Regional : Cluster TA on Strengthening the Conduct of Economic Appraisal of Project and Program Investments in Developing Member Countries

Project Name

Cluster TA on Strengthening the Conduct of Economic Appraisal of Project and Program Investments in Developing Member Countries

Project Number

50279-002

Country / Economy

• Regional

Project Status

Proposed

Project Type / Modality of Assistance

• Technical Assistance

Source of Funding / Amount

TA: Strengthening Conduct of Economic Appraisal of Project and Program Investments in DMCs

Source	Amount
Technical Assistance Special Fund	US$ 3.00 million

Strategic Agendas

• Environmentally sustainable growth
• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Governance and capacity development
• Knowledge solutions

Sector / Subsector

• Public sector management / Economic affairs management

Gender

Some gender elements

Description

The proposed TA is designed to strengthen the capacity of DMC officials/technical staff to carry out economic analysis to support their investment design and selection. The Cluster KSTA will include two subprojects and the main outputs include: (1) conduct of economic analysis training workshops for investment projects; (ii) conduct of economic analysis training workshop for Policy Reforms and (iii) support preparation of methodological notes or guidebooks on selected economic analysis methodologies The outputs of the TA aim to promote allocative efficiency, equity considerations and project sustainability of programs and projects being implemented by DMCs. It will also complement the Guidelines on Economic Analysis of Investment Projects 2017.

Project Rationale and Linkage to Country/Regional Strategy

Asia continues to face large infrastructure investment gaps. Although alternative financing schemes have been emerging to help ease the fiscal burden, reforms in other areas such as in governance, legal and regulatory framework to enhance investment climates would have to be undertaken. In some cases, the lack of well prepared financially and economically viable projects have hindered the DMCs to implement these programs and projects to support their quest for growth.

DMCs' capacities for the conduct of adequate due diligence, particularly for economic and financial due diligence, greatly vary. Only selected DMCs have established processes and capacities for conduct of economic due diligence in line with ADB s requirements as outlined in ADB Charter and policies. Even in case of majority of these DMCs, methodologies and viability criteria need to be revisited and updated. This weak capacity often leads to allocation of unviable projects especially for private sector financing and PPPs and have caused major delay in their implementation. Weak capacity in project economic analysis also causes misallocation of scarce fiscal resources to project with suboptimal development impacts. This also affects the selection of infrastructure projects to be financed by ADB and other development partners. On the other hand, weak capacity in assessing the impact of structural reforms required in creating enabling environment for increased public and private sector investment in infrastructure and even in other sectors hampers policy dialogue and the preparation of progressive policy reforms. Weak preparation can result in poor design and slow the pace of reforms

Given these, there is pressing need for the development partners to assist the DMCs in building their capacities and processes for conduct of adequate levels of due diligence in key areas including economic due diligence. In case of DMCs with limited capacity and with no-defined processes for conduct of economic due diligence, the focus will need to be in developing their own processes and guidelines and train the DMC officials in conduct of economic due diligence. In case of DMCs with existing capacity and processes for economic due diligence, the focus needs to be on assistance for reviewing and updating the current methodologies and processes, and familiarizing the staff in applying the updated methodologies and processes.

Impact

Achievement of more efficient resource allocation by DMC governments

Outcome

Use of economic analysis or assessment in project or program selection and design increased

Outputs

Capacity of DMC officials on conduct of economic analysis or assessment improved

Guidance materials for improved economic analysis published and disseminated.

Capacity of DMC Officials on conduct of Economic Analysis of Policy Reforms improved.

Geographical Location

Regional

Summary of Environmental and Social Aspects

Environmental Aspects

Involuntary Resettlement

Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design

During Project Implementation

Contact

Responsible ADB Officer

Cham, Maria Rowena M.

Responsible ADB Department

Economic Research and Regional Cooperation Department

Responsible ADB Division

Economic Analysis and Operational Support Division (EREA)

Executing Agencies

Asian Development Bank

Timetable

Concept Clearance

16 Nov 2018

Fact Finding

-

MRM

-

Approval

-

Last Review Mission

-

Last PDS Update

13 Nov 2018

Funding