Infrastructure Governance in Argentina CO-ORDINATING INFRASTRUCRTURE 1
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Public Governance Directorate Senior Budget Officials Infrastructure Governance in Argentina CO-ORDINATING INFRASTRUCRTURE 1 Infrastructure Governance Review of Argentina This document is not published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. INFRASTRUCTUREPUBE GOVERNANCE REVIEW OF ARGENTINA FOREWORD 3 Foreword This review examines the infrastructure governance framework in Argentina against OECD best practices. It provides the Argentine authorities with assessments and recommendations to improve resource allocation and increase spending efficiency in infrastructure investment. In Argentina, as in most countries, the real obstacle to effective delivery of crucial infrastructure is not the availability of finance, but rather problems of governance. This review identifies the main bottlenecks in developing infrastructure projects and proposes tailored policy recommendations. Argentina has recently improved its institutional framework and undertaken reforms to increase transparency and oversight of infrastructure investment, strengthen the role of the Chief of Cabinet of Ministers in defining infrastructure investment objectives, and create closer links between the budget formulation process and the National Public Investment System. However, planning capacities at the national and subnational level are weak. There is a need to develop a long-term strategic vision based on assessed infrastructure needs, shifting from a sector-oriented approach to a place-based approach for infrastructure investment. Argentina could also strengthen its project prioritisation process, as well as the multiannual investment system to ensure value for money throughout the lifecycle of projects. Important efforts have also been made to improve infrastructure management within the annual budget cycle. These efforts should continue with a stronger emphasis on the multiannual dimension of infrastructure planning and delivery. To help Argentina improve its management of infrastructure policy from strategic planning all the way to project delivery, this report draws on several OECD frameworks and standards. First, Getting Infrastructure Right: a Framework for Better Governance, addresses the key success factors for an effective infrastructure policy system ranging from planning and strategy to delivery mode choice and managing public-private partnerships. Second, the OECD Council Recommendation on Effective Public Investment Across levels of Government provides guidance to governments in assessing the strengths and weaknesses of their public investment capacity across levels of government and setting priorities for improvement. Third, the 2012 Recommendation of the OECD Council on the Principles for Public Governance of Public-Private Partnerships provides concrete guidance to policy makers on how to make sure that public-private partnerships represent value for money for the public sector. The review was conducted in parallel with an OECD Budget Review. The two reviews are complementary, as capital budgeting on infrastructure is an integral component of the Argentine Government’s annual budget. Likewise, improving resource allocation and increasing spending efficiency is crucial for ensuring that the country has sufficient resources to invest in infrastructure. INFRASTRUCTURE GOVERNANCE REVIEW OF ARGENTINA ACKNOWLEDGEMENTS 5 Acknowledgements This Infrastructure Governance Review of Argentina was prepared by the Directorate for Public Governance (GOV), under the leadership of Marcos Bonturi. Edwin Lau, Head of Division for Budgeting and Public Expenditures (GOV), and Dorothee Allain-Dupré, Head of Unit for Decentralisation, Public Investment and Subnational Finance in the OECD Directorate for Entrepreneurship, SMEs, Regions and Cities (CFE) provided oversight. The report was drafted by Ana Maria Ruiz Rivadeneira (GOV), Richard Foster (international expert and external consultant to the OECD), Isidora Zapata (CFE), Wu Yingyin (CFE), and Lorena Cruz Serrano (GOV), with expert contributions through the review on budgetary governance from Andrew Blazey (GOV), and Juliane Jansen (GOV). The OECD would like to thank the Government of Argentina for its engagement and commitment during the review, in particular to the National Directorate of Public Investment and the National Budget Office for its support and input during the review process. Funding support from the European Union under its Regional Facility for Development in Transition is kindly acknowledged and the OECD would like to thank and recognise the Delegation of the European Union in Argentina for their useful feedback and guidance throughout the review process. In carrying out the Review, the OECD benefited from extensive consultations and interviews with officials from the National Directorate of Public Investment, the Public- Private Participation Sub-secretariat, the Ministry of Treasury, the Congressional Budget Office (OPC), the National Statistical Office (INDEC), line ministries, decentralised agencies, as well as members of civil society, academics and independent experts. The OECD review team would like to thank all those who contributed to the evidence and insights to this review, in particular the individuals who met with the review team during the mission to Buenos Aires and Mendoza in May 2019. The report includes feedback from a consultation process co-ordinated by the National Public Investment Directorate of Argentina. The OECD is grateful to all the parties who prepared feedback on the report. INFRASTRUCTURE GOVERNANCE REVIEW OF ARGENTINA TABLE OF CONTENTS 7 Table of Contents Foreword ................................................................................................................................................................ 1 Acknowledgements ................................................................................................................................................ 5 Acronyms ............................................................................................................................................................. 10 Executive summary ............................................................................................................................................. 11 1. Economic and institutional context for infrastructure investment ............................................................. 15 A challenging economic and fiscal context ................................................................................................ 15 Recent fiscal consolidation efforts ............................................................................................................. 19 Trends in infrastructure investment ............................................................................................................ 25 Institutional reforms to support infrastructure planning and investment .................................................... 30 Argentina’s multi-level governance framework ......................................................................................... 33 2. Strategic planning and co-ordinco-ordination .............................................................................................. 41 The need for a strategic vision .................................................................................................................... 41 What kind of planning framework could apply to Argentina ..................................................................... 46 Conclusions and recommendations ............................................................................................................ 50 3. Prioritising public investment in infrastructure ........................................................................................... 53 The Argentinian National Public Investment System ................................................................................. 53 Prioritising infrastructure within the budget process .................................................................................. 54 The need for well-developed projects and robust project pipelines ............................................................ 57 Conclusions and recommendations ............................................................................................................ 60 4. Ensuring affordability and value for money ................................................................................................. 63 4.1. Instruments and procedures to ensure value for money.............................................................................. 63 4.2. Meeting the infrastructure challenge by harnessing PPPs .......................................................................... 73 Conclusions and recommendations ............................................................................................................ 81 5. Co-ordinating infrastructure policy across levels of government ............................................................... 85 5.1. Territorial diversity in a highly urbanised country ..................................................................................... 85 5.2. Towards a place-based approach for infrastructure investments ................................................................ 89 Multi-level governance tools for more efficient infrastructure investments