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Competitiveness Support Fund brief’s Government of Pakistan on Intergovernmental Finance

CSF presents its findings on Intergovernmental Finance Post 18th Amendment and the 7th NFC Award, suggestions made to federal government on asset distribution to the provinces, opportunities and challenges.

Islamabad – 1 December 2011 – The Competitiveness Support Fund (CSF), a joint initiative of the Ministry of Finance, Government of Pakistan and the United States Agency for International Development (USAID), made a presentation to the key institutions responsible for economic management of the country on a recent study on intergovernmental finance.

The research team was led by Shahid Javed Burki, renowned economist and former Finance Minister of Pakistan. It also included Dr. Aisha G. Pasha Director Institute of Public Policy of BNU, former Federal Finance Secretary Ahmed Waqar and CSF team consisting of Shahab Khawaja CEO, Imran Khan and Mehr Shah.

The meeting was attended by high a level federal government panel, representing all economic ministries and the Planning Commission represented by itsDeputy Chairman, Dr. Nadeem Ul Haque. The panel of the federal government included Cabinet, Finance, Law and Parliamentary Affairs, Economic Affairs, Statistics Divisions and Federal Board of Revenue etc.

In his keynote presentation Shahid J. Burki briefed the participants about the scope of the study and the impact of intergovernmental finance post 18th amendment and the 7th National Finance Award (NFC) and the challenges and opportunities for the Federal and Provincial Governments.

Shahid J.Burki in his briefing said that “Two extremely important developments have taken place in Pakistan recently. The first was the announcement of the 7th National Finance Commission (NFC) Award in November 2009. An unprecedented 56 percent of revenue constituting divisible resources has been committed to the provinces under this Award. The second was Parliament’s ratification in April 2010 of the 18th Amendment under which 18 ministries have been devolved from the center to the provinces”.

He further said that together, the two initiatives aim at fundamentally restructuring the fiscal and functional equation between the central and provincial governments in the country. “Although the 18th Amendment is expansive in scope, the primary purpose of the CSF study was to focus on the intergovernmental financeaspect of the process of devolution. Study results will contribute to a better understanding in the Government of Pakistan of the fiscal implications of the 18th Amendment in light of resource shifts from the federal to the provincial governments under the 7th NFC Award”, he added.

Dr. Nadeem Ul Haque in his remarks commented that, “the study has highlighted a number of key issues likely to impact the process of devolution, some of which require immediate attention from both the federal as well as the provincial governments”. Appreciating CSF’s contribution to do the first ever research study on the 18th Amendment and its fiscal impact on the federal and provincial governments,he said, “the study has made recommendations on establishment of a commission to oversee implementation of the 18thAmendment, management of fiscal implications, strengthening of human resource pool, improved provincial budgeting, planning, and public finance management, assessing the regulatory fallout of the process and taking the devolution to the district level”. These are some of the most important findings for improving governance and harnessing development and growth in Pakistan, he further added.

Speaking on the occasion, Shahab Khawaja, Chief Executive Officer of the Competitiveness Support Fund said that, “the CSF study includes an assessment of the current public finance management practices of provincial governments and the human resource and regulatory impact likely to arise out of the restructuring exercise.

CSF will also be briefing the leading development institutions representing the Asian Development Bank, DFID, USAID, the World Bank, UNDP, the Aga Khan Foundation, EU delegation and CIDA; whereas academic scholars from LUMS, CERP, COMSATS, PIDE and QAU will also participate in an interactive discussion. In addition to these, leading think tanks like Center for Social Science Research and SDPI will also be participating in the conference.The study gives a road map to the donor community on areas where they should intervene with public sector stakeholders. Areas highlighted for specific donor intervention and support include the development of a monitoring mechanism to track progress under the devolution effort to ensure the initiative retains momentum and direction, assessment of the impact of the 18th Amendment on the regulatory landscape of the country, continued support for initiatives aimed at horizontal equalization, and capacity building of provincial cadres to ensure service delivery and development planning are improved through bringing government closer to the citizenry.

CSF has already presented the findings of the report to the Government of Sindh and has plans to present the same to other provincial governments in the following weeks.

Established in 2006, as a joint initiative of the Ministry of Finance and the US Agency for International Development, CSF is also providing technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy. CSF is the local partner of the World Economic Forum (WEF) and annually participates in computing the competitiveness index for Pakistan’s economy. It is also assisting the federal as well as provincial governments to identify economic gaps in their policies to improve their competitiveness.Some of the recent initiatives include capacity building of staff at the Federal Board of Revenue, crafting an Investment Policy for Pakistan with the Board of Investment (BOI), and technical assistance on tax reforms to the Sindh Revenue Board (SRB).

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