PESHAWAR, April 25: The World Bank wants the NWFP government to continue with its ongoing institutional reforms and adopt capacity-building programmes to improve overall financial management
, transparency and accountability in the provincial public-sector institutions.
The lending agency has recommended to the government to continue with its institutional reforms while preparing a programme for updating legislation and rules to address institutional issues. Besides, it also wants the provincial government to embrace capacity building programmes to improve overall financial management, transparency and accountability.
"There are substantial opportunities for introducing institutional reforms for strengthening public financial accountability in (the) NWFP despite substantial progress already achieved," notes World Bank's recently formulated document 'NWFP Provincial Financial Accountability Assessment'.
The document - which forms part of the structural adjustment credit (SAC) being extended to the NWFP government to support implementation of its three-year roll-over multi sectoral reforms programme - has pinpointed several grey areas needed to be addressed effectively to improve financial management, accounting and audit procedures, transparency and accountability in the provincial public sector institutions.
Besides, it has also highlighted the progress made by the provincial government during the course of implementing reforms under SAC-1 in the 2002-03 financial year. It emphasized the importance of taking actions that both stimulated demand for prudent financial management and built capacity of the government to respond to the public requirements for efficient and effective delivery of services.
Though the public financial accountability in the NWFP was improving under the ongoing reform programme, the results remained mixed, observes the document. The lending agency, while reviewing revenue generation and expenditure trends, has stressed the need to strengthen relationship between long-term planning framework and yearly budgets.
"Provincial and local (district governments) budgets overlap which may lead to weak financial accountability," warns the report, adding that "budgetary process is more procedural and incremental in nature and not directly based on the desired performance outcome."
The report also pinpoints the shortage of specialized and experienced staff in the finance and planning offices at the local government level. "Budget execution has weaknesses in monitoring of spending programmes, outcomes and service delivery along with the lack of information to track actual versus planned expenditure," the report says.
Accounting, financial reporting and internal controls were improving but technical capacity and difficult management and organization issues involving both federal and provincial staff cadres needed to be resolved.
The report talks of legislative oversight of budget activities being weak "due to limited technical capacity and uncertain charter for public account committee (PAC)". The information provided to PAC is often difficult to understand and less timely, it says, and goes on to suggest that laws and subsidiary legislation required updating by removing obsolete items and modernizing concepts and terminology.
Dilating upon issues relating to fiscal decentralisation, the report says: "Fiscal decentralisation is underway but there are certain transition issues adversely affecting financial accountability at the local level".
Though detailed efforts had been made by the National Reconstruction Bureau and Asian Development Bank for devising new systems suitable for devolved local governments, subordinate legislation had yet to be framed and ratified by the provincial government, the report notes.
Similarly, internal audit function, established in 19 provincial departments, was weak and needed to be revitalized with additional resources along with an enhanced role based on international benchmarks.
The lending agency recommends to the provincial government to frame the local government budget code, local government internal audit rules and guidelines, local governments procurement rules and other local government subordinate legislation.
"This is important to implement the local government ordinance, 2001, and to move from the transitional systems". Under its recommendations viz-a-viz capacity building, the report asks the government to provide suitable resource levels to manage local government finances in the functions of planning, accounting, auditing, procurement and cash management and establish local government internal audit offices and reorganize the tehsil level accounting structures in concert with the office of controller general of accounts.
It also recommends that the provincial PAC secretariat be strengthened by framing better procedures, providing support, and devising bye-laws for the account committees of the local governments so that they function efficiently.
