A. Introduction and Overview

1. Against a backdrop of constrained fiscal space, Belgium faces considerable investment needs. Public investment is required to improve the quality and coverage of physical infrastructure, to foster digitalization and spur productivity growth, to enable the decarbonization transition, and to ensure climate resilience and adequate maintenance of the existing asset base. These needs must be accommodated within a decreasing overall spending envelope.²

2. Belgium’s capital stock is comparatively low relative to neighboring countries and peers, and investment efficiency lags leading performers. The public component of the capital stock has been below three percent of GDP since the 1990s. From an efficiency perspective, comparators such as the UK and Spain achieve a higher level of infrastructure quality for a comparable level of capital stock, and components of transport infrastructure competitiveness fall behind neighboring countries in the road, railroad, and air transport sectors and in ICT adaptation (Figure 1). This may understate the relative efficiency gap for Belgium given its high population density. For a densely populated country, a given level of capital stock in value terms should be expected to deliver a higher level of access to quality infrastructure compared to a more sparsely populated country. Higher density can bring an efficiency in infrastructure provision compared to less densely populated countries where more distributed and less concentrated networks are required to bring services to remote locations, serving fewer inhabitants.

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Comparative Infrastructure Efficiency and Competitiveness

Citation: IMF Staff Country Reports 2025, 070; 10.5089/9798229005296.002.A002

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3. Belgium has an opportunity to narrow the efficiency gap by improving infrastructure governance practices. IMF research has shown that, on average, countries could close two thirds of the efficiency gap by improving public investment management (PIM) practices to the level of the most efficient comparator. Further, strong infrastructure governance practices are also associated with improved economic productivity of public investment: countries with better PIM systems get more growth “bang” for their investment “buck”.³ Accordingly, improving institutions for public investment can improve the quality and coverage of infrastructure delivered and improve the chances of that infrastructure enhancing growth prospects.

4. This paper assesses public investment management practices in Belgium, focusing on the planning phase of the infrastructure lifecycle. The approach draws on aspects of the IMF’s Public Investment Management Assessment (PIMA) framework – the leading diagnostic to assess countries’ infrastructure governance practices.⁴ Belgium is a highly decentralized state and subnational governments have significant autonomy over fiscal policy.⁵ While responsibility for the rail network, public buildings and prisons rests with the federal government, most other sectors of public investment including roads, waterways, public transport, flood defense, water supply and wastewater treatment are the competence of the regions: Flanders, Wallonia and Brussels-Capital Region. Given the distribution of responsibilities for public investment across Belgium, this paper assesses each aspect of infrastructure government as they apply in the federal and each regional federated entity.

5. The remainer of this paper is structured as follows: Section B assesses the extent to which public investment is planned, budgeted and implemented within an overarching national, regional or sectoral strategy; Section C assesses the project preparation phase, including use of standard techniques like project appraisal, governance and decision-making protocols for public investment and practices for project selection; Section D reviews institutional arrangements and coordination structures for public investment management; Section E presents recommendations to address the issues identified.

B. Strategic Planning of Public Investment

6. To be effective and efficient, public investment should be guided by an overarching strategic plan. Investment strategies, or “National Development Plans” establish how public investment goals and objectives will be achieved through a broad portfolio of projects and programs that complement each other. A strategic approach can maximize the impact of individual investments and ensure alignment of infrastructure spending with other cross-cutting policy priorities including addressing climate change or promoting economic growth or sustainable regional development. Investment plans should be linked to available resources and must be feasible in the context of the medium-term macroeconomic context. In the absence of a national or regional investment plan, there is a risk that spending will be haphazard, opportunities for synergies and network benefits will be forgone, and investment efficiency will be eroded.

7. While there are reforms underway, there are significant weaknesses in strategic planning of public investment in Belgium at present. Integrated investment plans are not in place. While there are a number of published investment programs at the regional level, these are generally confined to sectors (such as mobility) or sub-sectors (such as roads). Where plans do exist, they are generally not in the context of a realistic assessment of available resources and hence aspirational. Frameworks for territorial development and spatial planning are generally well developed but these are undermined by absence of supporting infrastructure plans. Given the fundamental spatial nature of infrastructure, this is a significant weakness.

Federal Government

8. Belgium does not have a national investment strategy nor an integrated plan for the sectors within the competence of the federal government. The Federal Department of Budget does not oversee investment strategy. While the Study Group on Public Investment, supported by the Federal Planning Bureau, has undertaken valuable research and analysis on infrastructure issues, its role has not extended to policy development. In addition, there is no central assessment of investment needs and priorities in Belgium, whereas the highest performing countries undertake such assessments. Nor does Belgium have sectoral strategies at the national level as standard.⁶ Regional sectoral strategies, where they exist, are not integrated at the national level. Belgium is an outlier in this regard – as of 2022, nine EU member states had integrated national investment plans and a further 13 used national sectoral strategies.⁷

Flanders

9. Flanders does not currently have an integrated public investment strategy, but work is underway to develop a medium-term plan. Historically, investment programs were set out annually by each of seven entities within the mobility and public works policy area. A consolidated plan is in development, incorporating all transport modes and flood defense investment. Project proposals will be reviewed by an Investment Cell in the Department of Mobility and Public Works. Structures have been established to improve coordination, but this is limited to the policy areas under the remit of the Department. The plan will be more constrained by available resources than previous plans and is likely to result in many proposals not proceeding. The development of a consolidated plan is a positive step and can be built upon. Future iterations should broaden the coverage to other investment sectors and ensure a close alignment with policy objectives such as climate change and territorial development.

Wallonia

10. The Government of Wallonia has developed a number of public investment strategies, focusing on the transport sector. Mobility and Infrastructure for All set out a range of investment projects and programs designed to maintain existing networks, engender a modal shift to sustainable mobility and encourage active transport.⁸ The plan included funding for all modes – public transport, roads, waterways and cycling. However, the plan did not incorporate complementary investment in other sectors. In addition, the plan was not sufficiently linked to available resources with the consequence that many projects were unaffordable and aspirational.

11. The Wallonia government is evaluating the domestically-funded component of the region’s Recovery and Resilience Plan, and this will form the basis of a new medium-term investment plan. This iteration, planned for 2025, should be explicitly linked to a realistic assessment of available resources. Future iterations of the plan should aim to broaden the coverage to other sectors of public investment. This should include economic infrastructure such as water and sanitation, energy and communications, and social investment such as education, healthcare and public housing. To support maximum impact, the plan should be consistent with spatial policy in the region. At present, there is no explicit link between territorial/land-use planning and public investment, impeding effectiveness in both policy areas.

Brussels Capital Region

12. BCR does not have an integrated public investment plan or strategy. While certain sectors have established multi-annual investment plans, these are not consistently developed or presented. Plans are fragmented. For example, the BCR Ministry of Mobility has three: bridges and viaducts, public transport, and tunnels.⁹ These amount to investment plans for individual asset classes rather than an integrated plan for mobility. Moreover, transport planning is a key enabler of other public investment sectors and there is no mechanism for strategic alignment across policy spheres.

13. BCR has a well-developed spatial planning framework, but this is not explicitly aligned to public investment policy. A Regional Designated Land Use Plan was adopted by the Brussels Government in 2001.¹⁰ The plan governs the general use of the various zones of the Brussels-Capital Region and has primacy within the spatial planning hierarchy. Special Use Plans give effect to the regional plan at the municipal level.¹¹ BCR has also adopted a Regional Plan for Sustainable Development that sets out the sectoral and territorial development objectives in the years to 2040.¹² The Plan articulates objectives around four main themes:

• Developing new neighborhoods;

• Improving the living environment;

• Developing the urban economy; and,

• Promoting multi-modal travel.

14. Complementary public infrastructure is critical to achieving the objectives of regional and urban planning. Likewise, achieving wider objectives of urban planning such as densification is fundamental to maximizing the efficiency of investment projects. The absence of a strategic investment plan and the lack of alignment between public investment and territorial development therefore undermines effectiveness of policy in both spheres.

C. Project Preparation and Governance

Project Appraisal

15. Rigorous and objective project appraisals are fundamental to sound public investment management. To support the identification and selection of the highest impact projects, all investment proposals should be subject to consistent economic, financial and technical appraisal. Good project appraisal involves comparing all available options to achieve a policy outcome. To facilitate comparison of competing demands for scarce resources, appraisals should be completed in line with standard methodologies across ministries.

16. Belgium has significant weaknesses in project appraisal across each entity of government, contributing to cost overrun on major projects. Project appraisals should make adequate provision for the impact of risk and uncertainty on the case for a public investment project, and shortcomings in this regard can contribute to cost overrun, schedule delay and underachievement of planned benefits. There are numerous examples of cost overrun in Belgium (Box 1), and weak arrangements for project appraisal exacerbate the challenges of delivering complex infrastructure.

Federal Government

17. There are no standard arrangements for project appraisal at the federal government level. The infrastructure sectors within the remit of federal government are energy, public buildings, rail, and prisons. In the case of energy, investment is by the private sector or within a regulated asset-base regime. There are no requirements for economic appraisal in public buildings. In the rail sector, Infrabel undertakes economic and financial appraisal on large network investment projects. These are not published, nor independently scrutinized prior to investment decisions. In the past, PPP contracts have been entered into without appraisal, for example the DBFM prison investment program.

Flanders

18. Public investment projects in Flanders do not require appraisal prior to approval. A number of previous studies have pointed to the absence of arrangements for ex-ante project assessment, though there is little evidence of progress as a result.¹³ Feasibility studies have been undertaken on some projects, but these are not completed to a common standard and are not routinely published. The absence of cost-benefit analysis (CBA) on road projects has been found to have contributed to problems with cost overrun, schedule delay and budgetary pressures, as too many projects were commenced without a clear indication of the relative socio-economic priority of each.¹⁴ The current government agreement mentions the role of CBA as a guideline for political consideration of investment.¹⁵

Wallonia

19. There are no standard arrangements for project appraisal of public investment projects in Wallonia. Sectors have autonomy to prioritize projects without the need for financial, technical or economic analysis of the proposal. Absence of requirements for appraisal and quality assurance of the case for investment exacerbates the risk of cost overrun and schedule delay such as those experienced in the Liege Tram and the Mons Railway Station.

Brussels Capital Region

20. Public investment projects in BCR are not subject to standard economic and financial appraisal. While previous diagnostics have acknowledged the practice of environmental impact assessment, this is an EU-mandated process and does not constitute project appraisal.¹ Some individual major projects have been appraised, for instance in the mobility sector. Large public housing developments are subject to technical and financial appraisal but not economic analysis. Appraisals are not published or independently assured as standard. Investment decisions are generally taken at ministerial or governmental discretion, with no standard requirements for projectlevel analysis. Absence of a strong framework for assessing proposals prior to the decision to proceed undermines the quality of project proposals.

D. Project Selection and Governance

21. Strong arrangements for project preparation and governance can improve public investment efficiency. Frameworks that govern project preparation, decision-making and funding approval can help prioritize the highest impact projects, identify, mitigate and manage risks, and support the delivery of infrastructure on budget, on time and to required benefits. Many European countries now use some form of decision-gate structure to govern public investment decisionmaking (Box 2).

22. Belgium does not use standard processes for selection and governance of new investment project proposals, but there are some pockets of good practice. Neither the federal government nor any of the regions have instituted standard procedures to oversee investment project preparation and scoping, risk management, and approvals at each point in the project lifecycle. However, there are some examples of good practice in individual sectors as noted below.

Flanders

23. Flanders does not have standard procedures for project selection and governance but has established an optional process designed to expedite the delivery of complex projects. In 2014, the Flemish government instituted a process for complex projects (Figure 2), but this is optional for project sponsors.¹ Decisions on major investments are usually made by the government and do not follow a standard decision-making or governance process.

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Flanders Complex Project Process

Citation: IMF Staff Country Reports 2025, 070; 10.5089/9798229005296.002.A002

Source: Staff interpretation of 2014 Decree on Complex Projects and related government documents.

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24. The optional process is underpinned by a range of supporting documents but has not been widely applied in practice, and there is limited evidence of its effectiveness to date. A number of high-profile megaprojects, including the Oosterweel in Antwerp, did not follow the process. Research on a sample of port projects that did use the model found that sponsors deemed that the process made project preparation more transparent and solution-driven, although there was mixed evidence as to whether the process expedited project delivery.² Nonetheless, key principles of the model such as standard project phases and document requirements, standard supporting guidance and formal decision points represent good practice and could form the basis of an improved – and mandatory - approach in the future.

25. Notwithstanding the absence of mandatory processes, there are some examples of good practice in project preparation and governance. In wastewater infrastructure, Aquafin uses a structured approach to identifying project priorities and selecting investments for inclusion in a multi-annual investment plan that is updated annually (Figure 3). Project proposals are ranked based on environmental criteria derived from the EU Water Framework Directive, a measure of time criticality reflecting regional policy priorities, and a measure of wider opportunities and risks.³ Candidate projects’ performance against these criteria are then assessed through a costeffectiveness framework. Priority projects are prepared and developed using a new project management process with formal decision gates. Risks are identified as part of the project costing process, and the P50 and P80 project costs are estimated. Risk contingencies up to the P80 estimate are available to project sponsors, but can only be released where specified risks materialize. Aquafin reports that in the two years since the new governance process was introduced, about 80 percent of projects are on budget at the P80 level, indicating an accurate cost-forecasting regime on average.

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Aquafin’s Project Governance Process

Citation: IMF Staff Country Reports 2025, 070; 10.5089/9798229005296.002.A002

Source: Aquafin and staff analysis

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Wallonia

26. Wallonia does not have a standard approach to project governance and selection. Project selection is largely a political process. There are no regulations on project preparation, approval or risk management. There is a requirement for reporting project progress through a dedicated software system, but this is a reporting rather than a governance or oversight function.

Brussels Capital Region

27. BCR does not have standard processes for project selection or investment governance. In practice, selection of new investment projects is political.⁴ There are no common steps for development and approval of projects across different sectors. Even within individual sectors, procedures for new project selection are weak: neither the Department of Housing or Mobility (the ministries with the largest public investment portfolios) have standard criteria to prioritize competing investments. Project costs are not explicitly set out as part of the Region’s budget.

28. There is some evidence of better approaches to prioritizing maintenance spending. For example, Vivaqua, which manages the 500km sewer network in BCR, uses a sophisticated risk-based approach to prioritize capital and operational maintenance interventions. The age of the network, coupled with the fact that 99 percent of the population is already served by the sewer system, means that maintenance and renewal is typically a higher priority than new infrastructure. The approach deployed by Vivaqua uses evidence on asset condition, assessment of consequences of infrastructure failure and financial information to prioritize a rolling 15-year investment program.

29. As the Brussels government aims to address these shortcomings, planned reforms should focus on high-impact early wins. Work has been ongoing in recent years to strengthen the approach to public investment in BCR. A gap analysis was undertaken⁵ and a set of recommendations developed.⁶ These are positive steps. On the point of project selection and governance, the region plans to develop a “Helper Tool” to assist in project selection.⁷ While supporting IT systems can aid good public investment management, the focus in the near term should be on establishing a clear and transparent framework for project governance; establishing the minimum level of information required for approval decisions at each point in the process (particularly relating to project costs and risks) and setting out clear criteria to shape investment prioritization within a realistic and binding fiscal constraint.

E. Coordination and Institutional Arrangements for Public Investment

Coordinating Public Investment

30. Effective coordination is crucial when various layers of the public sector are involved in planning, funding and delivering public infrastructure. In this context, coordination means that the priorities of the different parts of government are made consistent with each other; budget funding, particularly to entities like local governments, is transparent and predictable; and risks arising from major investment projects, regardless of the implementing body, are well understood and managed appropriately and consistently.

31. There is fragmentation in public investment management and weak coordination among entities. Infrastructure is spatial in nature and discrete public investment projects form networks that work together to provide services to users. These network effects are particularly pronounced in geographically smaller and more densely populated contexts. At present Belgium does not have administrative structures to align infrastructure planning and development among sectors and across regions. There is no process to coordinate investments that are within the competence of the federal government and within the competence of the regions. For example, rail investment is planned and managed nationally, but road investment is planned and managed by the regions. The two modes interact as complements and substitutes in different circumstances, and, absent a coordinating mechanism, there is a significant risk of loss of efficiency. Even where public investment is managed nationally, there are cases where regional issues risk undermining efficiency, for example Infrabel’s Regional Key (Box 3).

32. A federated government system should not preclude coordinated public investment management, and there is a case for structures to allow coordination among different competent bodies. Infrastructure has spillover effects from one region to another and many countries with decentralized autonomy for investment recognize the interconnected nature of infrastructure systems and plan investment accordingly. For example, in Germany, the Federal Government prepares 10–15 year strategies for transport spending. Germany’s current plan, the 2030 Federal Transport Infrastructure Plan is the primary transport infrastructure planning tool and addresses both maintenance needs and new investments in road, rail and waterways. The plan was developed with input from the federal states, members of parliament, the Federal Government, railway infrastructure companies, members of the public, trade associations and other stakeholders.⁸

33. Even within the federated entities, there is a risk of fragmentation given the proliferation of agencies and absence of coordination structures or unifying policy vision. Each entity has numerous bodies tasked with investment delivery in sub-sectors. In addition, the use of special purpose structures for project or program delivery is widespread. On major investment projects, this practice risks diluting accountability and scrutiny of projects by government departments.

Institutional Arrangements for Public Investment

34. Appropriate structures and institutional arrangements are an important component of strong PIM systems. In addition to the technical role of delivery agencies in implementing investment projects, there are key functions for central government departments to align public investment with wider national and regional policy objectives and to ensure fiscal sustainability of infrastructure spending.

35. Within each federated entity, the budget/finance functions have a limited role in oversight of public investment. The Budget Ministry does not have an active gatekeeper role in public investment management in any of Belgium’s entities. Belgium is an outlier in this regard – in most advanced economies, the Ministry of Finance plays a significant role in oversight of capital spending (Box 4). Strengthening the role of the budget/finance function would support improved coordination of public investment, support enhanced fiscal sustainability, and bring closer scrutiny of risks at the project and portfolio levels.

36. There are reform initiatives underway which are a positive starting point. Flanders has established a new public investment cell within the Department of Mobility and Public Works that will oversee public investment planning and the project selection process within the sectors under its remit. The Brussels-Capital Region has enacted legislation to establish a new PIM unit.⁹ The unit will oversee project appraisal, selection and budgeting. These units should be adequately empowered to drive improved investment governance.

F. Recommendations

Investment Planning

37. To address weakness in strategic planning and increase public investment efficiency:

• Mandate and resource the Federal Planning Bureau – or a similarly competent body - to undertake periodic assessments of the existing capacity and condition of public infrastructure in Belgium and make recommendations on the optimum focus of public investment on a national basis.

• Introduce requirements in each entity to publish periodic public investment strategies, constrained by a realistic assessment of available resources, linked to spatial policy objectives and incorporating all budget-funded investment sectors.

Project Preparation and Governance

38. To improve investment efficiency and mitigate against the risk of major cost overrun:

• Introduce a requirement for economic and financial appraisal for all public investment projects, with larger and more complex investments requiring more detailed analysis:

  • Develop a common standard and accompanying guidelines for project appraisal.

  • Determine thresholds that set the required form of appraisal for projects of different sizes.

• Establish a standard governance process for public investment projects and programs, incorporating explicit decision gates and approval processes.

• For megaprojects, clearly set out the required level of project maturity and supporting information required at each point in the process including:

  • Economic and financial appraisal;

  • Project governance and organization structure;

  • Design and technical brief;

  • Risk assessment, mitigations and management plan;

  • Commercial and procurement plan;

  • Cost management plan; and,

  • Benefits realization plan.

• For megaprojects, introduce a requirement for expert assurance of project documentation prior to progression at each decision gate.

Coordination and Institutions for Public Investment

39. To tackle inefficiencies through weak coordination and fragmentation:

• Establish a structure to bring together federal and regional policy makers in public investment to enhance coordination, examine common challenges, and identify opportunities for efficiency improvements.

• To foster construction industry confidence and prepare the supply side of the market, publish a rolling combined national pipeline of construction tenders, updated every six months.

• Introduce new regulations to empower the finance and budget functions in each entity to play a defined gatekeeper role in project appraisal, selection budgeting, and implementation (drawing on the potential functions set out in Box 4).

• Build on the nascent public investment units in each region to drive to a step-change in the quality of public investment policy, project appraisal and governance, risk management, portfolio monitoring and ex-post review.

• Resource and mandate the Study Committee on Public Investment to develop new research and analytical tools for better public investment management.

Taken together these steps can improve infrastructure governance and support enhanced investment efficiency, supporting Belgium in meeting its investment needs in the context of a constrained fiscal position.