Managing Public Investment Spending during the COVID-19 Crisis


Posted by Richard Allen and Eivind Tandberg[1]

A recently published IMF Note discusses the role public investment management can play in the fiscal response to the COVID-19 crisis. Public investment has several characteristics that makes it attractive for both spending cuts in the initial phase of the crisis and boosts to support economic recovery later. It is largely discretionary, lumpy with most spending concentrated over a few years, and it makes a substantial contribution to economic activity, especially in low-income countries.

Phase 1: Cutting or postponing projects

A concrete set of selection criteria should be used as a guide for adjusting a government’s public investment portfolio. Table 1 provides a simplified example of possible criteria. These should include specific thresholds for the decisions and the selection framework should be calibrated to produce the required magnitude and timing of fiscal adjustment. Options include: (i) identifying ongoing projects that are under implementation stress; (ii) applying a temporary freeze on approving new project commitments; (iii) putting all stalled projects on hold until further notice; and (iv) designating all COVID-19 related projects as a strategic priority

Table 1. Illustrative Criteria for Postponing or Cancelling Projects

Basic decision matrix



Project approved, not initiated



Project initiated, less than 10 % of cost incurred



Project under implementation, B/C of completion >1.5



Project under implementation, B/C of completion <1.5



Project under implementation, B/C of completion <1.0



Additional considerations


High employment creation



Significant synergies with other projects



High cost of project cancellation (beyond B/C)



Note: Thresholds are indicative.

In making these decisions, governments should be guided by the following factors:

Phase 2: Managing public investment for fiscal recovery

As the Great Lockdown ends, many countries will want to use infrastructure investment, to help restart the economy during the second half of 2020 or early in 2021, as happened after the global financial crisis of 2008. Such measures should be timely, targeted and temporary (TTT). The post-crisis phase may also provide important opportunities for the “greening” of public investment.

Countries could consider the following measures:

Table 2. TTT Criteria for Projects in a Fiscal Stimulus Package


Illustrative criteria



Possible to implement the projects in the required timeframe

A significant share of projects should be available for immediate implementation



High benefit/cost ratio (B/C >1.5)

Additional positive impacts (beyond B/C estimate):

§  Economic

§  Social

§  Environmental

High employment creation potential

Significant synergies with other projects, including SNGs and private sector

Leverage concessional financing



The projects should have a strong long-term growth impact but limited long-term fiscal impact

They should not require significant funding beyond the fiscal stimulus period

This article is part of a series related to the Coronavirus Crisis. All of our articles covering the topic can be found on our PFM Blog Coronavirus Articles page.


[1] Fiscal Affairs Department, IMF.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.