Financing instrument to support Public Financial Management Reform Strategy for 2017-20
MONITORING DESK
PESHAWAR
The World Bank is developing a ‘Programme for Results’ (PfR) financing instrument that will support implementation of the Public Financial Management Reform Strategy for the period 2017-20 developed by the Khyber-Pakhtunkhwa government.
The strategy’s overall objective is putting in place a robust public finance management that ensures financial compliance, facilitates prioritisation amongst competing claims on scarce resources, encourages efficient delivery of public services and achieves the ultimate goal of efficient, effective and accountable use of public resources. The strategy takes an integrated approach to public finance management reforms that cover the whole PFM cycle at both the provincial and local government levels, and organised around six policy objectives: resource mobilisation, asset and liability management; accountability for results; policy-driven planning and budgeting; comprehensive, credible and transparent budget; and predictability and control in budget execution. The bank is currently working with the provincial government to prepare the programme, titled ‘Khyber-Pakhtunkhwa Revenue Mobilisation and Public Resource Management, which will use the ‘programme for results’ financing instrument as lending tool for investment. The proposed programme will support the implementation of the KP government’s public finance management reform strategy with a credit of $100 million to be provided by the International Development Association (IDA). The proposed programme would seek an increase in own source revenue, both tax and non-tax, through expanding the tax base without imposing new taxes or raising tax rates, reflecting the broad base, low rate principle; enhancing the institutional capacity for tax collection by enhancing business intelligence using ICT; facilitate taxpayer voluntary compliance by making it convenient for taxpayers to discharge their legal obligations and reduce the costs involved in tax compliance; and mobilise non-tax revenue to increase the yield of existing sources of non-tax revenues and tap into new sources that could support a sustained growth of provincial revenue.
The programme will also help to improve the management of public resources, notably budget funds and dedicated funds such as the province’s pension fund and hydel development fund.
