ISLAMABAD: The World Bank is developing a ‘Programme for Results’ (PfR) financing instrument that will support implementation of the Public Financial Management Reform Strategy for the period 2017-20 developed by the Khyber-Pakhtunkhwa government.

The strategy’s overall objective is putting in place a robust public finance management that ensures financial compliance, facilitates prioritisation amongst competing claims on scarce resources, encourages efficient delivery of public services and achieves the ultimate goal of efficient, effective and accountable use of public resources.

The strategy takes an integrated approach to public finance management reforms that cover the whole PFM cycle at both the provincial and local government levels, and organised around six policy objectives: resource mobilisation, asset and liability management; accountability for results; policy-driven planning and budgeting; comprehensive, credible and transparent budget; and predictability and control in budget execution.

The bank is currently working with the provincial government to prepare the programme, titled ‘Khyber-Pakhtunkhwa Revenue Mobilisation and Public Resource Management, which will use the ‘programme for results’ financing instrument as lending tool for investment.

The proposed programme will support the implementation of the KP government’s public finance management reform strategy with a credit of $100 million to be provided by the International Development Association (IDA).

The proposed programme would seek an increase in own source revenue, both tax and non-tax, through expanding the tax base without imposing new taxes or raising tax rates, reflecting the broad base, low rate principle; enhancing the institutional capacity for tax collection by enhancing business intelligence using ICT; facilitate taxpayer voluntary compliance by making it convenient for taxpayers to discharge their legal obligations and reduce the costs involved in tax compliance; and mobilise non-tax revenue to increase the yield of existing sources of non-tax revenues and tap into new sources that could support a sustained growth of provincial revenue.

The programme will also help to improve the management of public resources, notably budget funds and dedicated funds such as the province’s pension fund and hydel development fund. Where relevant, the programme will need to include the former Fata new districts and local government bodies as constituted in the interventions and results sought.

In terms of social benefits, the programme will result in much desired increased fiscal space to improve service delivery across the province.

Currently, the provincial government is highly reliant on federal government for revenue, and most budgetary planning especially for development expenditures, is done on the basis of estimated federal receipts.

Incremental planning is based on percentages of actual transfers rather than on actual planning and predictions based on revenue receipts. Increase in taxpayer compliance without increasing the tax burden, improved valuation of urban properties for taxation and using public land for generating revenue will all result in improved own source revenue for the province to deliver basic services to its citizens.

Planned cash management across treasury accounts will improve budgetary allocations as the managers will have an estimate of unspent funds at any given time.

Prior to approving the proposed programme, an assessment report prepared by the World Bank uncovered gaps in some as areas which would be required through the programme action plan. It found that there are no internal policies, rules or standard operation procedures for the management and disposal of end of life IT equipment in the province.

The ‘Land Acquisition Act’ of 1894 does not allow compensations for any economic displacement of encroachers and titles. This is a major gap between the World Bank requirements and the country systems.

Government departments are not required under operational procedures to consult vulnerable groups for their inputs while designing and developing interventions that can have perceivable impacts on them, unless they are large scale infrastructure projects.

Published in Dawn, December 16th, 2018

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