Integrated Infrastructure Planning and Budgeting

Richard Allen, Ashni Singh

September 28, 2020

IG Book
Posted by Richard Allen and Ashni Singh[1]

Efficient and well-integrated planning and budgeting functions are key for building quality infrastructure. Planning functions establish a framework of national, sectoral and subnational government goals, policies, and targets. Budgeting puts these policies into a defined fiscal space and resource envelope, thus allowing policymakers to implement their plans. In many countries, however, strategic planning and budgeting systems are neither efficient nor well integrated. Planning systems are often poorly designed and largely aspirational, while decisions on major infrastructure projects can be dominated by short-term considerations. Budgeting is often separated administratively from the planning process, undermined by weak enforcement of fiscal and budgetary rules, and affected by poor control of budget execution, so that the annual budget lacks credibility.

A chapter[2] in the recently published IMF volume, Well Spent: How Strong Infrastructure Governance Can End Waste in Public Investment, explains what is meant by integrating planning and budgeting functions and why integration matters. At one level “integration” amounts to little more than loose coordination among government ministries and agencies. At the other extreme, it means full integration of planning and budgeting tools and decision-making processes. Between these two extremes exist a wide variety of intermediate approaches. Poorly integrated planning and budgeting functions frequently result in plans for infrastructure investment that are over-ambitious, continuous improvisation in project selection, delays and cost overruns in project implementation, and weak accountability for results.

The authors of the chapter make several critical observations regarding mechanisms that can help achieve better integration of planning and budgeting:

The authors of the chapter carried out a survey of 218 countries and independent territories. The survey found that:

Other important conclusions of the chapter are as follows:

 

[1] Fiscal Affairs Department, IMF.

[2] Chapter 12 on “Integrating Infrastructure Planning and Budgeting” by Richard Allen, Mary Betley, Carolina Renteria, and Ashni Singh.

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