Public Investment Management Handbook for Capacity Development

This Handbook is the outcome of the collective effort of many officials and experts who have experience and expertise in public investment management in developing countries
as well as Japan.

Public investment management (PIM) has recently been attracting attention in the field of public financial management (PFM) in developing countries for the following reasons:

First, the growth of “infrastructure deficits” around the world. Many developing countries are experiencing infrastructure deficits while trying to sustain high
economic growth. Developed countries must address the increasing need to renovate public infrastructure facilities that were built in the 1950–1970s. At the same time,
developed countries have experienced a steady decline in the public investment-gross domestic product (GDP) ratio since the 1980s, leading to growing concerns regarding the sustainability of economic growth.

In response, the government of Japan has been advocating quality infrastructure investment to address the growing demand for public infrastructure around the world.

Second, recognition that improvement of PIM is a critical component of PFM reforms in developing countries. Limited PIM capacity has been identified as a major bottleneck
 to securing and strategically allocating government resources, and therefore a bottleneck to addressing the rapidly increasing need for public infrastructure in developing countries.

Finally, weak institutional foundations for managing development plans, national budgets, and individual projects to achieve long-term visions and targets in many
developing countries.
 Since the adoption of the sustainable development goals (SDGs) in 2015, many developing countries have been required to strengthen those institutional foundations to achieve their own SDGs and national development visions and targets by 2030.

To address these issues, JICA has been implementing technical cooperation projects in Bangladesh, Laos, Malawi, and Indonesia since the mid-2000s. The current Handbook
takes stock of the experiences of those projects and provides useful information for JICA officials and experts tasked with diagnosing PIM capacity and formulating and implementing capacity development projects.

The current Handbook is organized according to the following three themes:
1) Understanding the outline of the PIM system
Chapter 1 provides background information on the importance of strengthening PIM in developing countries, along with an overview of the PIM capacity development framework (PIM-CDF).
Chapter 2 explains the first of the four stages of the PIM-CDF and provides guidance for collecting and organizing basic information on PIM in a developing country.
This chapter delineates the outline of public investment and identifies the main characteristics of the PIM system in a country.

2) Analyzing PIM issues and capacity
Chapter 3 explains the second stage of the PIM-CDF for analyzing PIM issues and capacity. This chapter will guide readers in conducting in-depth analyses of the issues and capacity
for PIM in the country concerned.

3) Formulating and implementing PIM cooperation strategy and capacity development projects
Chapter 4 explains the third stage of the PIM-CDF for formulating and implementing a cooperation strategy and projects for PIM. This chapter uses the and capacity information on PIM issues
and capacity collected in Chapter 3 to formulate a comprehensive cooperation strategy for PIM for the country concerned. This will allow readers to design JICA technical cooperation projects.
Some critical points requiring attention at the design stage of PIM support are also summarized in this chapter.

Chapter 5 highlights additional critical considerations that require attention at the implementation stage of PIM support. These insights are based on experience from past JICA technical
cooperation projects conducted in Bangladesh, Laos, Malawi, and Indonesia.