Greater transparency is required when managing public projects

This month the Word Bank presented its EU 10 Regular Economic Report on the new member states of EU.  A special focus of the report is the public investments in infrastructure as a factor for economic growth and convergence of the 10 new countries to the average levels of incomes in the EU.

The recommendations of the World Bank with respect to the implementation and management of public projects are related to the presence of adequate procedures for planning and management of public funds. This is a particularly pressing and important from the point of view of the effective use of European funds, directed towards the development of the transport and energy infrastructure of the country. The public investments into infrastructural projects must not be managed with the aim to absorb more European funds and respectively – to finance mainly projects, which fell within the framework of the European rules, but the funds should be directed towards projects, which will bring the greatest economic benefit to the country.

The main recommendations of the World Bank with respect to managing public funds are six:

1. Public investment strategies need to be closely linked to budgets. Startegies need to be periodically reveiwed and should have clear priorities, which should be supported with analysis, calculations and economic justification about the proposed projects.
2. Capital projects need multi-year funding commitments by the government that cover the duration of the project or the project phase.
3. Competing public projects must be evaluated through cost-benefit analysis, in order to select projects with the highest added value for society. 
4. The execution of the projects must be accompanied by ex-post monitoring and evaluation. Evaluations could be undertaken by any number of institutions, including the Ministry of Finance.
5. In order to insure transparency it is necessary to have independent audit and to have public accountability of the projects.
6. Project planning and management skills need to be enhanced and retained within the civil service and public administration.

The Bulgarian reality

When we take into account these recommendations, we could assess the situation in Bulgaria with respect to management and implementation of public projects.  During the recent years the country executed significant reforms in the area of public finance by introducing the program budgeting in the ministries, fiscal decentralization, transparent rules and accounting of the budget procedure, reduction of out of the budget accounts, the existence of fiscal rules and strict accounting to the EU. At the same time, there is a lot that can be done in the area of utilization of public funds, abolishing of corrupt practices and increasing the taxpayer confidence and conviction that their money is used rationally and according to intend.

Here are several public facts:

• There is no cost-benefit analysis and comparative analysis of the alternatives for the most expensive project in Bulgarian modern history – NPS  "Belene".
• The information connected to the concession of the "Trace" highway is not publicly available (as it represents "commercial secret") although there was public pressure brought in by suspicion of corruption and the scandalous practice related to selecting the concessionaire without a tender or competition as is required by the Bill on concessions.
• At the end of last year, within 18 working days, the Government spent about 1 billion levs from the budget surplus with priority on infrastructural projects. These funds have not been budgeted in the Bill of the state budget for 2007 and passed quickly through the Parliament, with contradictory comments and lack of public debate and consensus about their spending.
• During 2007, awarding of the concession to the "Plovdiv" airport failed although awarding a concession to the airport was included in the priorities of the long term strategy for infrastructural development of the Republic of Bulgaria until 2015.
• Although the KPMG report about the audit of the fund "Republic Road Infrastructure' was made secret it became clear that in connection to the PHARE and ISPA funds serious violations and conflicts of interests were found.

Let everyone alone decide by himself whether or not the management of public infrastructural projects in Bulgaria adheres to the standards proposed by the World Bank.

With connection to that, Mr. Marin Dimitrov from the UDF made a proposal in the Parliament for changes in the Bill for Access to Public Information, where he is asking to disallow the use of commercial secrets as a basis to make secret public information. If it is passed, that will be a significant step forward along the road of better management of public funds in the country. Since, the lack of information and transparency lead to impossibility of public control about the effective and expedient public spending. While all of us, the taxpayers, have the right to know how the government is spending our money!