IMF finds serious shortcomings in Irish infrastructural planning

The International Monetary Fund (IMF) has highlighted serious shortcomings in the planning of major infrastructural projects in Ireland and the lack of a national strategy to deal with the current bottlenecks.

The IMF’s Public Investment Management Assessment suggested there was a proliferation of sector strategies, which generated “weak results and limited information on cost estimates”.

It concluded, however, that the Republic managed its public infrastructure relatively well by international standards.

The report, normally carried out on developing countries, was requested by the Government in a bid to improve the delivery of public infrastructure and follows a visit by an IMF inspection team earlier this year.

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Capital spending in Ireland fell off a cliff after the financial crisis, which has resulted in major bottlenecks in housing, health, education and water.

In its report, the IMF said the inadequate supply of infrastructure is now perceived as the most important barrier for doing business in Ireland.

It noted that a fast-growing population was placing even greater demands on existing infrastructure while six years of low spending have resulted in backlog of maintenance and rehabilitation needs.

Fiscal consolidation

The report said the need for fiscal consolidation in the aftermath of the crash resulted in a sharp reversal in investment spending, sending levels back down to the level of the 1990s as a percentage of gross domestic product (GDP).

However, it acknowledged the situation was slowly being remedied within the confines of the EU’s fiscal rules.

Since the Government’s capital plan was first announced back in 2015, some €6 billion has been added to the original €20.9 billion capital budget.

About €2 billion of this additional spend has already been earmarked for housing projects while the remaining €4 billion will go to address other infrastructural deficits.

While the report said implementation of multi-year budgeting had improved the allocation of resources for projects the planning process is still inadequately linked to decisions on funding.

“Moreover, there is room to improve the methodological rigour, sequencing, and effectiveness of the project appraisal and selection processes,” it said.

Funding for ongoing projects is adequate, it said, even under the ongoing fiscal consolidation process, and generally good project management practices are in place.

“However, more attention needs to be given to the management of assets, including prioritising spending on the maintenance of infrastructure assets,” it said.