National Public Investment System of El Salvador

Country
Investment Map Training Methodologies Projects Bank Legal Framework Processes Stakeholders Instruments Formulation Planning Cross-cutting Processes Budgeting Evaluation Cross-cutting Processes Ex-ante Evaluation Selection Execution Ex-post Evaluation Other Stakeholders Public Investment Policy Cycle Staturory Governing Body Organic Law for Finance Administration of the State (Decree 516 Law AFI) of El Salvador General Directorate for Public Investment and Credit, Ministry of Finance General Budget Directorate Centralized and Decentralized Institutions of the Government of the Republic and Autonomous State Enterprises Steering Financing Coordination Information Project Management Cycle Annual Public Investment Program (PAIP)

 

Stakeholders

Statutory Governing Body:

The Ministry of Finance, through the General Directorate of Public Investment and Credit, is responsible for the SNIP. Its main responsibilities are the preparation of the five-year public investment program and the Annual Public Investment Program (PAIP). It gives technical support to the public investment projects, manages the project bank, assesses the projects registered in the bank, and monitors the financial-physical progress of the projects in execution.

Related Entities:

The General Budget Directorate establishes the budget limits for the different National Public Administration (APN) entities, includes the Public Investment Program into the budget bill and submits it for consideration to the Presidency of the Republic and the Minister Council. It follows up on and assesses the budget execution annually.

Incorporated Entities: 

The centralized and decentralized institutions of the Government of the Republic contribute to preparing the five-year investment plan by formulating the projects to be included. In accordance with the budget limits established by the DGP, they select the projects to be included into the PAIP. During budget execution the institutions report the physical-financial progress of the projects they execute. The institutions also prepare their relevant budget execution reports.

 

Legal Framework

The SNIP in the Republic of El Salvador is ruled by the Organic Financial Administration Law which establishes the Ministry of Finance as the steering entity and determines that the General Directorate for Investment and Public Credit is in charge of preparing the public investment policy, proposing guidelines, methodologies and regulations to apply the AFI Law stipulations related to public investment. To support the application of the AFI Law, on August 30th, 1996 the AFI Law regulations were published. Other legal frameworks related to the SNIP are the Environmental Law, the Law of the El Salvador Fund for Pre-Investment Studies, the Public Administration Procurement and Contracting Law and the Law of the Court of Accounts of the Republic. See the complete legal framework.

 

 

Methodologies

Currently, the DGICP has the Technical Guide to Prepare Public Investment Studies (not publicly accessible), which was published in 1998. The “Methodology for Project Formulation and Assessment” is in the process of approval. This methodology will consider, among other things, the analysis of risks related to climate change. In parallel, the Ministry of Public Works has a unit specialized in the assessment of the risk and environmental impact of its investment projects.

 

 

Public Investment Plans

Taking the pluriannual budget programming as a reference, each year the DGICP prepares the Annual Public Investment Program (PAIP). Even though this is not publicly accessible, their monthly progress can be enquired about on the portal of the Ministry of Finance. The progress reports show the progress on the investment budget execution separated by source of financing, sector, executory entity and investment project. One can also request the complete list of projects in execution that outline the total investment amount (in US dollars), the programmed and executed amount for the month reported on and the accumulated percentage of progress in financial execution.

Another pluriannual public investment planning instrument is the 2019-2029 Medium and Long-Term Tax Framework, prepared based on the Tax Responsibility Law and which dedicates one section to the 2020-2024 Medium-Term Public Investment Program. This medium-term program projects public investment annually by the source of financing and estimates that in the next 5 years on average 1.339 billion US dollars will be invested. Specifically, some investment projects which are considered of great importance are worth highlighting, without mention their estimated investment amounts.

Recently, the 2019-2030 El Salvador Infrastructure Master Plan was published. It was prepared by the Ministry of Public Works in collaboration with the Interamerican Development Bank (IDB). This is a multisectoral public investment plan with a long-term horizon, which, based on the gap identification in infrastructure and territory analysis, establishes the investment projects which, in accordance with the results of the ex-ante assessment, selects those that contribute most to closing the identified gaps. One particularity of this plan is the definition and application of prioritization criteria, to prepare a list of projects by priority order according to the results of said prioritization criteria.

 

 

Investment Project Bank

The Public Investment Information System (PIIP) is the platform that records public investment projects from the profile phase until they have been finalized. The projects should be interrelated with the Integrated Financial Administration System, which transmits the information on the financial progress of the investment projects to the PIIP. Access to PIIP is possible only with a username and password. However, based on the information gathered monthly, the Monthly Progress Report of the Annual Investment Program, which is publicly accessible on the Ministry of Finance’s website.

 

 

Training

Training is mentioned as one of the SNIP’s important components in the AFI Law and its relevant regulations. However, there is no evidence of a training program.

 

 

Project Management Cycle

The life cycle of the public investment projects starts with the identification of the problem and the formulation of the project profile in the DGICP. To be considered, the project profiles must be formulated according to the Technical Guide for the Preparation of Public Pre-investment Studies and information required by the effective regulations. Once the profile contains the basic information (project name, goal, problem identification, description, investment amount, source of financing, execution calendar) it is registered in the SIIP, where the DGICP issues a technical opinion, declares the favorable endorsement and gives the project a registration number.

Depending on the investment amounts, the DGICP may request pre-feasibility, feasibility, or design studies, as per the nature and complexity of each project, before they are included in the Budget Bill. In some projects, environmental impact studies and disaster risk analysis need to be carried out. Projects that have met the DGICP requirements (have the endorsement and project registration number) can be selected by the public entities to be included in the PAIP and later start the investment phase (execution).

During the execution of the projects, the executory units must report on the physical-financial progress in the SIIP. The Financial Information Units of each institution report on progress in the budget execution on the SAFI platform (this system shares this information with the SIIP). Through these platforms, the DGICP monitors the physical-financial progress of the projects, and more important investments require field visits for the physical verification and to corroborate that the reported information reflects the real progress. When the execution phase is finished, the project enters the operation stages. Up to this moment, the SNIP has no ex-post assessment program or methodologies for investment projects.

 

 

Public Investment Policy Cycle

Public investment planning in El Salvador is formed by different instruments with the legal basis of the Organic Financial Administration Law and the Law on Tax Responsibility. These instruments are mainly the five-year public investment program and the Medium and Long-Term Tax Framework, which project the budget to be executed on a 5-year horizon and are updated once a year. The Five-Year Public Investment plan is prepared by the DGICP based on the set of projects registered in the SIIP, and is used as a based to inform the DGP on the determination of the pluriannual (indicative) and annual budget limits for public investment.

Once the institutions know their annual budget limit, they proceed to select the investment projects registered in the SIIP (previously prioritized and endorsed by the DGICP) they plan to execute during the year and communicate their decision to the DGICP. The 2020 Budget Policy indicates that the entities must select the investment projects in accordance with the Priorities of the Government Plan and the Institutional Strategic Plans. This policy also indicates that the prioritization of projects must consider, as applicable, transversal topics related to risk prevention and management, the environmental incidence of the project, including climate change mitigation and adaptation, incidence of the project in gender and territoriality equality, this means, that they are to be executed in departments and municipalities with high poverty indexes. Based on the selection made by the entities, the DGICP prepares the PAIP and this is sent to the DGP to be included in the Budget Bill. Then the Bill is sent to the President of the Republic and the Minister Council for discussion and approval, and then the bill is sent to the Legislative Assembly for approval.

Monitoring the PAIP execution is the task of the DGICP and, to that purpose, it has the SIIP where the project executory units inform on the physical-financial progress of the projects and the SAFI where the financial information units of each institution register the financial execution of their project portfolio. Based on these systems and with the information consolidated by the DGICP, the Ministry of Finance annually assesses the budget execution and monthly progress reports on the PAIP are submitted. By legal stipulation, these documents are publicly accessible and can be consulted on the website of the Ministry of Finance. Additionally, the Tax Transparency Portal shows the public investment evolution in El Salvador, separated by sector from 2009 to 2018.

 

Latest update: July 1, 2021