What follows is the Summary of the Public Investment Progarmme (PIP) 1999-2001. For a copy of the full document, please contact CEPEX.

	Introduction
	Government Objectives and Macroeconomic Policy
	Sector Objectives and Policies for the Period 1999-2001
	Summary of Investment Expenditure Status from 1996 to 1998
	Analysis of Investment Expenditure Requirements of Ministires for the 1999-2001 period
	Analysis of the Financial Programming of the PIP 1999-2001 on the Basis of the ESAF Ceilings

 

Introduction

Importance of the Public Investment Programme (PIP)

Within the framework of its policy of liberalisation of the economy and the conclusion of the Enhanced Structural Adjustment Facility (ESAF) with the Bretton Woods institutions in 1998, the Government is reducing its role in direct productive activities and most of the public enterprises are being privatised. However, there is still need for the Government to plan its own activities, particularly when the private sector is not yet well developed and the Government is still the main initiator and investor in the country.

  The Public Investment Programme (PIP) is an important document for defining the development strategy of the Government and making budgetary forecasts. It covers a rolling period of three years, and serves equally as one of the central documents for discussion with Rwanda’s development partners.

Consistency of the PIP with National Economic Policy

  The PIP is consistent with national economic policy, being based upon the objectives, policies and budgetary ceilings of the macroeconomic framework of the ESAF for 1999-2001. Section 3 below therefore shows the major macroeconomic objectives and policy framework of the PIP.  The total budgetary ceiling for public investment for the period 1999-2001 is RwF 234.4 billion which is divided over three years as follows : 71.7 for 1999 ; 77.2 for 2000 ; and 85.5 for 2001. The PIP 1999-2001 respected these ceilings.

 

Consistency of Programmes and Projects with Sectoral Policy

The PIP 1999-2001 adopts a ‘Programme Approach’. The sectoral programmes were identified from the sectoral strategies, which themselves emanated from the sectoral objectives. The projects in the PIP were in turn identified from the programmes. This programme approach is an important part of the selection and prioritisation process which helps to ensure that the scarce resources available are devoted to programmes and projects which are in tune with national and sectoral objectives, policies and strategies. Projects earmarked for the PIP were screened against the programmes according to project screening critieria (see main document Chapter 10 p.63 for a list of these).

 

The process of the preparing the PIP 1999-2001 document

The process of preparing PIP involved the following steps :

1. The preparation and presentation of guidelines to the ministries to guide them in the preparation of PIP.

2.  A workshop was held from the 17^th – 23^rd November 1998, whereby each ministry presented its draft PIP 1999-2001 document. The ministries’ PIP documents were discussed and recommendations to improve the documents were made.

3.  The ministries corrected their PIP documents according to workshop recommendations.

4. MINECOFIN (CEPEX) analysed and consolidated the sectoral PIPs into the final PIP document.

 

  The preparation of the PIP has not been smooth and has met many difficulties and constraints. The most important constraints are :

	Unclearly defined national development priorities ;
	Lack of sectoral and ministerial budget ceilings ;
	Unclearly defined sector policies and strategies ;
	Incomplete database on projects and software not adapted ;
	Insufficient preparation and evaluation of projects ;
	Weak planning capacity at the sector level ;
	Weak involvement of line ministries in the process of developing the PIP.

 

To improve the process of preparing the PIP, the following actions must be taken :

	Define clearly the national development policies and priorities ;
	Determine sectoral and ministerial budget ceilings and carry out sectoral reviews within the context of the Medium Term Expenditure Framework (MTEF);
	Clearly define sectoral priorities;
	Ensure the establishment and strengthening of planning and monitoring activities in the ministries;
	Improve the planning of projects and the project information system.

 

Government Objectives and Macroeconomic Policy

 

See the Policy Framework Paper.

 

Sector Objectives and Policies for the Period 1999-2001

 

The sectoral policies and strategies allow among other things :

	Assuring the consistency of programmes and projects with objectives and macroeconomic policies ;
	Assuring the rationalisation of resource allocation on the basis of priority sector policies and strategies ;
	Guidance to donors and other investors in their interventions ;

The allocation of the resources of the PIP must be coherent with sectoral objectives, policies, strategies and programmes. The policies are defined from objectives and strategies from policies. Subsector programmes are also defined from strategies. Part II of the main PIP document indicates the objectives, policies, strategies and priority programmes.

The sector policies and strategies have been defined by sub-sector. These sub-sectors are grouped into specific sectors, which in turn are grouped into the four major sectors as follows:

	Productive sector which comprises: Agriculture, Livestock, Fishing, Forestry, Fish-farming, Environment, Cottage Industry, Industry, Mines, Trade, Tourism and Co-operatives;
	Service and Economic Infrastructure sector which covers: Town Planning, Transports, Communications, Water and Sanitation and Energy;
	Social sector that comprises: Education, Health and Population, Social Welfare and Youth, and Sports and Culture;
	Finance and Administration that covers: Justice, Defense and Security, Local Administration, Economic and Financial Management and Foreign Affairs.

 

Summary of Investment Expenditure Status from 1996 to 1998

The investment expenditure for the years 1996, 1997 and 1998 (127,718.48 millions FRW) were realised at a rate of 48.47%. In 1996, the realisations were valued at 33,303.15 millions FRW or 43.02% of the provisional estimates of 77,418.58 millions FRW. In 1997 they amounted to 46,054.24 millions FRW for the estimated 108,343.61 millions or a rate of realisation of 42.51%. In 1998 the amount of realisations was 48,361.11 or 62,21% of the provisional estimates of 77,743.52 millions. 

Sectoral  breakdown of expenditure from 1996 to 1998

The sectors of Human Resources and Social Development, Infrastructures and Administration and Finance registered high expenditure during the period, with 39,92%, 22,85% and 21,02% respectively, of the total expenditure. In comparison to what had been planned initially, it was the sectors Administration and Finance and Human Resources and Social Development that achieved the highest performance, at a rate of 68,10% in Administration and Finance, and 55,71% in Human Resources and Social Development.

Table 1: Sectoral breakdown of investment expenditure from 1996 to 1998 (in millions of RwF)

Sector	1996/1998 forecasts		Estimates of Realisations 1996/1998
	Amount	% Total	Amount	% Total	Rate of Realisation
Productive	50 243,56	19,07	20 691,46	16,20	41,18
Infrastructures	82 043,16	31,24	29 188,33	22,85	35,46
Human resources	91 522,80	34,73	50 987,94	39,92	55,71
Administration & Finance	39 426,30	14,96	26 850,75	21,02	68,10
Total	263 235,82	100,00	127 718,49	100,00	48,47

The weak performance of the Productive sector as well as the Infrastructure sector is due essentially to delays in the starting up of projects. These are caused firstly by difficulties in fulfilling implementation conditions of credit agreements or financing conventions, secondly by the complexity of donor procedures and especially modalities of tenders and fund disbursements. Some projects for which some funds were programmed have been closed before their end, and their funds have been allocated to other activities that were not necessarily realised : this is among others the case for the Energy Restructuring Project (PRSE), the Agricultural Services Project (PSA) etc…

 

Graph 1: Sectoral breakdown of investment expenditure 1996 to 1998

The low level of realisation (48,47%) is due several factors, including:

	Weak institutional capacity of the technical services responsible for the implementation and the follow-up of development projects which are often not in a state of execution;
	Slowness in the take-off of projects because of difficulties faced by technical ministries in fulfilling the conditions for the implementation of credit agreements and financing conventions;
	Complexity of intervention procedures by various donors especially the modalities of pledging, contracts and disbursement of funds
	Accumulation of debt arrears which led to the freezing of interventions by certain partners;
	Delay of the Budget vote by Parliament for the 1996 and 1997 budgets, and the weakness of the system of planning leading to the overestimation of expenditures.

 

Analysis of Investment Expenditure Requirements of Ministries for the 1999-2001 Period

In conformity with the principle of coherence between the Public Investment Programme and economic and financial policies defined by the macroeconomic framework, the allocation of resources to programmes and projects must respect the budgetary ceilings determined according to financial constraints and sectoral policies. This chapter makes an analysis of the total expenditure requirements for the years 2000 and 2001 as formulated by the line ministries before the Government reshuffle of 8 February 1999, and aims to show the distance between needs and available resources.

The investment needs expressed by the ministries amount to RwF 342,148.89 million, (or the equivalent of US$ 1,0793.33 million at an exchange rate of 317.0 RwF for 1 US$). They are spread over the three years as follows : RwF 71,700.01 million in 1999 i.e. 20.96% of the total amount ; RwF 149,985.26 million in 2000 i.e. 43.25% and RwF 122,463.62 million in 2001 i.e. 35.75%. The breakdown of requirements by ministry is contained in Table 5 of the main document of PIP.

 

Sectoral analysis of expenditure requirements for the period 1999-2001

As shown in table 2 below, the Infrastructures sector requires the largest part of the resources and comes first in ranking with RwF 130,794.73 millions i.e. 38.23% of the total requirements. The Human Resources and Social Development sector should occupy the second rank with RwF 98,272.06 million or 28.72%; the Productive sector comes in third place with RwF 77,965.41 million or 22.79% of the global requirements, before Administration and Finance sector which should benefit from an allocation of RwF 35,116.69 million i.e. 10.26%.

Table 2: Annual and sectoral breakdown of investment requirements for the period 1999/2001 (in million RwF)

Year	1999/2001		1999		2000		2001
Sector	Amount (MRWF)	%	Amount (MRWF)	%	Amount (MRWF)	%	Amount (MRWF)	%
Productive	77,965.41	22.79	19,484.73	27.18	29,371.80	19.85	29,108.89	23.77
Infrastructure	130,794.73	38.23	13,533.81	18.88	66,711.47	46.43	48,549.45	39.64
Human Res.  & Social Dev.	98,272.06	28.72	28,061.70	39.14	38,074.62	25.73	32,135.73	26.24
Administration & Finance	35,116.69	10.26	10,619.78	14.81	11,827.36	7.99	12,669.55	10.35
Total	342,148,98	100.00	71,700.01	100.00	147,985.26	100.00	122,463.62	100.00

 

Anaysis of the Financial Programming of the PIP 1999-2001 on the Basis of the ESAF Ceilings

The requirements of the ministries have been adjusted to respect the ESAF budgetary ceilings. Therefore, the programming of the financing being negotiated has been postponed to 2000 and most of the financing to be sought has been programmed from 2001 on.

After these adjustments, the PIP 1999/2001 amounts to RwF 234,400.0 million (or the equivalent of US$ 739.43 million at an exchange rate of 1 US$ for 317.0 RwF), against RwF 226,037.41 million for the PIP 1998-2000. This ceiling encompasses 498 projects grouped into 106 sector programmes (see Annexes 6 and 7 in the main PIP document). It registers a slight increase of 3.7% in relation to the previous PIP. The total represents 10.51% of GDP over the 1999-2001 period, whereas the total of the PIP 1998-2000 represented 10.13% of estimated GDP for 1998-2000.

Nature of the 1999-2001 PIP expenditures

The categorization of projects according to the nature of expenses in Table 3 below, allows us to note that 76.34% of the 1999-2001 PIP expenditures may be considered as being investments linked to the creation of gross fixed capital, while 13.49% constitute recurrent expenditures, and the rest of 10.13% constitute technical assistance and pre-investment expenditures. This categorization remains a summary and should be further developed for the future PIPs in order to determine with more precision what the real investment expenditures are, and their implications in terms of recurrent costs which must be borne by the recurrent budget.

Table 3: Breakdown of expenditure estimates of the PIP 1999-2001 by nature of expenditure (in million RwF)

Year	1999		2000		2001		Total
Type	Amount	%	Amount	%	Amount	%	Amount	%
TA	4,779.70	6.67	4,629.37	6.00	2,861.03	3.35	12,270.10	5.23
REC	10,535.27	14.69	10,730.83	13.90	10,348.24	12.10	31,614.37	13.49
INV	55,012.97	76.73	57,513.84	74.50	66,408.41	77.67	178,935.21	76.34
PRE	1,372.04	1.91	4,325.96	5.60	5,882.31	6.88	11,580.31	4.94
Total	71,700.00	100.00	77,200.00	100.00	85,500.00	100.00	234,400.00	100.00

(TA = Technical Assistance, REC = Recurrent, INV = Investment, PRE = Pre-investment)

Sector-based analysis of the 1999/2001 PIP expenditure estimates

In accordance with the priorities set out in the Policy Framework Paper for the Enhanced Structural Adjustment Facility, high priority must be given to the sectors of agriculture and infrastructure. Also, resources allocated to the human resources sector must be substantially increased. In this perspective, while allocating resources for the present PIP and especially for the years 2000 and 2001, a particular attention has been given to health and education in order to increase the resources of the Human Resources and Social Development sector.

As shown in Table 4 below, the sectoral breakdown of resource allocation under PIP 1999-2001 reflects the top priority given to the sector of Human Resources and Social Development with a share of RwF 82,452.75 million, representing 35.18% of the total resources planned for the period under consideration. The Productive sector comes second with RwF 64,256.68 million, or 27.41%, followed in third place by the sector of Infrastructure with RwF 58,873.51million, or 25.12%, and finally the sector of Finance and Administration, which is allocated RwF 28,817.06 million, or 12.29 % of the Programme’s resources.

One notes that the adjustment of expenditure requirements allowed to contain the PIP amount 1999-2001 within the ESAF budgetary ceiling and to obtain a sector priority in conformity with the sector allocation recommended in the Policy Framework Paper.

Table 4: Annual sectoral breakdown of PIP Expenditure 1999-2001 (in millions of RwF)

Year	1999/2001		1999		2000		2001
Sector	Amount	%	Amount	%	Amount	%	Amount	%
Production Sector	64,256.68	27.41	19,484.73	27.18	20,703.36	27.28	24,563.65	28.73
Infrastructure	58,873.51	25.12	13,533.77