Unformatted text preview: 0% in urban roads, and 5% in rural roads), 30% in Electricity (25% in generation of electricity and 5% in rural electrification), and 20% in Water and Sanitation (15% in coverage expansion and 5% in treatment plants). We simulated different composition and the estimations were significantly robust. 145 Peru ‐ Second Rural Roads Project (P044601); data from Mexico Subsecretario de Transporte, MTC, and Guatemala ‐ Second Rural and Main Roads Project (P055085). 110 Sorting and Planning Contradictions: Infrastructure investments often contain complementarities (e.g., modes of transport assets along a supply chain) or substitution effects (e.g., rail versus road for transport or gas versus electricity supply for heating). They might also contain contradictory character traits intended to meet different objectives. For example, a road investment component might meet employment goals, but could contribute to automobilization and higher carbon emissions in the long‐
term. A renewable energy component might meet environmental objectives but may not demonstrate significant employment benefits given the high import components. Governments will need to call upon the capacity for ex ante project evaluation; cross‐sectoral convening ability; and the authority to 146
prioritize, scale and permit projects according to impact analysis. This will enable the development of investment packages that converge short‐term goals of stimulus with the long‐term goals of sustainable growth. Delayed Implementation and Impact: The lifecycle of project preparation for medium or large‐scale projects is generally 1 to 3 years, although projects that are simply awaiting financing may be “shovel ready.” However, it is possible that projects that have been sitting in pipeline will require new demand studies, updated cost projections or even recalibrated willingness and ability to pay analyses given the shifting resources of consumers and the changing prices of inputs in the crisis environment. Moreover, several countries in LAC habitually disburse less than their annually expected disbursements—typically around 75 percent of plan. Given the importance of timeliness in generating stimulus effect, delays and slow disbursements would have a significant and perhaps irreversible effect on the impact of the project. Affordability of the Stimuli Packages: The potential scope, size and timing of LAC’s proposed stimuli packages will be determined by fiscal space—the room in a government’s budget that allows it to provide resources for additional projects without jeopardizing the sustainability of its financial position or the stability of the economy. In other words, fiscal space must exist or be created if extra resources 147
are to be made available for worthwhile government spending . LAC’s proposed stimuli packages present enormous demand on the limited fiscal space in the region and the room for aggressive 148
responses is heterogeneous across the region. Corruption Risks: Emergency environments often create...
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