Drawing on the Fund’s analytical and capacity development work, including Public Investment Management Assessments (PIMAs) carried out in more than 60 countries, the new book Well Spent: How Strong Infrastructure Governance Can End Waste in Public Investment will address how countries can attain quality infrastructure outcomes through better infrastructure governance—an issue becoming increasingly important in the context of the Great Lockdown and its economic consequences. It covers critical issues such as infrastructure investment and Sustainable Development Goals, controlling corruption, managing fiscal risks, integrating planning and budgeting, and identifying best practices in project appraisal and selection. It also covers emerging areas in infrastructure governance, such as maintaining and managing public infrastructure assets and building resilience against climate change.
International Monetary Fund. Communications Department
This issue focuses on recent experiences that holds lessons for when to tackle debt and when not to. Growth is picking up, and the IMF has been ratcheting up its forecasts. Government coffers are filling and, with more people at work, demand for public social support is receding. Research shows that the stimulatory effect of fiscal expansion is weak when the economy is close to capacity. Low-income economies may be at greatest risk. Traditionally, they borrowed from official creditors at below-market rates. Higher global rates could divert precious budget resources to debt servicing from crucial infrastructure projects and social services. Raising budget balances toward their medium-term targets can be achieved at little cost to economic activity. Growth-enhancing infrastructure investments and crucial social services such as health and education should be maintained. Well-designed fiscal policy can address inequality and stimulate growth.
Gerd Schwartz, Manal Fouad, Torben Hansen, and Geneviève Verdier
Public infrastructure is a key driver of inclusive economic growth and development and the reduction of inequalities. Roads, bridges, railways, airports, and electricity connect markets, facilitate production and trade, and create economic opportunities for work and education. Water and sanitation, schools and hospitals improve people’s lives, skills, and health. Also, if done right, broad-based provision of public infrastructure can support income and gender equality; help address urgent health care needs (for example, during epidemics); reduce pollution; and build resilience against climate change and natural disasters.
Public infrastructure projects are typically large and complex, with long planning, implementation, and operational periods, and as such they are inherently exposed to uncertainties and risks. However, project risks are often not well integrated in infrastructure governance frameworks and receive only moderate attention during major investment decisions. Governments’ decision making is typically shortsighted, and the long-term costs and benefits are poorly reflected in most standard budget systems. Moreover, while planning and monitoring systems may help decision makers get an impression of the long-term effects of infrastructure projects, these systems are often limited in their scope and coverage. As a result, risk management of infrastructure projects remains underdeveloped and project outcomes often deviate significantly from expectations or forecasts.