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Punjab govt scrambles to strengthen core functions

Updated September 05, 2017

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As in most nations, the public sector remains the largest service provider for citizens in Pakistan.

With taxpayers’ demands for ‘better, efficient, transparent and accessible’ services rising worldwide, the provision of the same is fast becoming a challenge for governments, as doing so requires greater financial resources, as well as implementing service-oriented policies and regulations.

Hence, governments across the globe are undertaking financial and governance reforms and changing their policies and systems to those that yield the most social and economic benefit.

Pursuing faster economic growth through a development agenda that focuses on improving public service delivery in the province, the Punjab government has also embarked upon a ‘holistic set of reforms’ to improve its policy, planning and public financial management functions.

These reforms involve plans and initiatives to improve government capability and capacity to increase revenue mobilisation for greater fiscal space, allocate resources for strategic priorities, and strengthen mechanisms for budget transparency and accountability.

“(The government) is under pressure to generate more financial resources to deliver on its unfinished development agenda before the elections next year.

“This agenda’s success is contingent upon strengthening the government’s core functions around both institutional and governance structures along with appropriate policy, planning and budgeting,” a senior finance department official told Dawn on condition of anonymity.

“The reforms undertaken by the government provide an overarching framework to pursue improvements in a structured and organised fashion with all relevant stakeholders — provincial departments of finance, planning and development, Punjab Revenue Authority, Board of Revenue, excise and taxation — collaborating with one another for effective implementation.”

The success of Punjab government’s development agenda is contingent upon strengthening the government’s main functions

In addition, the government has taken a collaborative approach for implementing these reforms and engaged external stakeholders and institutions such as the World Bank, UK Department for International Development (DFID) funded Sub-National Governance Programme (SNG) and GiZ.

The financial and governance reforms being implemented in Punjab have significantly boosted provincial tax revenues, and enhanced budget utilisation and transparency in addition to linking its allocations to improvements in service delivery — the objective of the entire exercise.

“The public financial management and planning reforms have helped the provincial government increase its own tax revenue by a whopping 45pc, or Rs47 billion, and improved utilisation of development funds by 31pc during the first year of their implementation in 2015-16,” Punjab Finance Minister Dr Ayesha Ghaus Pasha told Dawn.

“In the past, several stand-alone initiatives were launched to improve planning and public financial management in the province. But these have never been consolidated in the form of a cohesive strategy or an action plan. Consequently, those reform programmes could not be sustained for a longer time.”

These improvements in Punjab’s revenue and expenditure management have been achieved through a number of measures that the government has undertaken.

For example, the government has identified over 20,000 new potential taxpayers from 22 districts, which has started to yield an additional GST on services with an estimated potential of yielding Rs1.6bn a year.

Similarly, for effective resource management, the finance department’s capacity has been strengthened through the creation of three specialised units — debt management unit, corporate finance unit and tax policy unit — to fill the capacity gaps in the areas of taxation policy, debt management and financial management of public sector enterprises.

Punjab’s annual development programming (ADP) has been re-strategised by aligning development allocations with the provincial growth strategy and Sustainable Develop­ment Goals (SDGs). The emphasis has helped push development spend for health by one per cent to 7.8pc and education by 2.2pc to 12.4pc during the last fiscal year.

In addition, the challenge of financing local governments established under the Punjab Local Government Act (PLGA), 2013, which are responsible for service delivery to the citizens in districts, has been addressed by designing a formula-based mechanism for transfer of funds through the provincial finance commission (PFC) award.

The award has boosted budget allocations for education by 19pc, health by 37pc and local councils by 164pc from the previous year.

A study on the outcome of the reforms in the last four years indicates that initiatives such as development and publication of citizens’ budget, medium-term fiscal framework, pre-budget consultations with parliamentarians and other segments of society, etc — implemented to strengthen budget transparency and accountability over the last three years — have improved Punjab’s Open Budget Index (OBI) score by 24.6pc from 55 in 2014 to 68 in 2017.

The successful execution of the governance, planning and financial reforms has brought to the fore the crucial need for their continuation.

“Public sector investments in social and economic infrastructure don’t make a people more educated and healthier with sufficient economic opportunities for everyone.

“Rather it requires prudent policies and regulations along with effective governance and administrative structure to achieve these outcomes,” the official contended.

Published in Dawn, The Business and Finance Weekly, September 5th, 2017