ISLAMABAD, April 29: The World Bank has expressed its concern over Pakistan's budget-making process which it says continues to suffer from a lot of weaknesses, resulting in ineffectiveness of public expenditure.
But a government official said the criticism was designed to win consultancies for World Bank officials.
The bank says that one of the main weaknesses of the budget process is lack of information on the cost of policies, programmes and services and an intertwining in a single agency of policy advice, regulation and service delivery, sources told Dawn.
Secondly, there continues to be a lack of strategic focus and a clear articulation and ownership of sectoral priorities. Similarly, there is a weakness of a primary focus on inputs with performance judged largely by how closely spending matched budget appropriations.
The bank's criticism has come at a time when the government's budget-making exercise for the next year is already under way. This follows a mid-year review of current year's resource utilization which showed unimpressive results.
The government official, who took swipe at the bank for this negative assessment, quoted an excerpt from a bank report to back his claim, which reads: "Liberal use of consultants is especially needed to strengthen the federal ministry of finance, including the debt office and the economic adviser wing, the federal planning commission and the ministry of commerce as well as planning and finance departments of the provincial governments".
The World Bank notes that there also continues to be a short-term horizon for budget decision making that fails to account for longer term costs and benefits. Furthermore, there is an artificial and unwarranted separation of development and recurrent budgets, making it impossible to prepare an integrated and coherent strategic budget framework.
Also, there are very few incentives for agencies to save budgetary resources because current year spending is the starting point for next year's allocations. The WB says that the budgetary practices suffered in the past because the planning and programming mechanisms were unable to withstand the political pressures that resulted in a number of economically unviable projects being included in the development programme.
As many of these were large projects they not only pre-empted a sizable portion of available development funds but also imposed an unnecessary burden on the federal and provincial recurrent budgets.
"Most of these projects were started by ignoring or short-circuiting the regular approval process, with some projects getting included in the development programme without even a proper feasibility study," said the bank. As many as 130 projects were included in current year's PSDP without PC-Is, of which 58 projects still lack these studies when the financial year is nearing its close.
The bank is of the view that problems with the budgetary processes were less apparent in earlier years, when the overall levels of public spending were growing rapidly, planning processes were better integrated with economic decision-making, and the governance problems and the weaknesses in the civil service had not yet assumed alarming proportions.
During the past decade or so, the weakness of the overall fiscal situation and stagnant or declining economic and social spending exacerbated the structural rigidities in the budget process and compromised the allocative efficiency of expenditure.
Arbitrary expenditure cuts undermined programme and agency level performance, operation and maintenance expenditure were severely under-funded and development resources were spread too thinly with the result the ongoing projects became very large and expensive.
