, expectations, and regular independent audits are important.
- Evidence of project management requirements exists for externally funded projects; Government Resolution 95 mandates competitive selection of project managers for externally funded projects and alignment of project implementation plans with development partner agreements.
- Process of appointing project managers and developing implementation plans was unavailable for internally funded projects.
- Absence of standardized rules for project adjustments in internally funded projects raises risk of ad hoc changes without regulatory clarity.

### Audit and oversight
- June 2023 amendment to the Law of the Chamber of Accounts underscores its role in auditing major investment projects (domestic and external); Chamber of Accounts is legally obligated to audit, publish reports, and submit these to legislatures.
- Gaps: law lacks explicit provisions for stand-alone ex-post audits dedicated to completed investment projects.
- Agency for Financial Control and Anti-corruption conducts biennial financial reviews of investment projects.

### Operational shortcomings and recommendations
- Major externally funded projects have implementation plans; absence of adjustment data and unclear government utilization of ex-post audits impact effectiveness.
- Lack of clarity on appointment process and absence of implementation plans hampers performance evaluation for internally funded projects.
- No formal project adjustment rules and lack of documented analysis of adjustment proposals risk inadequate updates to cost estimates, timetables, and implementation plans, and neglect of necessary project cancellations.
- Recommendations:
  - Establish comprehensive regulatory framework for project management.
  - Require appointment of dedicated project managers and robust project implementation plans for major internally funded projects.
  - Institute standardized rules for project adjustments and ensure access to project adjustment data.
  - Establish explicit requirements for ex-post audits of major completed projects.

---

### 15. Monitoring of Public Assets (Strength—Medium; Effectiveness: Medium; Reform Priority: Medium)

### Asset registers and accounting
- SCISPM has operated a legally mandated central asset register since January 2022; information system designed by SCISPM.
- Register covers all asset types owned by central and local government budget entities and state unitary enterprises.
- Data updated annually at year-end, including responsible entity, description (does not cover condition), location, replacement value, depreciation, and whether operational.
- Access to register is restricted; primary purpose is financial accountability and control rather than asset management.
- Published accounting policy: non-financial assets recorded in financial statements at historical costs and depreciated on an asset class-specific basis; MDAs expected to maintain asset records but no guidance/standards issued beyond supporting accounting for fixed assets.

### Practice and shortcomings
- Depreciation is applied consistent with international standards and published guidance on depreciation policies and rates is consistent with international practices.
- Register data is materially incomplete due to budget entities not providing information; assets are not revalued in financial statements.
- State Service on the Use of State Property investigates improper use but does not routinely verify register data accuracy.
- Chamber of Accounts has not audited the register; Chamber checks that non-financial sums match appended list of assets and performs spot checks in the field and with the register, but no systematic reconciliation exists between a budget entity’s financial statement and its assets recorded in the register.
- SCISPM policies restrict register access typically to agencies involved in financial control (Chamber of Accounts and Anti-Corruption Agency).

### Recommendation
- Improve completeness and verification of asset register data, institute systematic reconciliation between budget entities’ financial statements and the central register, and consider revaluation procedures to support asset management and accurate financial reporting.

*IMF Technical Assistance Report*

### 80.      The asset register is not yet well established but has the potential to be useful for

### tarea2024094-print-pdf - 80.      The asset register is not yet well established but has the potential to be useful for 

### Asset register: status, potential, and data requirements
- The asset register is not yet well established but has the potential to be useful for investment planning and estimating maintenance needs.
- The register collects information on assets, which are described, and their replacement value.
- While the MoEDT can collect asset information directly from MDAs and SNGs, a centralized register is much more convenient and could serve as the basis for cross-sector analysis.
- An asset management module to SGB.net, the treasury management information system, is planned.
- Coordination between the SCISPM asset register and the planned SGB.net module is not clear.
- Current register limitations:
  - Includes a simple identification code for assets that is not designed for analysis.
  - Lacks classification codes that meet data needs of other agencies (planning, maintenance, climate change).
  - External access and registration by entities outside SCISPM is not enabled in current setup.
- Suggested institutional actions:
  - MoEDT and the SCISPM are well placed to establish a working group, with broad participation, to develop a coding system for analytical use.
  - Given that the register was developed locally, modification to add one or more coding schemes should not be technically difficult or expensive.
  - SCISPM should develop methods for verifying the accuracy of its data, including reconciliation with accounting data and the broader system of real estate registration.
- Practical benefit caveat:
  - Ministries and agencies would benefit from the register with appropriate classification codes only if they could obtain reports on individual (or groups of) assets.

### Recommendations on portfolio oversight, evaluation, and the asset register
- Issue: There is no formal mechanism for monitoring internally funded initiatives, and externally financed project portfolio monitoring responsibilities are fragmented and shared unclearly across SCISPM, MoEDT, and MoF.
  - Recommendation 8. Establish an overarching framework for portfolio oversight and management that encompasses all investment projects, regardless of funding source. (MoEDT, by end-2024).
- Issue: There is no requirement for ex-post reviews of major capital projects, which means the outcome and performance of the project cannot be evaluated, and lessons cannot be drawn on in future projects.
  - Recommendation 9: Establish an ex-post evaluation process and require these evaluations for all large projects. (MoEDT, by mid-2025)
- Issue: There is a lack of centralized data on assets to support medium-term investment planning, maintenance, climate mitigation, and vulnerability of assets to climate change.
  - Recommendation 10: Expand the functionality of the SCISPM asset register by classifying assets for analytical purposes and allowing entities outside of the SCISPM to access and register data. (MoEDT and SCISPM, by mid-2025 for use during 2026 budget preparation)

### Climate change: exposure, projections, and infrastructure implications
- Tajikistan is increasingly experiencing the impacts of climate change; it is a lower middle-income country with a landlocked, mountainous, but diverse topography and climate, and is especially vulnerable to climate change.
- Climate projections:
  - Annual average temperatures have risen steadily over the past decades in Tajikistan and are projected to increase by 1.6 to 2.3°C in 2050 and between 1.8 and 3.3°C in 2070 across the 1-2.6 and 3-7.0 Shared Socioeconomic Pathway (SSP) emission scenarios.
  - In a high-emission, fast-warming scenario (SSP3-7.0 90th percentile), temperatures could increase by 4.1°C by 2070.
- Expected physical impacts:
  - Increased likelihood of drought, accelerated land degradation and glacial retreat, changes to water flows, increased hydrological variability.
  - Intensification of flooding, landslides, and mudslides.
  - Most vulnerable areas are glacier-dependent river catchments and basins.
- Infrastructure and economic implications:
  - Risks to hydropower: existing plants require renewal to cope with changing climate; new plants need resilient design.
  - Renewable hydropower accounts for approximately 40 percent of energy and 93 percent of electricity generation.
  - Agriculture employs almost 46 percent of the population.
  - Without mitigation and adaptation efforts, effects could result in severe loss and damage.

### Macroeconomic and fiscal impacts of climate change
- Disaster frequency and losses:
  - Government analysis: 3,460 natural disasters occurred between 1997 and 2018, which on average meant almost 160 a year or one occurring every two days.
  - Annual average losses due to floods estimated at US$60.8m (0.7 percent of GDP).
  - A 100-year flood would incur economic losses of US$550m (6.5 percent of GDP).
  - Damages from all types of natural disasters have been estimated to cost up to 3 percent of GDP each year.
- Policy implication:
  - Climate-resilient infrastructure is key to averting impacts of climate change and natural disasters; otherwise frequency and severity of loss and damage will increase, disproportionately affecting rural and urban poor and remote communities.

### Climate mitigation, strategy, and institutional framework
- Emissions context:
  - Tajikistan currently contributes a negligible amount to global greenhouse gas (GHG) emissions, but emissions are rising as the economy grows.
  - Drivers of rising emissions: growing transportation sector, expansion of heavy industry, and more coal being added to the grid in response to energy security concerns.
  - Agriculture remains a large contributor to emissions.
- Strategic documents and commitments:
  - NDS-2030 (adopted in 2016) sets long-term economic direction and includes climate-related measures.
  - Medium-Term Development Programs: 2016-20 and 2021-25.
  - Green Economic Development Strategy for 2023-37 provides a roadmap for green development and commits to developing renewable energy, improving resilience and environmental sustainability across sectors.
  - Tajikistan updated its NDC in 2021 and committed to reducing emissions by 30-40 percent of pre-industrial levels by 2030 (unconditionally) and 40−50 percent (conditional on adequate international support).
  - The NDC covers energy, forestry and biodiversity, industry and construction, transport and infrastructure, and proposes a stronger approach to adaptation.
  - The government is developing a Climate Finance Plan and a National Adaptation Plan.
- Institutional responsibilities:
  - Committee on Environmental Protection (CoEP): responsible for controlling use of natural resources, protecting land, minerals, forests, water, and coordinating activities on environmental protection; responsible for climate change implementation of the NDC and National Strategy for Adaptation to Climate Change 2030.
  - Ministry of Economic Development and Trade (MoEDT): central executive authority developing socio-economic policies and implementing economic development strategies, including the Green Economy Development Strategy.
  - Sector ministries: critical role in development and implementation of climate-relevant infrastructure projects and climate-related rules and regulations.

### NDC Implementation Plan: actions and scale
- The NDC Implementation Plan (adopted in 2022) provides a roadmap for achieving the updated NDC.
- Mitigation actions:
  - Total mitigation actions: 34 unconditional and 16 conditional across energy; industrial processes and product use (IPPU); agriculture, forestry, and other land use (AFOLU); and waste.
  - Table 5 summary (as presented):
    - Mitigation action — Energy IPPU AFOLU Waste
    - Unconditional — 10 0 13 11
    - Conditional — 3 1 12 0
- Adaptation actions:
  - A total of 40 adaptation actions across energy, water, agriculture, forestry, transport, and industry and construction plus 6 cross-sectoral actions.
  - Table 6 summary (as presented):
    - Energy Water Agriculture Forestry Transport Industry and construction Cross-sectoral
    - 6 9 9 7 5 4 6
- Policy implication:
  - Public investment will need to be used strategically and judiciously to achieve climate goals; meeting objectives will involve significant costs, require fiscal space creation, strong policy frameworks, clear finance mechanisms to catalyze private investment, and close coordination among MDAs and development partners.

### Climate PIMA: framework, scope, and assessment topics
- The Climate PIMA assesses five key public investment management practices from a climate change perspective and extends the existing PIMA framework.
- Covered issues:
  - C1. Climate-aware planning: Is public investment planned from a climate change perspective?
  - C2. Coordination across the public sector: Is there effective coordination of decision-making on climate change-related public investment across the public sector, including central government, SNGs, SOEs, and private sector entities?
  - C3. Project appraisal and selection: Do project appraisal and selection include climate-related analysis and criteria?
  - C4. Budgeting and Portfolio management: Is climate-related investment spending clearly identified in the budget and subject to active management and oversight?
  - C5. Risk management: Are fiscal risks relating to climate change and infrastructure incorporated in budgets and fiscal risk analysis and managed according to a plan?
- Assessment note:
  - C1. Climate-aware Planning (Strength: Medium; Reform Priority: Medium)

*IMF Technical Assistance Report | Excerpt provided in the source content unit*

### 92.      Tajikistan has adopted an impressive NDC Implementation Plan covering mitigation and

### tarea2024094-print-pdf - 92.      Tajikistan has adopted an impressive NDC Implementation Plan covering mitigation and

### NDC Implementation Plan: scope and gaps
- The NDC Implementation Plan sets out 34 actions to deliver its unconditional NDC commitment (measures with the country’s own efforts up to 2030) and 16 to meet its conditional NDC commitment (measures that rely on adequate international financial or technical support, technology transfer, or capacity building).
- It includes 40 actions across energy, water, agriculture, forestry, transport, industry, and construction, plus six cross-sectoral actions to adapt to climate change.
- Individual actions are not costed in the Plan; costing detail is expected in the forthcoming Climate Finance Plan.
- The ongoing development of a National Adaptation Plan provides an opportunity to further strengthen the country’s approach to climate change.
- Recommendation: Ensure future national and sectoral public investment strategies, plans, and key processes reflect NDC commitments.

### Legislation, spatial and urban planning, and construction
- Current legislative framework:
  - Several laws cover environmental protection and the Urban Planning Code can restrict activity in areas exposed to natural disasters.
  - The 2013 Law on Energy Savings aims to improve the energy efficiency of buildings, but several important pieces of secondary legislation needed for implementation are still under consideration.
- Observed shortfalls:
  - Emissions reduction and building resilience to climate change are generally not addressed in existing laws, regulations, and codes.
  - Recent strategies (for example, National Strategy for Adaptation to Climate Change for the period up to 2030) acknowledge that existing laws do not include climate change issues sufficiently.
- Recommendation: Review legislation and develop a plan to incorporate climate mitigation and adaptation across spatial and urban planning and construction, as part of work to develop a broader Ecological Code.

### Technical guidance, capacity, and the NDC Capacity Building Action Plan
- No centralized guidance exists on technical climate issues or support for ministries and agencies in preparing and costing climate-aware public investment plans.
- Government Resolution 161 concerns the development and implementation of the state investment program and specifies that ecological and environmental sections must be included within project proposals, but it does not adequately include climate change.
- The NDC Implementation Plan acknowledges the need for capacity development and commits to developing an NDC Capacity Building Action Plan (see Box 8).

Box 8 — NDC Capacity Building Action Plan commitments (as stated in the Plan):
- Creation of favorable conditions for the introduction of new technologies in the field of climate change in collaboration with the MoF
- Adoption of gender-sensitive measures to improve the planning system
- Creation of climate change awareness and disaster risk management campaigns
- Adjustment of master plans in response to climate change
- Strengthening the technical capacity of government agencies in the field of climate change adaptation and management

### Coordination between entities (C2: Strength: Medium; Reform Priority: Low)
- Public investment planning and decision making is coordinated through the public investment management process and the NDC Implementation Plan links actions to responsible national and sectoral institutions.
- Climate change considerations are not fully integrated within broader public investment management processes.
- Government Resolution 161 includes environmental impacts but provides no guidance on considering climate change.
- Recommendation: Improve coordination on climate-related public investment across the public sector, emphasize climate considerations in key processes, and strengthen central institutions (MDAs such as CoEP, MoEDT, and MoF) to oversee development and implementation.

### Sub-national governments and SOEs
- SNGs:
  - Planning and implementing SNG capital spending is coordinated with the central government; the NDC Plan includes municipal-level investment projects with ministries as lead agencies and SNGs as stakeholders.
  - Government Resolution 161 mandates SNGs to propose projects to the MoF for state budget funding and MoEDT for external financing through the PIP, but contains no climate-change references.
  - Externally financed projects through the PIP often include a climate perspective; internally financed state budget projects have lower transparency.
  - Recommendation: Strengthen coordination and capacity-building with SNGs for planning and implementing local mitigation and adaptation projects.
- SOEs:
  - SOEs (examples cited: Barki Tojik, Tajik Railways, Tajik Aluminum Company) are key operators in climate-relevant sectors.
  - MoF monitors financial performance of government-majority SOEs; line ministries review investment plans for strategic alignment.
  - There is no specific guidance for SOEs on aligning investments with national climate objectives or requirements to assess new investments for climate mitigation and adaptation impacts.
  - Recommendation: Integrate national climate goals and climate risks into SOE oversight and governance; MoF monitoring should include financial implications from climate-related risks (both physical and transitional).

### Project appraisal and PPPs (C3: Strength: Low; Reform Priority: High)
- Appraisal process:
  - Government Resolution 161 requires appraisal of environmental impact and compliance with environmental standards but does not mention climate mitigation or adaptation measures.
  - No standard methodology with technical details, publication, or external review requirements currently exists.
  - MoEDT has noted methodological guidance as a priority; the forthcoming Ecological Code is an opportunity to include climate requirements.
  - Recommendation: Develop guidance on technical climate issues and support line ministries to prepare and cost climate-aware public investment plans and projects, including alignment with the NDC, to ensure eligibility for concessional financing targeting such measures.
- PPPs:
  - The 2012 Law on PPPs requires environmental impact assessments but does not explicitly address climate change risks or their incorporation into long-term PPP obligations.
  - Recommendation: Review PPP and concession regulation to incorporate climate change risks into assessments and contracts.

Box 9 — incorporation of climate into PPP contracting and operation (summary):
- PPPs typically commit governments for 20-30 years; climate risks (adaptation and mitigation, including lock-in of high-emitting infrastructure) can arise during contract terms.
- Careful analysis of climate-related risks at design and appraisal stages is important.
- Contract management should consider climate implications of asset operation and future transfer to government.

### Project selection, budgeting, portfolio management (C4: Strength: Low; Reform Priority: High)
- Project selection:
  - There are no formal project selection criteria that explicitly refer to climate change; Government Resolution 161 omits climate mitigation or adaptation considerations.
  - Recommendation: Use the envisioned review of Resolution 161 and supplemental guidance to fully integrate climate criteria into selection processes.
- Budgeting and tagging:
  - Budget documents do not identify climate-related investment expenditures; no methodology exists for defining climate-related spending.
  - The Chart of Accounts is structured to support climate budget tagging at various levels.
  - Six sectors are being piloted using a program classification; each sector must develop a budget plan aligning objectives and indicators to program spending over the medium term.
  - Project-level budget tables require information on how projects contribute to outputs and outcomes; these initiatives could be adapted to include climate mitigation and adaptation measures.
  - Recommendation: MoF and CoEP should explore options for identifying climate change-related investments in the budget (Annex 10 illustrates France’s green budget tagging approach as an example).
- Ex-post review and maintenance:
  - No ex-post reviews or audits assess climate adaptation and mitigation outcomes for public investments, despite a law/process for ex-post reviews.
  - Absence of a definition of climate-related spending prevents comparison of intended vs. actual mitigation/adaptation outcomes.
  - Externally financed projects from major development banks have internal climate safeguards; domestically financed projects lack this.
  - Recommendation: Introduce ex-post review practices that, for mitigation projects, compare actual GHG emissions against projected and business-as-usual scenarios; and for adaptation, assess impacts of natural hazards and climate risks on completed infrastructure.
  - Maintenance methodology for major infrastructure has not been updated in over 30 years and omits climate change references.
  - A new Government Decree authorizes a comprehensive centralized register but omits reference to damage or impairment caused by climate-related disasters or climate-exposed assets.
  - Recommendation: Update maintenance manuals and schedules to integrate climate-related risks, particularly for sectors vulnerable to hydrological events or higher temperatures.

### Risk management and disaster risk reduction (C5: Strength: Medium; Reform Priority: Medium)
- The National Strategy to Reduce the Risk of Natural Disasters for 2019-2034:
  - Provides an overview of climate-related disaster impacts on public infrastructure and acknowledges increased likelihood of mudflows, avalanches, and droughts due to climate change.
  - Aligns with the Sendai Framework for Disaster Risk Reduction 2015-2030 and the 2030 Sustainable Development Goals.
  - Lays out a comprehensive multi-phase plan but lacks a current, in-depth hazard analysis and quantification of risks to public infrastructure assets and networks.
- Recommendation: Complement the Strategy with a detailed vulnerability assessment of public infrastructure to climate-related risks, paying careful attention to the Rogun Hydropower Project given its national significance and substantial investment requirements.
- Analytical approach (Box 10 summary):
  - Infrastructure exposure assessment enables prioritization, adaptation strategies, and resilience.
  - Example referenced: Third United Kingdom Climate Change Risk Assessment categorizes infrastructure into Category A (assets linked to water and energy) and Category B (sites such as railway stations, hospitals, schools) to identify significant risk exposure.
  - A similar analysis in Tajikistan should account for hydro-meteorological hazards (glacial lake outbursts, mudflows) and mountainous terrain impacts on water management systems (dams, irrigation, hydroelectric power).
  - Recommendation: Incorporate local climate data and terrain analysis to map vulnerable regions (including the Pamir and Fann Mountains) and inform region-specific risk assessments for infrastructure development and disaster risk mitigation.

*Source: IMF Technical Assistance Report (excerpts as provided).*

### 105.      Funds are available to address the impact of natural disasters, including infrastructure

### tarea2024094-print-pdf - 105.      Funds are available to address the impact of natural disasters, including infrastructure

### Disaster and contingency funds: availability and governance
- The National Contingency Fund, designated by Article 45 of the 2018 Law on Public Finances, sets aside up to 0.5 percent of state budget revenues for unforeseen expenses such as natural disasters.
- The Reserve Fund of Local Executive Bodies, established by Decree 602 of the 2021 Law on the Use of the Reserve Fund of Local Executive Bodie, allocates 0.5 percent of local budget revenues to cover expenses, including those resulting from natural disasters.
- There is no reporting on the use of these funds in budget execution reports.
- A “Reserve Fund of the President” exists under Article 46 of the Law on Public Finances, but there are no clear directives on its usage other than it “shall be determined by the President of the Republic of Tajikistan.”
- The legislation does not specify the purposes for which the President’s Reserve Fund can be employed, leaving its potential role in disaster management unclear.
- The absence of transparency and specificity raises concerns about allocation and whether these funds can serve as instruments for managing fiscal contingencies.

### Statement of Fiscal Risks and climate-related fiscal risk coverage
- The government has a limited Statement of Fiscal Risks that focuses only on contingent liability risks related to SOEs, with the latest report published in 2021.
- The Statement of Fiscal Risks does not include fiscal risks related to climate change.
- Suggested expansions (consistent with Institution 5 of the PIMA):
  - Include other contingent liability risks (such as PPPs).
  - Include risks related to natural disasters (including those caused by climate change).
  - Include more specific analysis of risks related to climate change, e.g., long-term fiscal sustainability analysis taking into account climate projections (such as temperature rises and precipitation changes).
  - Include discrete fiscal risk analysis related to infrastructure, state-owned enterprises, and PPPs (for instance, the impact of accelerated glacial melt on hydropower projects and risks related to the climate-related policy transitions).

### Recommendations related to climate integration in public investment
- Issue: Regulations on spatial and urban planning and construction do not address climate-related risks and impacts on public investment.
  - Recommendation 11: Legislation should incorporate climate mitigation and adaptation measures across spatial and urban planning and construction. (CoEP, mid-2025)
- Issue: No explicit integration of climate mitigation and adaptation into project appraisal and selection; not considered as explicit risk in long-term contracts such as PPPs.
  - Recommendation 12: Update the regulatory framework governing the appraisal and selection process to include climate mitigation and adaptation criteria. Update PPP and concession regulations to take climate-related risks into account. This should accompany changes proposed under Recommendation 3 in the PIMA (I4: Appraisal). (MoEDT with CoEP, by end-2024)
- Issue: No systematic approach to identify and track climate-sensitive investments.
  - Recommendation 13: Report climate-related investment expenditure in an annual climate budget statement that accompanies the detailed budget documentation. Ensure these are followed up as part of the ex-post review process (see Recommendation X of the PIMA). (MoF, Department of Budget, mid-2025 for inclusion in the 2026 budget)
- Issue: No government analysis of infrastructure-related fiscal risks as a result of climate change.
  - Recommendation 14: Expand the Statement of Fiscal Risks to include long-term fiscal risk analysis under different climate scenarios and assess the exposure of infrastructure, SOEs, and PPPs to changing climatic conditions (such as accelerated glacial melting) and policy transition risks. (MoF with CoEP, mid-2025 for inclusion in the 2026 budget).

### Legal and regulatory framework: structure and climate gaps
- Tajikistan’s legal framework is structured at six cascading levels below the Constitution:
  1. National laws and codes (including accompanying regulations and instructions).
  2. Parliamentary decisions.
  3. Presidential Decrees or Resolutions.
  4. Government Decisions (resolutions).
  5. Government Directives (sector-specific ministerial instructions).
  6. Municipal-level decisions.
- A comprehensive legal, policy, and regulatory framework covers key aspects of public investment management; most important issues are covered by Laws and their accompanying regulations and instructions (first level) and by Government Decisions (fourth level).
- Climate adaptation and mitigation measures are largely missing from the legal, regulatory, and policy framework, although the CoEP is drafting a new Ecological Code that includes climate change components.
- The National Strategy for Adaptation to Climate Change (2019) identifies sectoral gaps; it states that existing laws, regulations and codes on environmental protection, energy, drinking water supply, construction and disaster risk management do not include climate change issues.

### Information technology: systems, gaps, and climate data needs
- Four operational public financial management information systems:
  - The Tajikistan Financial Management Information System (SGB.net), introduced in 2015 and fully operational in 2016, with budget, revenue, treasury, and accounting modules. Other modules planned, including public investment and asset management. Externally financed expenditures do not go through the system and are not recorded after expenditures are made outside the system; therefore, it is not possible to generate budget expenditure reports consistent with the approved budget.
  - The Debt Management and Financial Analysis System, introduced in 2022 and still being populated with historical data; expected to become fully operational in early 2024. The system tracks loan and grant agreements and disbursements but there are no plans to reconcile it with SCISPM data on externally financed projects.
  - The e-procurement system managed by the Agency for State Procurement of Goods, Works, and Services, operational since 2019.
  - An asset management system under the SCISPM, operational in 2022.
- Links between systems are limited; none of the four public financial management-related systems share information with each other.
- The Integrated Tax Management System is linked to SGB.net, but the Human Resources Management Information System and Payroll System are not.
- Three key functions are not supported by electronic information systems:
  - MoEDT does not employ a modern electronic information system for long- and medium-term planning or the PIP.
  - The SCISPM’s electronic system to track externally funded projects ceased operation in 2016.
  - A coding system has not been agreed upon or structured in SGB.net to identify climate-related current and investment budget spending.
- Electronic information support for public investment management is largely absent; priority should be given to establishing one or more (linked) systems to support the public investment planning, budgeting, expenditure, and asset management cycle, including climate-related public investment.

### Capacity: staffing, skills, and training needs
- Substantial capacity issues across SNGs and MDAs; lack of specialized skills and guidance may cause foreign financing partners to perform functions that belong within the national administration.
- Project inception stages tend to contain little analytical assessment and focus on policy alignment and cost estimates rather than detailed analysis—acceptable for small repeated projects but problematic for larger, complex projects.
- MoEDT’s State Investment Program and Centralized Capital Investment Department:
  - Receives and is expected to process between 100-150 proposals a year.
  - The unit currently consists of only seven staff including managers, indicating substantial processing challenges.
  - The unit indicated that Government Resolution 161 requires supplemental guidance and methodologies to implement required analysis.
- The Academy of Public Administration under the President of the Republic of Tajikistan conducts retraining, advanced training and mobile courses for civil servants but there is no internal financing system to provide climate-related training at scale.
- International agencies may finance immediate training, but developing a national system for training on public investment management and its climate aspects should be a priority.
- Recommendation 14 (staffing/capacity): Take stock of the skills, guidance and capacity gap across government ministries and agencies and sub-national government and develop a capability building action plan. Develop guidelines and provide technical support for ministries and agencies on climate in sectoral planning and in the preparation and costing of climate-related public investment strategies. (MoEDT and CoEP, Immediately).

*Source: IMF Technical Assistance Report*

### 5. Alternative Infrastructure Financing: Is there a favorable climate for the private sector, PPPs, and PCs to finance i

### 5. Alternative Infrastructure Financing: Is there a favorable climate for the private sector, PPPs, and PCs to finance infrastructure?

### A. Alternative financing, competition, PPPs, and public corporations (Indicators 5.a–5.c)
- 5.a. Does the regulatory framework support competition in contestable markets for economic infrastructure (e.g., power, water, telecoms, and transport)?
  - "Provision of economic infrastructure is restricted to domestic monopolies, or there are few established economic regulators."
  - "There is competition in some economic infrastructure markets, and a few economic regulators have been established."
  - "There is competition in major economic infrastructure markets, and economic regulators are independent and well established."
- 5.b. Has the government published a strategy/policy for PPPs, and a legal/regulatory framework which guides the preparation, selection, and management of PPP projects?
  - "There is no published strategy/policy framework for PPPs, and the legal/regulatory framework is weak."
  - "A PPP strategy/policy has been published, but the legal/regulatory framework is weak."
  - "A PPP strategy/policy has been published, and there is a strong legal/regulatory framework that guides the preparation, selection, and management of PPP projects."
- 5.c. Does the government oversee the investment plans of public corporations (PCs) and monitor their financial performance?
  - "The government does not systematically review the investment plans of PCs."
  - "The government reviews the investment plans of PCs, but does not publish a consolidated report on these plans or the financial performance of PCs."
  - "The government reviews and publishes a consolidated report on the investment plans and financial performance of PCs."

### B. Ensuring Public Investment is Allocated to the Right Sectors and Projects (Indicators 6–10)
- 6. Multi-Year Budgeting: Does the government prepare medium-term projections of capital spending on a full cost basis?
  - 6.a. Is capital spending by ministry or sector forecasted over a multiyear horizon?
    - "No projections of capital spending are published beyond the budget year."
    - "Projections of total capital spending are published over a three to five-year horizon."
    - "Projections of capital spending disaggregated by ministry or sector are published over a three to five-year horizon."
  - 6.b. Are there multiyear ceilings on capital expenditure by ministry, sector, or program?
    - "There are no multiyear ceilings on capital expenditure by ministry, sector, or program."
    - "There are indicative multiyear ceilings on capital expenditure by ministry, sector, or program."
    - "There are binding multiyear ceilings on capital expenditure by ministry, sector, or program."
  - 6.c. Are projections of the total construction cost of major capital projects published?
    - "Projections of the total construction cost of major capital projects are not published."
    - "Projections of the total construction cost of major capital projects are published."
    - "Projections of the total construction cost of major capital projects are published, together with the annual breakdown of these cost over a three-five-year horizon."
- 7. Budget Comprehensiveness and Unity: To what extent is capital spending, and related recurrent spending, undertaken through the budget process?
  - 7.a. Is capital spending mostly undertaken through the budget?
    - "Significant capital spending is undertaken by extra-budgetary entities with no legislative authorization or disclosure in the budget documentation."
    - "Significant capital spending is undertaken by extra-budgetary entities, but with legislative authorization and disclosure in the budget documentation."
    - "Little or no capital spending is undertaken by extra-budgetary entities."
  - 7.b. Are all capital projects, regardless of financing source, shown in the budget documentation?
    - "Capital projects are not comprehensively presented in the budget documentation, including PPPs, externally financed, and PCs’ projects."
    - "Most capital projects are included in the budget documentation, but either PPPs, externally financed, or PCs’ projects are not shown."
    - "All capital projects, regardless of financing sources, are included in the budget documentation."
  - 7.c. Are capital and recurrent budgets prepared and presented together in the budget?
    - "Capital and recurrent budgets are prepared by separate ministries, and/or presented in separate budget documents."
    - "Capital and recurrent budgets are prepared by a single ministry and presented together in the budget documents, but without using a program or functional classification."
    - "Capital and recurrent budgets are prepared by a single ministry and presented together in the budget documents, using a program or functional classification."
- 8. Budgeting for Investment: Are investment projects protected during budget implementation?
  - 8.a. Are total project outlays appropriated by the legislature at the time of a project’s commencement?
    - "Outlays are appropriated on an annual basis, but information on total project costs is not included in the budget documentation."
    - "Outlays are appropriated on an annual basis, and information on total project costs is included in the budget documentation."
    - "Outlays are appropriated on an annual basis and information on total project costs, and multiyear commitments is included in the budget documentation."
  - 8.b. Are in-year transfers of appropriations (virement) from capital to current spending prevented?
    - "There are no limitations on virement from capital to current spending."
    - "The finance ministry may approve virement from capital to current spending."
    - "Virement from capital to current spending requires the approval of the legislature."
  - 8.c. Is the completion of ongoing projects given priority over starting new projects?
    - "There is no mechanism in place to protect funding of ongoing projects."
    - "There is a mechanism to protect funding for ongoing projects in the annual budget."
    - "There is a mechanism to protect funding for ongoing projects in the annual budget and over the medium term."
- 9. Maintenance Funding: Are routine maintenance and major improvements receiving adequate funding?
  - 9.a. Is there a standard methodology for estimating routine maintenance needs and budget funding?
    - "There is no standard methodology for determining the needs for routine maintenance."
    - "There is a standard methodology for determining the needs for routine maintenance and its cost."
    - "There is a standard methodology for determining the needs for routine maintenance and its cost, and the appropriate amounts are generally allocated in the budget."
  - 9.b. Is there a standard methodology for determining major improvements (e.g. renovations, reconstructions, enlargements) to existing assets, and are they included in national and sectoral investment plans?
    - "There is no standard methodology for determining major improvements, and they are not included in national or sectoral plans."
    - "There is a standard methodology for determining major improvements, but they are not included in national or sectoral plans."
    - "There is a standard methodology for determining major improvements, and they are included in national or sectoral plans."
  - 9.c. Can expenditures relating to routine maintenance and major improvements be identified in the budget?
    - "Routine maintenance and major improvements are not systematically identified in the budget."
    - "Routine maintenance and major improvements are systematically identified in the budget."
    - "Routine maintenance and major improvements are systematically identified in the budget, and are reported."
- 10. Project Selection: Are there institutions and procedures in place to guide project selection?
  - 10.a. Does the government undertake a central review of major project appraisals before decisions are taken to include projects in the budget?
    - "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. Does the government publish and adhere to standard criteria, and stipulate a required process for project selection?
    - "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. Does the government maintain a pipeline of appraised investment projects for inclusion in the annual budget?
    - "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."

### C. Delivering Productive and Durable Public Assets (Indicators 11–15)
- 11. Procurement
  - 11.a. Is the procurement process for major capital projects open and transparent?
    - "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. Is there a system in place to ensure that procurement is monitored adequately?
    - "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. Are procurement complaints review process conducted in a fair and timely manner?
    - "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. Are ministries/agencies able to plan and commit expenditure on capital projects in advance on the basis of reliable cash-flow forecasts?
    - "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. Is cash for project outlays released in a timely manner?
    - "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. Is external (donor) funding of capital projects fully integrated into the main government bank account structure?
    - "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."
- 13. Portfolio Management and Oversight: Is adequate oversight exercised over implementation of the entire public investment portfolio?
  - 13.a. Are major capital projects subject to monitoring during project implementation?
    - "Most major capital projects are not monitored during project implementation."
    - "For most major projects, annual project costs, as well as physical progress, are monitored during project implementation."
    - "For all major projects, total project costs, as well as physical progress, are centrally monitored during project implementation."
  - 13.b. Can funds be re-allocated between investment projects during implementation?
    - "Funds cannot be re-allocated between projects during implementation."
    - "Funds can be reallocated between projects during implementation, but not using systematic monitoring and transparent procedures."
    - "Funds can be re-allocated between projects during implementation, using systematic monitoring and transparent procedures."
  - 13.c. Does the government adjust project implementation policies and procedures by systematically conducting ex post reviews of projects that have completed their construction phase?
    - "Ex post reviews of major projects are neither systematically required, nor frequently conducted."
    - "Ex post reviews of major projects, focusing on project costs, deliverables and outputs, are sometimes conducted."
    - "Ex post reviews of major projects focusing on project costs, deliverables, and outputs are conducted regularly by an independent entity or experts, and are used to adjust project implementation policies and procedures."
- 14. Management of Project Implementation: Are capital projects well managed and controlled during the execution stage?
  - 14.a. Do ministries/agencies have effective project management arrangements in place?
    - "Ministries/agencies do not systematically identify senior responsible officers for major investment projects, and implementation plans are not prepared prior to budget approval."
    - "Ministries/agencies systematically identify senior responsible officers for major investment projects, but implementation plans are not prepared prior to budget approval."
    - "Ministries/agencies systematically identify senior responsible officers for major investment projects, and implementation plans are prepared prior to budget approval."
  - 14.b. Has the government issued rules, procedures and guidelines for project adjustments that are applied systematically across all major projects?
    - "There are no standardized rules and procedures for project adjustments."
    - "For major projects, there are standardized rules and procedures for project adjustments, but do not include, if required, a fundamental review and reappraisal of a project’s rationale, costs, and expected outputs."
    - "For all projects, there are standardized rules and procedures for project adjustments and, if required, include a fundamental review of the project’s rationale, costs, and expected outputs."
  - 14.c. Are ex post audits of capital projects routinely undertaken?
    - "Major capital projects are usually not subject to ex post external audits."
    - "Some major capital projects are subject to ex post external audit, information on which is published by the external auditor."
    - "Most major capital projects are subject to ex post external audit information on which is regularly published and scrutinized by the legislature."
- 15. Monitoring of Public Assets: Is the value of assets properly accounted for and reported in financial statements?
  - 15.a. Are asset registers updated by surveys of the stocks, values, and conditions of public assets regularly?
    - "Asset registers are neither comprehensive nor updated regularly."
    - "Asset registers are either comprehensive or updated regularly at reasonable intervals."
    - "Asset registers are comprehensive and updated regularly at reasonable intervals."
  - 15.b. Are nonfinancial asset values recorded in the government financial accounts?
    - "Government financial accounts do not include the value of non- financial assets."
    - "Government financial accounts include the value of some non- financial assets, which are revalued irregularly."
    - "Government financial accounts include the value of most nonfinancial assets, which are revalued regularly."
  - 15.c. Is the depreciation of fixed assets captured in the government’s operating statements?
    - "The depreciation of fixed assets is not recorded in operating statements."
    - "The depreciation of fixed assets is recorded in operating statements, based on statistical estimates."
    - "The depreciation of fixed assets is recorded in operating expenditures, based on asset-specific assumptions."

### Cross-cutting issues
- A. IT support: "Is there a comprehensive computerized information system for public investment projects to support decision making and monitoring?"
- B. Legal Framework: "Is there a legal and regulatory framework that supports institutional arrangements, mandates, coverage, procedures, standards and accountability for effective PIM?"
- C. Staff capacity: "Does staff capacity (number of staff and/or their knowledge, skills, and experience) and clarity of roles and responsibilities support effective institutions?"

*IMF Technical Assistance Report*

### Annex 3. C-PIMA Questionnaire

### Annex 3. C-PIMA Questionnaire

### Indicator scoring
- 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 Are national and sectoral public investment strategies and plans consistent with NDC or other overarching climate change strategy on mitigation and adaptation?
  - 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 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?
  - 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 Is there centralized guidance/support for government agencies on the preparation and costing of climate-aware public investment strategies?
  - 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 Is decision making on public investment coordinated across central government from a climate-change perspective?
  - 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, PPPs and extra-budgetary entities, from a climate-change perspective.
- C.2.b Is the planning and implementation of capital spending of SNGs coordinated with the central government from a climate-change perspective?
  - 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 Does the regulatory and oversight framework for public corporations ensure that their climate-related investments are consistent with national climate policies and guidelines?
  - 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. Do project appraisal and selection include climate-related analysis and criteria?
- C.3.a Does the appraisal of major infrastructure projects require climate-related analysis to be conducted according to a standard methodology with central support?
  - 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 Does the framework for managing longer-term public investment contracts, such as PPPs, explicitly address climate-related challenges?
  - 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 Are climate-related elements included among the criteria used by the government for the selection of infrastructure projects?
  - 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 Are planned climate-related public investment expenditure, sources of financing, outputs and outcomes identified in the budget and related documents, monitored, and reported?
  - Planned climate-related public investment expenditure are not identified in the budget and related documents.
  - Some planned climate-related public investment expenditure are identified in the budget and related documents, including investment expenditure funded externally, by extra-budgetary entities, and PPPs.
  - Most planned climate-related public investment expenditure, sources of financing, and outputs and outcomes are identified in the budget and related documents, including investment expenditure funded externally, by extra-budgetary entities, and PPPs, and expenditure on these projects is monitored and reported.
- C.4.b Are ex-post reviews or audits conducted of the climate change mitigation and adaptation outcomes of public investments?
  - 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.
- C.4.c Do the government’s asset management policies and practices, including the maintenance of assets, address climate-related risks?
  - 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?
- C.5.a Does the government publish a national disaster risk management strategy that incorporates the potential impact of climate change on public infrastructure assets and networks?
  - 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.
- C.5.b Has the government put in place ex ante financing mechanisms to manage the exposure of the stock of public infrastructure to climate-related risks?
  - 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.
- C.5.c Does the government conduct and publish a fiscal risk analysis that incorporates climate-related risks to public infrastructure assets?
  - 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.

### Cross-cutting issues
- A IT support. Is there a comprehensive computerized information system for public investment projects to support decision making and monitoring?
- B Legal Framework. Is there a legal and regulatory framework that supports institutional arrangements, mandates, coverage, standards and accountability for effective PIM?
- C Staff capacity. Does staff capacity (number of staff and/or their knowledge, skills, and experience) and clarity of roles and responsibilities support effective institutions?

*Annex 3. C-PIMA Questionnaire*

### Annex 9. Environment and Climate Appraisal

### Annex 9. Environment and Climate Appraisal

### Distinguishing objectives: environment, adaptation, mitigation, and risks
- Improved environmental outcomes have been a focus of government policy for many decades.
- Environmental impact assessment of infrastructure proposals typically considers factors such as noise, air quality, water quality, flora and fauna, visual impacts, habitats and socio-economic impacts.
- A requirement to assess new projects in terms of these impacts is legally enshrined in many countries around the world and there are specific requirements in EU Member States.
- Although closely linked and generally complementary, climate and environment should be seen as distinct issues.
- The mere adherence to environmental planning regulations, and the conduct of environmental impact assessments, will not be sufficient to achieve climate-informed public investment management in the future.
- Conflicts can occur between climate and environment objectives; example: construction of solar energy parks or electricity transmission lines can be delayed or cancelled owing to challenges in planning relating to environmental impacts.
- The shift to a low carbon future involves trade-offs that need to be understood and managed in a holistic manner to achieve a sustainable development path.

### Definitions: mitigation, adaptation, and climate risks
- Climate change mitigation:
  - Refers to actions to limit the magnitude and/or rate of long-term climate change.
  - Primarily understood as reductions in human-caused emissions of GHGs, for example through a move to renewable energy from fossil-fuel dependence.
  - Includes increases in the use of carbon sinks, for example through afforestation or the use of new carbon-capturing technologies.
- Climate change adaptation:
  - Refers to the process needed to minimize losses and maximize benefits from climate change, for example making infrastructure more resilient to extreme weather events like flooding.
- Climate change risks:
  - Refers to physical and transition risks.
  - Physical risks stem from uncertainty about how the climate system works and is impacted by human activity, such as temperature increases or extreme weather events.
  - Transition risks stem from uncertainty about technological innovation and how climate policy will be formulated to mitigate climate change, for example whether the price for GHG emissions will increase sharply and impact on the profitability of renewable energy projects or the characteristics of a future transport system.
  - A sound understanding of the various forms of risk, which can be enhanced through quantitative and qualitative scenario analysis, support better investment decisions and risk management.

### Appraisal methodology and core approaches
- Appraisal methodology across the world is in the process of being updated to fully consider the effects of climate change and a suite of core approaches is emerging.
- In the context of the Climate PIMA, climate-related appraisal analysis means assessments containing technical details relating to:
  - Climate change mitigation:
    - Estimation of business-as-usual GHG emissions and gross and net emissions impacts of alternative technologies;
    - Estimation of marginal abatement cost curves;
    - Use of parameters such as the social cost of carbon, shadow price of carbon and appropriate long-term discount rates.
  - Climate change adaptation:
    - Hazard analysis, risk mapping and screening;
    - Loss and damage estimation;
    - Vulnerability analysis;
    - Use of risk scenarios;
    - Dealing with climate uncertainty in project design (for example, through climate-robust physical design features; delaying full implementation until better information is available; by implementing in stages; doing ‘no regrets’ elements first; or through the use of real options).

### Example of comprehensive practice
- The World Bank Group example:
  - Mainstreams climate change into the analysis of infrastructure project proposals through:
    - (i) screening for climate risks and building in appropriate risk mitigation measures,
    - (ii) conducting GHG accounting, and
    - (iii) applying a shadow carbon price for all material investments.
- Climate-related aspects — mitigation, adaption or climate risks — as well as environmental aspects require that the resilience of infrastructure assets to changing conditions should be fully understood and appraised when planning, allocating and executing public investment projects.

*Source: IMF staff; https://climatescreeningtools.worldbank.org/*

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_Source: https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024094-print-pdf.pdf_