**Table 4: Comparison of Output Multipliers from PVAR**

||Impact multiplier|Peak multiplier|Cumulative multiplier(after 10years)|
|---|---|---|---|
|Total Spending|0.008|0.008|0.023|
|Infrastructure Spending|0.010|0.010|0.020|
|Road Spending|0.021|0.021|0.043|
|Power Spending|0.058|0.058|0.130|

Note: All spending is in per capita terms

# **3.2 Roads**

# **3.2.1 Road Spending Adequacy**

Attention now turns to a more disaggregated analysis of spending trends at the sector level. In the case of roads, on-budget road expenditure does not tell the full story. While many countries do channel roads expenditure directly through the budget, a significant minority – particularly in Sub-Saharan Africa – have also established off-budget road funds that are typically resourced through earmarked fuel levies and used primarily to support road maintenance activities. This makes it particularly important to integrate road fund expenditure in any cross-country comparison of road sector spending or any assessment of its adequacy. In addition, several off-budget channels of expenditure potentially make a significant contribution to road sector funding. To begin with, OECD donor agencies (FCDO, JICA, MCC etc.) and multilaterals (WB, AfDB, ADB etc.) often fund or finance major investment projects in the sector, as increasingly do NonParis Club donors (notably China). In addition, a subset of countries has pursued toll road projects through public private partnerships, thereby tapping an additional source of finance for road investments.

For a better understanding of the sources of expenditure in the sector, budget expenditure needs to be combined with road fund statements, donor contributions and information on PPPs to build up a more comprehensive picture of financial flows. Due to constraints in data availability from different sources, the sample size shrinks to 49 countries where data is available and can be brought together from multiple sources to provide the full picture of road sector spending.<sup>11</sup> The relative importance and time trends for the different sources of road expenditures differ remarkably (Figure 12a). Budget expenditure was historically by far the largest source, but has fallen dramatically over the period 2010-18, and is now similar in overall magnitude to the resources from Road Funds, which have been more stable over time at just over 0.5 percent of GDP. Contributions from donors and private sector financiers have been steady but very small in magnitude, amounting to no more than 0.1 percent of GDP combined. Overall, public investment accounts for around 70 percent of road sector spending, with Road Funds making-up another 26 percent, donors a further 4 percent, and the private sector providing only a negligible amount (Figure 12c).

As anticipated, addition of off-budget expenditures significantly increases the estimate of resources allocated to the road sector. Whereas total on-budget spending on roads for the reported countries averages around 1 percent of GDP during the time period 2010-18, total spending on roads rises to 1.2 percent of

> 11 There is some potential risk of double counting to the extent that Road Agency expenditure may be dedicated to paying shadow tolls or availability payments to private road concessionaires. However, given the limited scope of toll road concessions, and the fact that these are more typically funded directly from toll revenue collected, the issue of double counting looks to be relatively insignificant in the roads sector.

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