The primary objective of the PublicExpenditure Review (PER) is to assist the Ministry ofFinance (MOF) in identifying opportunities for efficiencygains in some key categories of government expenditure. Inthis context, policy makers face two related fiscaldilemmas. First, how can expenditure efficiency areincreased to provide public services with fewer resources?Second, how can the fiscal space for key infrastructureinvestments are increased to ensure an enabling environmentfor long-term growth and diversification? To answer thesequestions, this PER analyzes three closely interrelatedtopics: a) aggregate fiscal discipline and overall publicexpenditure management, b) public expenditures in transportwith specific focus on roads and railways, and c) publicemployment and the wage bill of budget organizations. Thefocus on these large expenditure segments of the RussianFederation's budget was mandated by the MOF'soperational needs to identify efficiency gains in thesesectors and then to use the findings to extend suchexercises to other sectors.