According to art. 40 of the Public Finance and Budgetary-Fiscal Responsibility Law no. 181/2014, the expenditures for capital investments financed from the budget are planned, executed and reported as an integral part of the respective budget.
The public authorities ensure the initiation, planning, examination, implementation of capital investment projects in their areas of competence, as well as monitoring and reporting on the degree of implementation and performance of these projects.
- The allocation of resources for capital investments from the state budget is carried out in accordance with the following principles:
- preponderance allocation of resources for the completion of ongoing projects;
- the new capital investment projects must result from the priorities set by the Government/local public administration authorities, as outlined in the strategic planning documents.
The Government Decision No. 684/2022 on the approval of the Regulation on public capital investment projects (hereinafter - Regulation) establishes the national procedures for managing the public capital investment projects eligible for funding from the state budget.
The Regulation establishes a mechanism for the identification, evaluation, planning, approval, implementation, monitoring and management of public capital investment projects funded from the state budget.
The provisions of this Regulation are applied to all public capital investment projects funded from state budget resources, including those funded from external sources, development funds, and to the contribution of the state budget to the implementation of projects from local budgets.
- Each public capital investment project will go through the following consecutive stages:
- identification and preliminary assessment of the project;
- preparation of documentation, development and presentation of project proposals;
- examination of proposals and determination of project eligibility;
- selection of projects and inclusion in the draft MTBF/state budget law;
- implementation and monitoring of the project;
- final evaluation and audit (post-implementation).
In order to fulfill the commitments and outlined objectives in the November 2023 Memorandum on Economic and Financial Policies with the International Monetary Fund (IMF) and the September 2023 IMF Technical Assistance Report "Climate Module of the Public Investment Management Assessment" (C-PIMA), the Government approved amendments to the Government Decision No. 84/2022 on July 24th, 2024.
Thus, according to section 20, subsection 5) of the Regulation on public capital investment projects, all of the new project proposals must be submitted to the Ministry of Environment for examination and issuance of an opinion regarding the climate implications and vulnerabilities of the project. Simultaneously, the methodology for evaluating the eligibility of capital investment projects was supplemented with an analysis of the project's impact on climate change.
- The Ministry of Finance’s Working Group for Public Capital Investments
The Ministry of Finance’s Working Group was established by the Minister of Finance’s Order No. 87/2023 on the establishment of the Ministry of Finance’s Working Group for public capital investments, with subsequent changes.
Through the Working Group, the Ministry of Finance manages the process of determining the eligibility of new public capital investment projects, based on proposals received from budgetary authorities.
The component of the Working Group is approved by Order of the Minister of Finance.
The working group ensures the examination and confirmation of the eligibility of new capital investment projects to be included in the draft MTBF/state budget law, based on the requirements outlined in Annex No. 2 of the aforementioned Regulation, except for projects funded by development funds.
The working group examines only new project proposals that have been submitted by completing Annex no. 1 to the Regulation and placing it in the Information System "Register of Public Capital Investment Projects" (SI RPIC).
The selection of the new projects to be included in the draft MTBF/state budget law is carried out by the body responsible for the strategic planning (CIPS - Interministerial Committee for Strategic Planning), in accordance with the general budget planning procedures and provisions of Law no. 181/2014.
The peculiarities of selecting the new public capital investment projects funded from development funds:
- The proposals of new projects are submitted to the institution responsible for managing the respective development fund;
- The institution responsible for managing the development fund places in the SI RPIC Annex no. 1 of the present Regulation "Capital public investment project identification and evaluation form", completed by the budgetary authority, which initiates the project;
- The management body of the development fund is responsible for examining the proposals, establishing the eligibility, selecting and monitoring the projects newly proposed for financing, according to the procedures approved by the specific normative acts.
- The management body of the development fund examines only the proposals of the new project that have been placed in the SI RPIC.
The Minister of Finance’s Order No. 104/2023 on the approval of the Instruction for evaluating public capital investment projects aims to implement the provisions of the Regulation on public capital investment projects, approved by Government Decision No. 684/2022, which applies to all public capital investment projects funded from state budget resources, including external sources, development funds, and the contribution of the state budget to the implementation of projects from local budgets.
The instruction outlines the main stages and operational details for submitting and evaluating the new public capital investment projects, proposed for funding from the state budget.
Key provisions of the Instruction:
1. Description of the submission process of the new public capital investment projects proposals by the central public authorities;
2. Structure and content of project proposals according to Annex No. 1 to the Regulation on public capital investment projects, with the detailed description of some examples, based on 8 criteria:
- project summary;
-technical analysis;
- economic and financial analysis;
- legal assessment;
- institutional and management assessment;
- social impact assessment;
- environmental impact assessment;
- risk analysis.
3. The structure and functions of the Ministry of Finance’s Working Group responsible for determining the eligibility of new public capital investment projects;
4. The description of the evaluation process of the new projects by the Ministry of Finance’s Working Group members, the methodology for calculating the score for 8 criteria, 6 of which are quantitative and 2 are qualitative;
5. The description of the Information System "Register of Capital Investment Projects" (SI RPIC) and the main working stages in SI RPIC.
It is important to note that the reform of public capital investment management was initiated with the support of the World Bank and the International Monetary Fund experts (PIMA Report "Public Investment Management Assessment in the Republic of Moldova", from December 2019).
Currently, this reform is supported by the experts from the EU Technical Assistance Project "Support for the Government of the Republic of Moldova in identifying and developing projects related to the implementation of the RM-EU Association Agreement". The normative acts issued for this purpose (mentioned above) were developed with the direct support of the experts from the EU Technical Assistance Project and cooperation with them is expected to be further developed.
The Ministry of Finance appreciates the support of the World Bank, the International Monetary Fund, and the European Commission and is counting on continuing collaboration in this area.