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Dedicated Road Funds: A Preliminary View on a World Bank Initiative

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  • Mr. Barry H Potter

Abstract

In the past, Road Funds have been criticized as inconsistent with effective expenditure control, as distorting the allocation of public sector resources, and as incompatible with efficient management of government resources. This paper considers whether there is a case for a more benevolent view of the new “second generation” dedicated Road Funds, which have emerged in recent years. The paper concludes that, where a Road Fund pursues a genuine purchasing agency approach, then in principle it can be an efficient means of delivering road maintenance and, perhaps road capital expenditures. But a formidable list of institutional and financial requirements would have to be satisfied for a dedicated Road Fund to be appropriate. These conditions are more likely to be satisfied in developed economies, with efficient budgetary systems already in place. In many developing countries, the better solution may be to reform overall budget institutions, procedures and practices. But if the institutional and financial requirements for an efficient fund can be met, a Road Fund may be appropriate. The question is just how often the right conditions will arise.

Suggested Citation

  • Mr. Barry H Potter, 1997. "Dedicated Road Funds: A Preliminary View on a World Bank Initiative," IMF Policy Discussion Papers 1997/007, International Monetary Fund.
    • Handle: RePEc:imf:imfpdp:1997/007
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    Citations

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    Cited by:

    1. Ana Maria Iregui B & LIGIA MELO B & JORGE RAMOS F, 2006. "¿Hacia dónde se dirigen los recursos de Inverersión del Presupuesto General de la Nación?," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, December.
    2. Ian Heggie, 1999. "Commercially managed road funds: managing roads like a business, not like a bureaucracy," Transportation, Springer, vol. 26(1), pages 87-111, February.
    3. World Bank, 2003. "Argentina : Reforming Policies and Institutions for Efficiency and Equity of Public Expenditures," World Bank Publications - Reports 14637, The World Bank Group.
    4. Gwilliam, Ken & Shalizi, Zmarak, 1999. "Road Funds, User Charges and Taxes," The World Bank Research Observer, World Bank, vol. 14(2), pages 159-185, August.
    5. Matthew Dornan, 2016. "The Political Economy of Road Management Reform: Papua New Guinea's National Road Fund," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(3), pages 443-457, September.
    6. Mr. Ian Lienert, 2003. "A Comparison Between Two Public Expenditure Management Systems in Africa," IMF Working Papers 2003/002, International Monetary Fund.
    7. Mr. Dimitar Radev & Mr. Richard I Allen, 2006. "Managing and Controlling Extrabudgetary Funds," IMF Working Papers 2006/286, International Monetary Fund.

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