National Public Investment System of Chile
Statutory Governing Body:
The Ministry of Social Development and Family, through the Division of Social Assessment of Investments, depending on the Sub-Secretariat of Assessment of Investment, is in charge of the social assessment of public investment initiatives to be included in the national budget. To do this, and as part of its mandate, the steering entity also prepares the methodologies for the formulation and assessment of the investment projects as well as the administration of the information systems that monitor the different phases of the investment projects’ life cycle. The budget is formulated by the Ministry of Finance. In this matter, it has authority over the institutions and services ruled by Law Decree N° 1,263, and over State Companies. The Budget Directorate is the technical body in charge of assigning financial resources of the State. Likewise, it regulates and supervises the execution of public expenses, regardless of the attributions the General Comptroller of the Republic has in this area.
The entities forming the National Public Administration (NPA) have the following faculties: identifying, formulating and assessing investment projects of their area, keeping the inventory projects of the area updating, performing the financial physical control of the projects, performing ex-post assessments, and exchanging information with the Division for Social Assessment of Investments and the Budget Directorate.
The National Investment System (SNI) in Chile is ruled by the Organic Law on Financial Administration of the State, which establishes, among other things: “The investment projects, studies, and programs should have a favorable report from the national or regional planning body, based on an economic technical assessment analyzing their profitability. In case they are financed with external credits, they must meet the requirements from the relevant loan contracts, as per the instructions emanating from the relevant national credit counterpart”. To comply with this law, in 2011 the Ministry of Social Development is created by Law 20,530, which charges the ministry with the assessment of investment initiatives that request State funding. See the complete legal framework.
The Social Investment Assessment Division has prepared and published several methodological guides for the formulation and (ex-ante and ex-post) assessment of public investment projects. There is a General Methodology for the Project Presentation and Assessment and, additionally, over 40 specific sector methodologies per sector are available to the sector and are publicly accessible for the formulation and ex-ante/ex-post assessment of investment projects. There are also specific methodologies available, such as the document “Gender Orientation in Investment Projects”. The main assessment criteria are the profitability indicators Net Present Value (NPV) and Internal Return Rate (IRR) and the cost-efficiency indicators Present Cost Value (PCV) and Equivalent Annual Cost (EAC). See the full list of methodologies (Available only in Spanish).
Chile has no national investment plan or strategy. Public investments are planned by the ministries in accordance with the identified investment needs. Each of the ministries prepares plans and strategies with different timing. Examples of this kind of plans are Plan Chile 30/30 prepared by the Ministry of Public Works (MPW) and the 2050 Energy Plan of the Ministry of Energy.
The Ministry of Public Works generates an Annual Investment Program every year, where the list of projects includes all the works to be executed during the year and includes the investment amounts for the following three years, in this case from 2022 to 2025. The investment program includes the BIP code of the project, region, service, name of the initiative, MIDESO stage, amount, carryover amounts for the following three years and balances.
The Integrated Project Bank (BIP) is the information system managed by the Ministry of Social Development through the Social Investment Assessment Division. In this system, all investment initiatives (basic, studies, projects, and programs) that apply to State funding must be registered. Once the projects have been registered, they are submitted to a socioeconomic assessment by the Social Investment Assessment Division, which then issues an opinion on the Technical-Economic Analysis Result (RATE). The platform is publicly accessible. Once they are in the BIP, the users can consult the Investment Initiative File (IDI), which contains general data on the project formulation, a paragraph with the ex-ante assessment results, the investment program, a summary of the expected results, and a section with the advances of the budget execution. In some cases, the file contains a link to access the project’s georeferentiation.
The Social Investment Assessment Division of the Ministry of Social Development, through the Training Unit, permanently gives trainings to the different public sector operators. The training program is taught throughout the country in coordination with the regional representations of the Ministry for Social Development, mainly by giving courses on preparation and social assessment of projects. The current offer consists of the Course on Preparation and Social Assessment of Projects (PYEP), Advanced PYEP Course, Training on the Integrated Project Bank, and Field Training. It also offers a Diploma course in Preparation and Social Assessment of Projects, which in 2019 was given by the Universidad de Chile. The website of the SNI (available only in Spanish) shows more details on the contents of the courses, participation requirements, and the annual calendar.
The life cycle of the investment initiatives (IDI) starts as an idea of the ministries and other state entities. These entities formulate the IDI in accordance with the indications in the “Regulations, Instructions and Procedures for the Public Investment Process”. This document classifies the IDI in three categories: basic investment studies, investment projects and investment programs. In function of their classification, the IDI must show different kinds of analysis and support documents. Additionally, the IDI need to meet the requirements established in the specific methodologies prepared by the Social Assessment Unit. In line with their nature, the IDI may need to prepare an Environmental Impact Assessment (EIA) in accordance with the environmental regulations of the Environmental Impact Service (SEA). The SEA manages the Environmental Impact Assessment System. On this platform, projects can be consulted that have been submitted to an EIA, which are in the process of obtaining it and those that have been rejected. The system also shows a map of georeferenced projects.
Once the Investment Initiatives have been formulated, they must be registered with their relevant pre-investment study that diagnoses the problem, analyzes alternatives of solutions, assesses and select those that are most convenient for society, considering technical, economical, legal and environmental feasibility aspects in the Integral Project Bank (BIP) so the Social Assessment Unit analyzes it and issues the Economic Technical Analysis Result (RATE). The RATE results can be as follows: RS (Recommended Satisfactorily); FI (Lacking Information); OT (Objected Technically); or IN (Non-compliance with Regulations). Only the projects recommended satisfactorily can continue to the stage to look for finance.
In the Ex ante evaluation state, Chile makes use of the PSC (Social Price of Carbon) in public investment projects in view of the objectives that the Chilean State has for the mitigation of Climate Change.
During the execution stage, the executory entities are in charge of registering and reporting on the physical-financial progress of the projects in their own systems and through the State's Financial Management System (SIGFE) managed by the General Budget Directorate. The Ministries also publish progress reports on their websites. For example, the Ministry of Public works prepares monthly progress reports on investment budget execution broken down by responsible entity and region. Based on the information registered by the executory entities and in coordination with other stakeholders who participate in the National Investment System (SIN), the Ministry of Social Development makes short, medium and long-term ex-post assessments. These assessments are public and can be consulted on the website of SNI (available only in Spanish).
IIn Chile public investment planning is done in the ministries and regions in accordance with the identified investment needs. Therefore, no national investment plan or strategy is prepared centrally. Instead, each one of the ministries prepares plans and strategies with different timing and content characteristics. An example of this kind of plans is Plan Chile 30/30 prepared by the Ministry of Public Works (MOP) and the Plan Energía 2050 of the Ministry of Energy. The regions prepare Regional Preliminary Investment Projects (ARI), which, once approved and in operation, are called Regional Public Investment Projects (PROPIR). As of 2020 participation of regional governments in public investment, planning is expected to be strengthened through the application of the Law on Regional Government and Administration. This law dictates that, as of 2020, regional governments will be elected and will receive the faculty of territorial planning by the preparation and execution of a Regional Territorial Organization Plan.
After formulation and ex-ante assessment by the ministries and regional governments, the investment projects must be inscribed in the Integral Project Bank (BIP). The projects registered in the BIP are analyzed by the Social Assessment and, as a result of this process, the Result of the Economic Technical Analysis (RATE) is issued. Once the ministries have a project portfolio approved with a favorable RATE, the state entities can include them into the preliminary budget project which is sent to the Budget Directorate (DIPRES) for analysis. Then DIPRES establishes the budget limit for each of the entities and, if this limit is lower than the amount requested, the entities must make the relevant modifications and, according to their own criteria, select the investment projects to be included in the Budget Bill, which is sent by the Ministry of Finance to Congress for discussion and approval.
During the execution of the public investment budget, the executory entities are in charge of recording and reporting on the financial progress of the projects through the Integrated Financial Management System of the State (SIFGE) managed by DIPRES. Additionally, the executory entities have their own monitoring mechanisms for the projects’ physical progress. Based on this information, DIPRES and the General Comptroller assess the budget execution. These assessments are very important, and their results are considered in the formulation of the public investment budget for the next budget cycle. In parallel, in August of each year, the Ministry of Social Development and the Ministry of Finance gives the Special Mixed Budget Commission of the regional governments, of the regional councils, of the mayors and of the municipal councils access to the “Report in Investment Initiatives Assessed in the Investment System”, which indicates the investment percentage decreed and executed the year before.
Latest update: November 12, 2022