Credit djedzura/iStock
Credit djedzura/iStock
Credit djedzura/iStock
Credit djedzura/iStock
Effective and efficient public investment is crucial for economic and social development and is particularly important in low-income developing countries (LIDCs). Two recent IMF papers discuss which public investment management institutions may be most important to ensure robust public investment management in LIDCs, and provide advice on specific steps the countries can take to enhance effectiveness and efficiency.
The first paper is Public Investment Management Bottlenecks in Low-income Countries (WP 2024/232). This paper analyzes an extensive data set from more than 80 IMF Public Investment Management Assessments (PIMAs), using statistical methods (principal component analysis - PCA) to identify bottlenecks to effective public investment management in LIDCs. The analysis suggests that five PIMA institutions are systematically highly correlated to estimates of public investment efficiency. This does not mean that these five are the only important institutions – this will depend on country circumstances. But the following five institutions are very likely to be high priorities for reform:
The second paper discusses several options for How to Improve Public Investment Management in Low-Income Countries (HTN 2025/001). The discussion covers eight PIMA institutions that are least effective across LIDCs and/or have the most significant impact on public investment efficiency. These include the five institutions noted above and the following three additional institutions:
For each of the eight PIM institutions, the note discusses basic practices, which should be realistic initial reform objectives for low-capacity countries, as well as medium practices that may be relevant objectives for medium-term reforms. The main criteria are summarized in the table below. The note also discusses how to overcome reform implementation challenges and consolidate the reforms and provides examples of action plans to implement the different reforms.
