2000年-世界发展银行全球_Pakistan_-_Reforming_Provincial_Finances_in_the_Context_of_Devolution___An_Eight_Point_Agenda_170页_17mb

Summary of Report No. 21362-PAK: Reforming Provincial Finances in the Context of Devolution

Core Content

This report, prepared by the World Bank in November 2000, outlines an eight-point agenda for reforming provincial finances in Pakistan, with a focus on the implications of devolution. It highlights the challenges facing Pakistan's public finances, including high fiscal deficits, poor revenue mobilization, centralization of power, vertical fiscal imbalances, problematic expenditure structures, weak financial management, lack of accountability, and the atrophy of local governments. The report emphasizes the need for structural changes to improve the financial health of provinces and local governments, enhance the delivery of public services, and promote more effective and equitable resource allocation.

Main Issues and Recommendations

1. Vertical Fiscal Imbalances

• Issue: The provinces generate only 17% of their expenditures from their own revenues, with the remaining 83% coming from federal transfers. This creates a significant imbalance and undermines fiscal autonomy.
• Recommendations:
  • Expand provincial revenue bases by allowing provinces to share selected federal taxes, such as personal income tax and GST, through "add-ons" with federal collection but provincial use.
  • Vacate federal tax bases that are constitutionally assigned to the provinces, such as capital value taxes on provincial bases.
  • Devolve energy resource taxes to provincial governments instead of federal collection and transfer.
  • Assign specific-purpose excise duties (e.g., on cigarettes and tobacco) to provincial governments or allow sharing.
  • Provide fiscal equalization grants to economically weaker provinces to correct horizontal imbalances.

2. Centralization of Power

• Issue: Local governments in Pakistan lack capacity, resources, and accountability structures to deliver public services effectively.
• Recommendations:
  • Develop local governments into a fully functional third tier of government with primary responsibility for locally-oriented public services.
  • Provide constitutional recognition and legal cover to local governments.
  • Devolve government authority and functions to local governments, including the delivery of local services such as water supply, sanitation, local roads, primary education, and health care.
  • Support capacity building for local governments through technical assistance and institutional development.

3. Skewed Expenditure Structure

• Issue: Provincial expenditure is heavily skewed toward establishment costs (salaries, pensions, etc.) at the expense of non-wage O&M (Operation and Maintenance) expenses, leading to poor service quality and deteriorating infrastructure.
• Recommendations:
  • Conduct functional reviews of all provincial public sector entities to assess their roles and determine the scope for shifting some activities to the private sector.
  • Initiate phased restructuring of staffing and expenditures based on these reviews.
  • Implement effective and sustainable expenditure programming and management systems to prevent the re-emergence of skewed structures.
  • Increase allocations for critical O&M budgets, such as those for medicines, books, irrigation, and road networks.

4. Ineffective Expenditure Planning and Budgeting

• Issue: Provincial budgeting is short-term and input-focused, with obsolete processes that fail to account for long-term costs and benefits.
• Recommendations:
  • Reform budgeting processes to be more outcome-oriented and aligned with modern governance and economic realities.
  • Eliminate the artificial distinction between recurrent and development budgets to improve resource allocation decisions.
  • Implement a Medium-Term Budget Framework (MTBF) to support long-term planning and budgeting.

5. Weak Financial Management

• Issue: Poor financial management and lack of accountability have led to inefficiencies and misallocation of resources.
• Recommendations:
  • Strengthen financial management systems with transparent and accountable mechanisms.
  • Improve the administration of local government user charges, such as water and sanitation rates, conservancy charges, and parking fees.
  • Implement a more systematic approach to provincial debt management.

6. Strengthening Local Government Finances

• Issue: Local governments are financially weak and lack the capacity to manage their resources effectively.
• Recommendations:
  • Restructure and broaden local government revenue bases, particularly through the reform of urban property tax.
  • Base property tax assessments on well-defined parameters and remove the discretion of tax collectors.
  • Reduce the rate differential between rented and owned properties.
  • Shift the tax base from rental to capital value over time, requiring changes in tax laws and administrative capacity building.
  • Devolve other taxes to local governments where appropriate, such as entertainment tax and motor vehicle tax.
  • Establish Provincial Finance Commissions to determine appropriate revenue sharing between local and provincial governments.

7. Accountability and Governance

• Issue: Lack of accountability and poor governance have contributed to the inefficiency of public services and financial mismanagement.
• Recommendations:
  • Enhance accountability through robust monitoring and evaluation systems.
  • Strengthen the role of local governments in service delivery and management.
  • Encourage community involvement and beneficiary participation in service management.

8. Debt Management

• Issue: Provincial debt management is not systematic, leading to potential financial instability.
• Recommendations:
  • Develop a more systematic approach to provincial debt management, including better monitoring and control mechanisms.
  • Ensure that debt management is aligned with the overall financial reform agenda and the new devolution plan.

Key Information

• Fiscal Year: July 1 – June 30.
• Currency Equivalents: The report provides exchange rates for the Pakistani Rupee (Rs) in relation to the US Dollar (USD) for various years.
• Acronyms: A list of key acronyms used in the report is provided, including terms like ACR (Annual Confidential Report), ADP (Annual Development Program), and NFC (National Finance Commission).
• Devolution Initiative: The federal government has announced a bold devolution plan aimed at strengthening local governments and improving the delivery of public services.
• Provincial Reforms: The report focuses on the provinces and their financial health, suggesting that reform should be based on a three-pronged approach: adjusting federal-provincial fiscal relations, restructuring provincial expenditures, and strengthening local government finances.

Conclusion

The report emphasizes the importance of devolution in improving the financial and administrative capacity of local governments, enhancing public service delivery, and promoting more sustainable and equitable fiscal management at the provincial level. It calls for a comprehensive reform agenda that includes legal, institutional, and financial changes to ensure that local governments can function effectively and independently.