February 2009 prem 4 Africa Region
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- Sectoral and Economic Allocation
Budget processThere are two main channels for public expenditures: on-budget and off-budget. On-budget expenditures are included in the central government budget and monitored as the budget is executed. Off-budget are the four SOEs that deliver infrastructure in Cape Verde: ELECTRA, TACV, ASA, and ENAPOR.88 They generate and spend a large share of the financial resources within their respective sectors. Figure 5 .18 is a road map to the allocation of public resources among various infrastructure sectors, institutional process, and various administrative entities. The main special fund relevant to infrastructure is the Road Maintenance Fund, which essentially is a mechanism to pass through road user levies to road maintenance. The fund became operational in 2006 and is implemented by a mechanism that transfers the proceeds from the point of collection directly to the fund. It has a minimum revenue guaranteed by the Treasury (CVE 300 million).89,90 The accounts of the new fund are public, and harmonization and accountability with public accounting are ensured. The mandate of the Road Agency is to maintain the national road network. The government decided that, pursuant to Cape Verde legislation, public works should always be procured, coordinated, and supervised by the MITM through DGI. Thus, the Road Agency has no formal competence to procure, coordinate, or supervise road investments. Despite this fact, in 2007 the road agency was managing the construction of new roads.91 Finally, infrastructure expenditures made by local governments, mainly in the water sector, have been negligible, as funding has been largely provided from the central government budget. Figure 5.18: Institutional Responsibilities for Infrastructure Delivery92
Source: Fiscal Cost Baseline Sectoral and Economic AllocationImportant resources have been allocated to infrastructure when compared to the social sectors. During 2001–06, allocation to infrastructure corresponded to on average 16 percent of the budget During this same period, allocation to education and health combined averaged 24 percent. Allocation to infrastructure in Cape Verde, as percent of total budget, also is high when compared to Kenya, Rwanda, Tanzania, or Uganda. Table 5.44: Budget Allocation of Public Expenditure Between Infrastructure and Social Spending - A comparison 
Source: Africa Infrastructure Country Diagnostic (2007). Note: Social sectors include education and health. During the analysis period, only one-third of public spending was channeled to asset creation. The remaining was spent on operation and maintenance (O&M) (salaries, inputs, and routine maintenance costs) (Table 5 .45). Asset creation has been financed in almost equal shares by SOEs and the central government budget, because the financial positions of most SOEs do not allow them to carry out major infrastructure investments. On the other hand, almost all O&M expenditure is carried out by the SOEs with resources from tariffs and user fees. Finally, before the effective creation of the road agency in 2006, road maintenance was financed with on-budget expenditure. Table 5.45: On- and off-budget Infrastructure Expenditures 
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