EDITORIAL: That the Public Finance Management Act 2022 has come into effect in Punjab, to bring transparency and efficiency in the handling of provincial funds, is a very welcome development.
Indeed, since the new Act is about setting budgeting guidelines in a way to minimise wastage of public funds, which is a big problem everywhere in the country, other provinces are also advised, and expected, to take the same route. It will incorporate mid-term plans (covering three to five years) into the budget-making process, providing perhaps the best blueprint for not just checking misallocation of resources in public sector departments, but also willful corruption.
Punjab’s finance department is mandated to prepare a plan for the Act’s implementation within six months of its commencement, so the spotlight will be on the provincial machinery as it prepares to meet the deadline. Hopefully, the charged politics of these times, which revolves around the threat of dissolution of Punjab and KP assemblies to force a snap election, will not push this initiative down the priority list.
Protecting public funds is the foremost responsibility of all governments, after all, especially when the central and all provisional administrations are struggling to stay solvent. And as it is becoming increasingly difficult to fish for more funds in the international market, the importance of maintaining the integrity of public spending is greater than ever. If this law can make the provincial government ‘improve the performance of fiscal responsibilities, increase tax collection, and rationalise expenditure and debt management’, as claimed, it will make a very big difference.
There’s no denying that the biggest problem that the country’s finance system suffers from is lack of transparency. Therefore, the Act duly notes that it was ‘necessary to regulate and manage financial affairs in the public sector in a comprehensive, efficient, transparent and sustainable manner contributing to long-term socio-economic stability and growth of the province’. For that it was important to ‘make provisions relating to custody of the provincial consolidated fund, payment of money into that fund, withdrawal of money therefrom, custody of other money received by or on behalf of the government, their payment into and withdrawal from the public account of Punjab’.
Punjab’s finance minister went on to explain that the allocation of funds during the budget-making process will now be based on outputs which, if carried out in letter and spirit, should help put an end to the long-standing tradition of doling out money based on political, instead of economic, imperatives. So, it will be interesting to see when and what sort of indicators will be issued to all government departments to benchmark their performance for future handouts. The Act also includes a chapter on risk, aimed at controlling the budget deficit, so they seem to have all areas covered.
All this looks fine on paper and makes for very good headlines. But the proof of the pudding lies in the eating. Besides, this is not the first time a provincial government has made noise about checking financial leakages and improving the system. That makes properly following up on this initiative crucial for the long-term credibility of the Punjab government. These are extraordinary times for the country, with nothing less than the threat of sovereign default looming large, so proper economic management and clamping down on waste and corruption should be the number-one priority of all governments.
The Punjab government must be appreciated for taking this step. It must now show the responsibility needed to implement it on the ground. Other provinces, too, need to take a leaf out of Punjab’s book and enact similar laws before time really runs out for everybody.
Copyright Business Recorder, 2022
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