July 16, 2007	Monday	Jamadi-us-Sani 30, 1428

In an election year, record budgets have been presented by the federal as well as provincial governments. Special attention has been paid to development expenditure which has been enhanced substantially — both within Public Sector Development Programme and out side of it.

Budget allocation is an essential pre-requisite for undertaking any activity in the government sector.

What provides the sufficient condition is how much and how well the allocation is actually utilised. At present, public sector has not much to show on both counts. Institutional capacity to undertake the task is not enhanced corresponding to the scope of work. As a result, allocations are seldom fully utilised in the given manner. This is officially recognised by the item “operational shortfall”, in the budget provisions.

According to Federal Budget in Brief, FY 08, development expenditure by federal ministries\divisions\corporations for FY 07 was provided at Rs435 billion against which the utilisation, as per revised estimates was Rs394.5 billion, a shortfall of 9.3 per cent. As a case of achievement in physical terms, 3,000 beds were to be added in Hospitals\RHCs\BHUs during FY 07 but only 2.5 thousand (76 per cent) were added. This situation underlines the urgent need for capacity building in the public sector.

Given the capacity, there are many factors, which militate against proper use of funds. Public functionaries only care for the legal propriety in the sense that the expenditure remains within the budget allocation. Whether the objective is achieved, in terms of the satisfactory quality of work and in the most cost effective manner, is given little importance.

The new prime minister’s secretariat has a chandelier worth Rs20 million. Obviously, this expensive lamp has no functional value in an office building except ego satisfaction but its opportunity cost in a poor country like Pakistan is primary schools and dispensaries that could be provided with thus sum in the so far neglected remote villages.

The common perception is that government money is nobody’s money. As a result, there is an avoidable tremendous waste in the public sector. The actual genuine expenditure on a project is only a fraction of the cost booked. The end result is sub-standard work, which often needs repair even before completion of the project. An interesting specific case may be cited.

In Karachi, one lane of the Liaquatabad flyover, within a few months’ of its opening, was closed as the it caved in. The official explanation was that a trailer truck had a flat tyre and it stopped to change it. The road could not stand its weight and caved in. This speaks volumes of the performance of planners, designers, executioner and monitors. The repair cost must have been treated as development expenditure. Such instances are innumerable. The most unfortunate aspect is that no heads roll in such cases even when precious human lives are lost

Ghost institutions and ghost workers at a massive scale are perhaps a unique phenomenon in Pakistan. It was reported that at one time there were as many as 23,000 ghost pensioners in Pakistan Railway. For a World Bank funded education project, army was used to detect ghost teachers in the funded institutions and it came up with no less than 40,000 such teachers.

The Economic Survey FY 07 gives the gist of Education Census 05, which should be an opener for country’s managers. It reveals that of the total institutions covered by the census, five per cent or 12,737 educational institutions were non-functional, of which 11,589 schools and 1,148 other institutions were in the public sector. Out of them, 35 per cent were without a boundary wall, 31 per cent lacked dinking water facility, 54 per cent had no electricity, 38 per cent had no proper latrine and six per cent were without a building. As far as the condition of the school buildings, only 51.6 per cent were in satisfactory condition,, 26 per cent needed minor repairs,17 per cent needed major repairs, and 5.7 per cent were found to be in dangerous condition.

The situation in the health sector is similar. There are hospital buildings without doctors and equipment. If doctors are there, there may be no equipment and medicines. The story is all too familiar to be dilated upon.

The World Bank has, in its latest Country Report, urged Pakistan to improve public financial management, accountability, transparency, and enhance the capacity of public sector managers to meaningfully use credible financial information for better and informed decision making. This says a lot

If development expenditure is to make any meaningful contribution to economic growth and poverty alleviation, the entire existing system from A to Z- project preparation, its execution, continuous monitoring, post project audit and appraisal will have to be revamped, to ensure that the objectives have been achieved in the best possible manner. This is a gigantic task but worth all the effort. Cosmetic changes to placate the donor agencies would not do.

The overarching problem is corruption which, apart from its importance for every aspect of civil society, affects as much government revenue as expenditure. Instead of accepting rampant corruption as a national culture, it should be dealt with, in earnes, as national cancer. Corruption cannot be curbed without “honest to God” prompt and objective system of punishment and reward. I have advisedly used the word curb and not eliminate, because corruption has been there and will remain, like any other crime, sin and vice. It is thus not just the existence of a phenomena but its magnitude.

In case it is of minor proportion and cannot adversely affect the system, it can be lived with, as the system will keep it in check. However, if it assumes proportions, which overwhelm the system to paralyse it and one can get away with anything through this, it is a matter of grave concern.