The second example comes from Tanzania (Figure 3), where the share of public capital formation in GDP has been rising, while the share of public sector consumption has been kept in check.

<!-- Start of picture text --> Figure 3 : Tanzania-Debt Composition and Public Sector Expenditure Trends (2004-2011)<br>Tanzania<br>35 25<br>30<br>20<br>25<br>15<br>20<br>15<br>10<br>10<br>5<br>5<br>0 0<br>2004 2005 2006 2007 2008 2009 2010 2011<br>Concessional debt (% of GDP) Nonconcessional debt (% of GDP)<br>Domestic debt (% of GDP) Public capital formation (% of GDP)<br>Public consumption (% of GDP) Public sector interest exp (% of GDP)<br>Public sector revenue & grants (% of GDP)<br>Source : World Bank.<br><!-- End of picture text -->

**The other dimension that is captured through the PRISM tool is the private sector response to public investments.** This response is contingent on the discipline in managing public finances, and specifically the government’s commitment to harmonizing capital and recurrent expenditures. These private sector benefits range from the direct benefits that raise the productivity of human and physical capital (for example, roads that provide access to remote areas making private investment possible) to lower infrastructure costs that increase economies of scale, productivity, and growth. The PRISM tool helps track recent trends in the public and private sector’s gross fixed capital formation,<sup>32</sup> and how these decisions are being financed.

> 32 Statistically Gross Fixed Capital Formation (GFCF) measures the value of acquisitions of new or existing fixed assets by the business sector, governments and households (excluding their unincorporated enterprises) _less_ disposals of fixed assets.  GFCF is a component of the expenditure on GDP, and thus shows something about how much of the new value added in the economy is invested rather than consumed.  GFCF is called "gross" because the measure does not make any adjustments to deduct the consumption of fixed capital (depreciation of fixed assets) from the investment figures.  For the analysis of the development of the productive capital stock, it is important to measure the value of the acquisitions less disposals of fixed assets beyond replacement for obsolescence of existing assets due to normal wear and tear. _"Net fixed investment"_ includes the depreciation of existing assets from the figures for new fixed investment, and is called _net fixed capital formation_ .  Gross Fixed Capital Formation  (GFCF) is therefore _not_ a measure of _total_ investment, because only the value of net additions to fixed assets is measured, and all kinds of _financial_ assets are excluded, as well as stocks of inventories and other operating costs (the latter included in intermediate consumption). If, for example, one examines a company balance sheet, it is easy to see that fixed assets are only one component of the total annual capital outlay.  The most important exclusion from GFCF is _land sales and purchases_ .  The original reason, leaving aside complex valuation problems involved in estimating the value of land in a standard way, was that if a piece of land is sold, the total amount of land already in existence, is not regarded as being increased thereby; all that happens is that the _ownership_ of the same land changes.  Only the

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