For Section III (Policies,
Measures to Develop large Scale Infrastructure for Economic Growth and
Poverty Reduction), we would suggest reorienting its content from a
description sector by sector of the main investment planned (which is
already largely contained in the five year plan and sector plans) to a
discussion of the criteria that would be used to (i) chose and (ii)
finance infrastructure investments.
Regarding the choice among
many different investment projects, we would suggest that in addition
to economic criteria (such as rate of return; effect on the current
budget of the operations and maintenance costs; and scope for cost
recovery), social criteria such as poverty impact, impact on improving
the infrastructure network beyond the project area, and distributional
impact should be considered. Ideally, a system would be developed
where, especially for large projects, a number of criteria would be
considered, the projects would be ranked based on the most relevant
criteria, and priority would be given to the best ranked investments,
given the budget constraints. The table below gives an example
| |
Criterion 1 |
Criterion 2 |
Criterion 3 |
|
| Project 1 |
|
|
|
|
| Project 2 |
|
|
|
|
Criteria could be
developed and listed in the CPRGS. They could be for example:
ECONOMIC CRITERIA
SOCIAL / POVERTY
CRITERIA
Regarding the financing
modalities, we would like to suggest that some discussion be devoted
to the type of financing sources that would be used to finance
different types of infrastructure. It would not be useful in a
strategic document such as the CPRGS to specific say what amount or
what source would be used for each sector or for each type of
infrastructure, but it would be useful to lay out some of the criteria
that would use fund allocation. For example, government budget would
be expected to address to some extent all types of infrastructure, but
the focus of private sources would be more on infrastructure that
generates economic growth (and hence financial returns which will make
private financing viable), while ODA may be directed to projects which
combine growth and poverty objectives.
The Government may further
give indications of trends to be encouraged within types of financing
sources. For example, general budget revenues may be used for targeted
poverty reduction activities, and bonds for larger economic
infrastructure; large ODA suppliers (development banks) may be
encouraged to focus on investment which combine growth and poverty,
while smaller bilateral programs could be encourage to cofinance or
finance the targeted poverty reduction components and capacity
building and institutional activities necessary to develop the
sectors. The table below shows a simplified graphic way of
illustrating this concept.
FINANCING MODALITIES
| |
Pure
Economic Growth |
Growth
and Poverty |
Targeted
Poverty |
| Government
Budget |
XXXX |
XXXXX |
XXXXX |
| ODA |
XX |
XXXXX |
XXX |
| Domestic
Private |
XXXXX |
XX |
|
| Foreign
Private |
XXXXX |
(larger number of X
and darker shading shows greater intensity of use of the type of
funds for the purpose)
It may also be useful in
the paper to briefly refer to two additional topics:
-
The linkage between
infrastructure investment and the services using that
infrastructure. For example, development of transport services in
a competitive manner can help keep down transportation costs once
the infrastructure has been built, or management of peak flows (in
roads and electricity) can maximize the economic benefits of a
given investment)
-
The macroeconomic and
fiscal implications of infrastructure development (particularly in
light of the recent proposals to issue large amounts of bonds for
this purpose).