Public Sector Governance and Accountability Series: Budgeting and ...

450 Salvatore Schiavo-Campo
assets, but limited to assets that are (a) very valuable, (b) at risk, and
(c) in an economically usable state.
Related to the last point, do not assume that just because a physical asset
exists it automatically deserves to be maintained. On the contrary, as part
of the selective inventory mentioned, some assessment must be requested
of whether the asset remains sufficiently valuable to warrant maintenance
expenditure or has been so degraded by the conflict and prolonged
deferred maintenance as to be best written off. Above all, do not rely on a
preconflict asset inventory as a basis on which to decide the allocation of
new O&M expenditure.
Screening Investment Project Proposals
It is in investment that most of the “technical” screening is needed, especially
in postconflict situations—where investment is both the largest category of
public spending and the mechanism for recovery and reconstruction.
Criteria and rules of thumb
The following two main criteria apply to investment project choices:
The project must fit within a sound overall public investment program
(as defined, at the start, through the JAM).
The economic and social quality of the project itself must be demonstrated
by both its consistency with government policy and its rate of
return (in national economic terms)—the latter being measured in
approximate terms.
Certain rules of thumb can be suggested:
Use the “double-sense” rule in assessing a project proposal—both economic
sense and common sense.
Provide in the budget for sufficient counterpart funding in the aggregate.
Adequate local funding does not guarantee good investment execution,
but insufficient budgetary provision guarantees bad execution—forcing
the shift of needed funds from one project to another or curtailing them
across the board.
Beware of “free” money from aid. Focus first on project quality, and
then look for the best financing terms. (However, as mentioned, the
process of iteration between resources and needs is articulated differently
in postconflict situations, and the project and funding choices