National Public Investment System of Panama
Statutory Governing Body:
The National Public Investment System, SINIP, has the Ministry of Economy and Finance (MEF) as the statutory governing body through the Investment Programming Directorate (DPI), which carries out the processes necessary for adequate management of public investment and in line with the principles of economy, efficiency, quality, and effectiveness.
The Budget Directorate of the Nation (DIPRENA) of the MEF, according to the Budget Law, will assign the budget resources only to the projects that have an approved “Technical Recommendation Opinion” by the DPI, the SNIP code and are a priority in the Five-Year Investment Plan.
El SINIP is based upon the participation of all public and subnational governments of the country that execute projects.
The SINIP is governed by the DPI which carries out all processes necessary for the correct management of public investment, in line with the principles of economy, efficiency, quality and effectiveness. To achieve its purpose from a legal perspective, it leans on the following decrees, laws and resolutions: Executive Decree No. 148, Resolution Nº 779 of the MEF, Law 34 “on Tax Social Responsibility”, Law 25 of October 28th, 2014. The regulations are applicable to the entire public sector, local governments, including public companies, with the exception of the bodies or entities with constitutionally guaranteed autonomy or independence, and public entities and companies that operate under competition regime that could participate in the application of these regulations as required, in accordance with the principle of due interinstitutional coordination. See the complete legal framework.
The “General Methodological Guide for the Formulation and Assessment of Public Investment Projects” is the main tool that the DPI makes available to the officers in charge of the formulation and ex-ante assessment of investment projects. This methodological tool guides the project formulators in the identification of the problems, the analysis of alternatives, and the assessment of the most viable option based on the calculation of the Internal Return Rate (IRR), Net Present Value (NPV), Present Cost Value (PCV) and the Equivalent Annual Cost (EAC). It also considers the identification of risks associated with natural disasters, formulation and cost-benefit assessment of risk reduction measures. See the full list of methodologies (Available only in Spanish).
The Five-Year Investment Plan (PQI) outlines the investment initiatives programmed by the entities that are part of the Non-Financial Public Sector. As per article 16 of Law N° 34 of Tax Social Responsibility (LRSF) the PQI must be updated annually. The 2020-2024 PQI includes 125 investment projects and programs considered as a priority. Each one of them indicates the name of the project, the strategic pillar they contribute to, and the entity responsible for its execution. No investment amounts are mentioned.
SINIP's Investment Project Bank is the IT tool used for the registration, formulation and ex-ante evaluation of public investment projects. SINIP's Investment Project Bank is the IT tool used for the registration, formulation, and ex-ante evaluation of public investment projects. To access this tool, a user name and password are required. It is currently being updated to incorporate other modules for recording the physical-financial progress of projects and its interoperability with other systems, such as the Integration and Technical Solution System of the Operational Management Model (ITSMO). However, it does not have a georeferential map of investments.
The life cycle of the investment projects in the SINIP of Panama starts in each of the public entities. The type and dimensions of each investment depend on the type of studies and requirements to fulfill. The first step in the life cycle of the investment initiative is the preparation of the “Project Document at Identification Level”. This document supplies general information where the responsible ministry identifies it as a priority for the sector and is necessary to register the initiative in the Project Bank managed by the DPI.
To register the investment initiatives in the Project Bank, the public organizations must send the Project Document at Identification Level and a note prepared by the competent authority to the Ministry of Economy and Finance with a copy to the DPI, to request the registration of investment projects or programs. Once the projects and programs have been registered, the DPI will perform the first analysis to determine, among other things, the alignment of the proposed investment with the Strategic Government Plan. If the plan contributes to the plan’s goals, the DPI will issue an Eligibility Opinion within three days.
Later, the public bodies must send the studies necessary for the technical analysis of the project, the type of assessment, and the document required, depending on the investment amount. In accordance with Art. 23 of Law 25, projects of higher than 0.1% of the General Budget of the State (PGE) must perform feasibility studies. Projects of less than 0.1% of the PGE and over 5 million balboas must perform pre-feasibility studies and the rest must present studies and profile level. The characteristics of each of these studies are established in the “General Methodological Guide for the Formulation and Assessment of Public Investment Projects”. Additionally, in accordance with the nature of the projects, risk analyses and environmental impact studies may be required.
Once the organizations submit the corresponding documentation, the DPI has three working days to issue the Favorable Technical Opinion. Based on obtaining the technical opinion, the organizations can start the procedures before the DPI and DIPRENA to assign resources to the project, for which it prepares and delivers the preliminary investment project. Based on all investment initiatives that request finance in the Project Bank, the DPI issues a list of those projects to DIPRENA, so it can contrast them with the budget requests made by public bodies. In accordance with Executive Decree 148, and Law 132 only those projects that have a favorable technical opinion issued by the DPI can be included in the PGE.
During the execution stage, the executory entities monthly report on the physical progress to the DPI and report on the financial progress to DIPRENA through the System for Integration and Technological Solutions of the Operative Management Model (ITSMO). At the same time, the DPI pays visits to very important projects to verify their physical progress. Based on this information, the DPI monthly prepares a report on the physical financial progress of the public investment programs and projects. When the projects are finished, the DPI must select those projects that will be submitted to ex-post assessment. These assessments, according to the effective regulations, will be published on the website of the MEF.
The main instrument for planning public investment in Panama is the Five-Year Investment Plan, which is prepared by the DPI every 5 years. In accordance with Law 34 on Social Tax Responsibility, at the beginning of each presidential administration, a Strategic Government Plan is adopted with a five-year horizon, which must include an economic social strategy, financial programming, and an indicative public investment plan. To prepare the investment plan ministries and public non-financial state companies must submit the projects they contemplate executing during the plan’s duration to the DPI. These projections are shared with DIPRENA, so they correspond with the multiannual budget projections.
As a result, within the first 6 months of the new presidential administration, the Five-Year Investment Plan is published as part of the 2019-2024 Strategic Government Plan (PEG). The indicative investment plan is formed by 125 projects divided by the “Strategic Pillars” of the PEG. For each investment project or program its name, the strategic area it belongs to, and the organization responsible for its execution are mentioned. As it is an indicative plan, some of the priority projects have no assessment studies or budgets assigned for their execution. Annually the organizations present these projects to the DPI in accordance with the effective regulations for their technical assessment and inclusion into the General Budget of the State. One of the requirements from the DPI is that the investment projects and programs be included in the Five-Year Investment Plan or that they show their connection and contribution to achieving the PEG goals.
Annually, DIPRENA prepares the General Budget Project of the State, which includes the portfolio of investment projects with favorable opinion from the DPI and taking into account the indicative multiannual limits for public entities and subnational governments. During the execution of the public investment budget, the DPI monitors the results in the execution of the investment plan and prepares, each semester a physical-financial progress report based on information reported by the project executory entities and the financial progress information of the public investment monthly shared by DIPRENA with the DPI. These reports are used as material for programming the next budget cycle, taking into account the performance of the different public entities and subnational governments.
Latest update: December 28, 2022