ISLAMABAD: The Punjab government is seeking a loan of $180 million from the World Bank to implement its ambitious roadmap for public financial management (PFM) reforms that aims to strengthen the resource mobilisation in the province.

The total cost of the ‘Punjab Public Resource Management Programme’ has been estimated to be $304m including the World Bank loan for the project. It is expected that the bank’s executive board will take up the Punjab government’s request in August.

The proposed programme is considered to be very important as it will support the government of the largest province to align its PFM and tax systems with the federal frameworks and augment the impact of new PFM and tax administration practices through implementation and results at the level that most affects the citizens.

This will be a hybrid ‘Programme for Results’ operation with three key result areas under the results component and a technical assistance component to support investment in infrastructure and capacity building activities.

The programme is anchored in the Punjab government’s strategic development plans as guided by the Punjab Growth Strategy 2023 and the PFM Reform Strategy which is currently being updated based on the findings of Public Expenditure and Financial Accountability (PEFA) assessment.

The rationale for the World Bank to support Punjab’s PFM and revenue mobilisation efforts as well as improve the efficient and effective use of resources is compelling. By helping the largest province of Pakistan in terms of population and contribution to national GDP, to increase efficiency in its public expenditure, close its large tax gap and create fiscal for growth-enhancing expenditures on infrastructure and human capital, the programme can contribute to a transformal change in the country, given that the other provinces tend watch, replicate and emulate Punjab’s lead in reforms.

An inception report of the loan request says the reforms under PFM has been impressive, making the province expand its services sales tax base, completed digitalisation of urban property tax records, automated property tax invoice system and rural land records; and digitalised stamp duty payments in addition to transparency and efficiency in government spending was enhanced through implementation of citizens budgets; use of Punjab Procurement Regulatory Authority’s management information system for registering and processing contracts of more than 153 agencies, and innovative use of smart management tools to monitor district services in health, education and agriculture sectors.

However, despite this progress, there are several outstanding areas considered as binding constraints that Punjab must now tackle to achieve fiscal stability and efficient use of resources.

Published in Dawn, February 7th, 2020