THE stories of rampant corruption and crony hiring/promotions by powerful people who abuse their official authority and the controversy surrounding key official data once again highlight the need for evolving a more efficient and transparent architecture for the country’s financial management.

Definitely, this is required to improve the quality of governance.

“Yes, I hire a tax consultant to advise me to legally avoid taxes. Wasting my hard-earned money by giving it to the government does not make sense when I know that it will not be used efficiently for the greater good of the maximum number of people,” said a former president of a local business chamber.

Some economists, including former finance minister Dr Hafiz Pasha, have repeatedly raised questions about the credibility of the official data, including the figures of the government’s liabilities.

Senior officials in the finance ministry in Islamabad confirmed to this writer that an exercise has been initiated by engaging consultants to suggest a framework for institutionalising financial discipline, reducing the fiscal deficit, and improving the management of public funds.

‘Unless the intent is there to actually do something about delivering better service through transparently and efficiently utilising every tax rupee raised, it is a waste of time and resources’

An earlier report in this paper detailed a broad contour of a unified public finance management law that aims to consolidate all revenue and expenditure cycles into a single ‘Public Finance Administration Act’ at the federal level.

It includes budget preparation, expenditure control, budgeting for contingencies, financial accountability, moving towards a single treasury account and fiscal transparency, as promised in Article 79 of the Constitution. The report said the bill would be presented in the parliament in the current year.

It was projected to be a move to link budget allocations with stated development priorities and performance. It said all relevant institutions and provinces were on board for the exercise.

The information gathered, however, revealed that no one beside a small group of people associated with the project knew anything about the move.

“Sorry, but I am not aware of the business of the fiscal management law,” said Miftah Ismail, chairman of the Board of Investment and an active member of the government’s kitchen cabinet.

“This is squarely the domain of the finance ministry. We are concerned with revenue. Sorry, but I am not in the picture,” Federal Board of Revenue Chairman Tariq Bajwa responded over phone.

“I can’t comment on a move that I am not aware of. I assume the idea is still on the drawing board,” said federal industries secretary Arif Azeem.

And federal finance secretary Dr Waqar Masood informed Dawn over phone from Islamabad that the idea was thrown up during a discussion on the possible ways to further improve the country’s fiscal management.

“The game plan is not ready. It is more of an idea that is being explored in the ministry with the help of a few consultants,” he said and insisted that the concept has not been peddled by donors.

Some experts were not impressed. “What does it matter if you craft a good law and then put it away to gather dust? Unless the intent is there to actually do something about delivering better service through transparently and efficiently utilising every rupee raised, it is a waste of time and resources. Sorry, but I do not see the will to change a system that serves the ruling elite well across the establishment,” commented a reputed financial management guru who heads an international audit firm.

He mentioned the ‘Fiscal Responsibility and Debt Limitation Act 2005’ to support his argument. “The Act bars the government from letting the public debt-to-GDP ratio go beyond 60pc. Does the government care? Did it even bother to go to the parliament to secure an exemption when they exceeded the limit,” he made a point.

Dr Waqar Masood said the government is making an all-out effort to scale down the aberration. “The Nawaz Sharif government inherited a 64pc debt-to-GDP ratio; we have already narrowed it to 63pc. And we hope to drag it down to 62pc by the end of the current fiscal year,” he defended the government’s position. The debt-to-GDP ratio was reported at 66.4pc at the close of fiscal year 2011.

As far as authenticity of the data goes, in the absence of any other credible independent source, it has to be relied on for the assessment of the economy. The multilateral agencies, including the International Monetary Fund, have been calling for more transparent accounting of total liabilities and for a benchmarked plan to contain the public debt and the budget deficit.

Published in Dawn, Business & Finance weekly, September 14th, 2015

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