Public Financial Management (PFM)

The Public Financial Management Reform Strategy provides a guide to the future focus of PFM reforms in the Government of Sindh Province (GoS) over a five-year period from 2014/15 to 2019/20. Despite the successes and improvements that have been registered by GoS PFM systems, recent studies such as the PFMAA indicated that reform efforts do not appear to be translating into marked improvement in services delivery.

Sindh is known as the financial and economic hub of Pakistan. Its population is above 30m, with a population growth rate of about 2.8%. Sindh has a major urban- rural divide, which is 48.75% and 51.25% respectively. Its per capita income is approximately Rs.12,432. Historically, Sindh's contribution to the Pakistan's GDP has been in the range of 30% to 32%. Its share in the service sector has ranged from 21% to 27%, and in the agriculture sector from 21% to 27%. Performance wise, its best sector is the manufacturing sector, where its share has ranges up to 46%. Endowed with coastal access, Sindh is a major center of economic activity in Pakistan and has a highly diversified economy ranging from heavy industry, manufacturing, services sector and agriculture. Manufacturing includes machine products, cement, plastics, and various other goods

OBJECTIVE

The objective of the PFM Reform Strategy is to ensure a public finance system that is based on the principles of transparency, accountability, equity, fiscal discipline and efficiency in the management and use of public resources for improved service delivery and economic development. The objective is linked to other reforms in the GoS which will target:

• Economic growth and poverty reduction to be achieved through policy based budgeting in order to realize three key strategic budgetary outcomes of aggregate fiscal discipline and sustainable budget balance; strategic allocation of resources; and the efficient use of the resources in service delivery to the province
• Rapid improvement of service delivery through performance contracts underpinned by the introduction and enforcement of performance and output based budgets within the Medium Term Budgetary Framework
• Promotion of principles of good governance so as to improve transparency, accountability and efficient controls. The PFM Reform Strategy will be instrumental in the fight against misuse and wasteful public spending, and in reducing/eliminating opportunities for corruption.

Principles of the PFM Reform Strategy

The PFM Reform Strategy is “to devise and implement principles of good governance, in the GoS to improve effectiveness, efficiency and attain value for money in the control and management of public resources”. The principles that will be used to guide the PFM reforms are:

• Well-structured coordination and participation by key stakeholders to ensure ownership and successful implementation of components. The key stakeholders include elected representatives, public officials, Provincial Assembly, civil society and the development partners
• Complete understanding of designed interventions and acceptability of change within the government machinery backed by political commitment
• The burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations
• Staff supervision and conformity with legislation and procedures to ensure strict adherence to laws, regulations and procedures to eliminate non-compliance which has the potential to degenerate into a culture of impunity
• Consolidate what has been achieved so far as it is important that the PFM reforms build on past successes and take into account the lessons learned
• Prioritization and sequencing of PFM reforms. It is critical to arrange and sequence the reforms in a way that ensures that they will be successfully implemented
• Guaranteed sustainability of reforms to ensure that the next phase of PFM reforms once implemented are sustained. This will require that the institutions given the responsibility for implementing the reforms have the requisite mandate and resources to carry through and institutionalize the reforms
• Greater use of Public Private Partnership (PPP) to complement the limited GoS resources and to improve the efficiency of the various operating units to improve service delivery