In order to improve Public Finances, the Punjab Government has embarked on a comprehensive programme of fiscal and financial management reform. Asian Development Bank (ADB) is supporting this programme under a five-year Punjab Resource Management Programme (PRMP) cluster loan of up to dollars 500 million.
THE KEY ELEMENTS OF THE PROGRAMME ARE:
(a) Strengthen provincial revenues through (i) rationalisation and restructuring of provincial taxes with broader tax base. These include especially agricultural income tax and GST on services. (ii) enhancing non-tax revenues and user chargers by rationalising rates and strengthening collection of abiana (water charges), and user charges on urban services, and (iii) improved tax and revenue administration.
(b) Rationalise provincial expenditure through (i) re-profiling and reducing provincial debt through more expensive to less expensive loans. (ii) containing and reducing contingent liabilities. (iii) phasing-out untargeted subsidies, and (iv) rationalising and improving public accountability of public spending.
(c) Improve effectiveness, predictability and accountability of provincial financial management through (i) preparation of transparent and user-friendly budgets within a MTBF. (ii) establishment and implementation of transparent and formula-based systems of inter-government financial flows. (iii) transparent and efficient procurement of goods and services, and (iv) timely, reliable and publicly accessible accounts.
(d) improve strategic programming of public investments through development of (i) a medium-term, poverty-focused investment strategy. (ii) effective systems and procedures to operationalize provincial goals and priorities (with initial focus on health, education and municipal services), and (iii) improved monitoring, feedback and evaluation systems.
(e) Restructure and strengthen government's administration and human resource development through (i) reform, restructuring and capacity enhancement of province's agencies responsible for policy, planning, fiscal and financial management. (ii) rationalisation of provincial staffing and enhanced skill levels. (iii) merit-based, transparent and institutionalised system of recruitment, promotions and transfers, and (iv) mainstreaming commitments on gender.
(f) Foster private sector development through (i) restructuring of public regulatory and administrative agencies and promoting public private partnership. (ii) ensuring transparent security of property rights and improved utilisation of land assets, through effective land registration and management system. (iii) providing effective support mechanism for facilitation of investment, public-private partnerships and employment generation, and (iv) reducing direct public sector involvement in economic and/or commercial operations.
According to a Study Report of ADB and DFID financial experts, as in most other developing countries of the world, in Pakistan too, the calculation of Gross Domestic Product (GDP) contains some methodological weaknesses. Two of the most obvious shortcomings are the periodicity (the national accounts are compiled on annual basis only) and aggregate nature of these accounts. While efforts are underway to prepare quarterly GDP and the Federal Bureau of Statistics (FBS), which compiles the national accounts, may start presenting GDP on a quarterly basis from 2004-05, no official attempt has been made to-date in Pakistan to estimate GDP at the provincial level. These shortcomings have hampered economic monitoring and regional planning in the country.
Until 1971 Pakistan had a centralised system of administration; the "one unit" system - under which no distinction was made between various geographical and cultural entities within the region called West Pakistan, which later came to be known post-1971 as Pakistan. Hence, no need was felt to estimate Regional Accounts.
In 1971 the "one unit" was broken into four separate administrative units or provinces, the Punjab, Sindh, NWFP and Balochistan. However, even under this new system relatively little autonomy was given to the provinces, as major decision-making authority de-facto remained at the federal level.
Until early 80s, Pakistan's GDP was estimated with the base year of 1959-60. In the early 1980s, the base year was changed to 1980-81, which continued till today. (The FBS has recently finished updating the base year for GDP calculations to 2000-01; however, the estimates presented in this report are based on the 1980-81 series, as dis-aggregated data from the new series is not yet available).
The construction of provincial GDP series is a large and complex undertaking, as dis-aggregated data is needed for a very large number of province-specific variables.
Moreover, the exercise is also extremely time-intensive, as a large volume of data needs to be analysed to derive consistent and robust estimates. Given time constraints and data inadequacies, as an interim measure, this report relied upon calculating the Punjab's share in the national value-added of various economic sectors using some broad "allocators", or national-GDP apportioning factors. Wherever data were available in a more dis-aggregated form, value-added in various sectors was estimated on a similar pattern to the methodology used by the Federal Bureau of Statistics (FBS) to estimate national GDP. However, such information at the regional level was not available for all sectors and activities.
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