World Bank approves restructuring of Pakistan’s Public
Financial Management program
The World Bank has given approval for the restructuring of
the financing agreement for the Public Financial Management (PFM) and
Accountability for Service Delivery Programme, totaling $380 million. Initially
approved on December 19, 2017, with effectiveness from December 29, 2017, the
program underwent two restructuring phases. The first, on November 22, 2021,
extended the closing date to June 30, 2023, and reduced the program size to
$380 million. The second, on June 25, 2023, further extended the closing date
to October 31, 2023, aiming to reallocate financing across Disbursement Linked
Results (DLRs).
Responding to a request from the Ministry of Economic
Affairs on October 18, 2023, the World Bank agreed to reallocate $5.5 million
from funds attached to certain DLRs to DLR 2.7, along with an additional five
percent of baseline or Rs50 billion under the Treasury Single Account (TSA).
The TSA, a crucial intervention for consolidating and centralizing government
funds, has already included Rs150 billion, potentially generating savings of
Rs33 billion annually.
World
Bank concerned over obstacles in privatization of Pakistan’s State Owned
Entities (SOEs)
The restructuring also aligns with the International
Development Association's (IDA) concurrence, leading to the amendment of the
financing agreement. The PFM program's objectives include enhancing PFM and
procurement systems to improve management and accountability in health and
education services. The five key result areas are: strengthening Legal
Framework and Internal Management Systems ($110 million), improving Procurement
Performance ($45 million), enhancing Payroll and Pension Payment Systems ($65
million), focusing on external Audit, Legislative Scrutiny, and Social
Accountability ($80 million), and implementing performance-based Grants ($80
million).
World
Bank expresses disappointment over Pakistan’s tax collection efforts
The program operates within the framework of the Government
of Pakistan's PFM Reform Strategy (2017) and initiatives following the PFM Act
2019, including the transition to the Treasury Single Accounting system,
decentralized payment processes, and delegation of financial powers. Program
implementation is on track, with progress towards achieving the Program
Development Objective (PDO) rated moderately satisfactory and overall
implementation progress rated satisfactory.
Progress against the five key result areas includes the
enactment of a PFM Law, empowering principal accounting officers and laying
foundations for TSA. Budget reforms mandated by the PFM Law have contributed to
an improvement in Pakistan's Budget Transparency Index Score from 28 points in
2017 to 46 points in 2022. In the area of improved procurement performance,
e-procurement systems have been piloted and adopted in various federal
ministries and provinces, with ongoing efforts to enhance rules and regulations
for seamless implementation and interoperability.
Source: Business Recorder