Posted by Yugo Koshima
In order to analyze the efficiency and effectiveness of public investment – and the size of any “infrastructure gap” – it is necessary to estimate the public sector capital stock. This is not an easy task even in a country with plentiful access to national accounts and other statistical data. For a country that is still recovering from two bitter civil wars that lasted from 1989 until 2003, together with the devastating impact of the Ebola crisis, the challenges are formidable.
Recently, the IMF’s Fiscal Affairs Department was invited by the Government of Liberia to carry out a Public Investment Management Assessment (PIMA) of the country. One of the tasks of the mission was to estimate Liberia’s stock of infrastructure and other public capital assets, and the efficiency of its investment in key areas such as electricity supply, health, education and water. The mission used an analytical framework set out in the IMF Board Paper (“Making Public Investment More Efficient”) that was published in April 2015. This paper sets out a relatively simple methodology for estimating the public capital stock and measuring public investment efficiency. The methodology is applicable to countries with limited statistical data, as well as more advanced economies. What were the challenges that we faced in applying this methodology to Liberia, and how did we address them?