Disfiguring the Balochistan Public Finance Management Act

Khaleeq Nazar Kiani

Balochistan has had the weakest economic performance among the four provinces. It depends heavily on federal transfers. The limited resources are spent lavishly with a minimal rule-based system by the bureaucracy on the aspiration of the political bosses. The Government machinery generally resists reform for any transparent, accountable processes and procedures. Moving away from a discretionary to the answerable system is not acceptable to them, which will likely limit corruption and discourage rent-seeking.

After the 10th NFC award, a massive amount had been transferred to the provinces. For proper and just utilization of transferred amounts, there was a need for commitment to good governance, accountability, and transparency, which was not achieved. There is a general impression that due to the lack of proper laws in the financial matter, a significant chunk of the public money goes waste on scammed development projects. 

In many countries, good laws and procedures are in practice to prevent misallocation and for tracking the funds. There is a need to enforce stringent budgetary discipline in the management and accounting of funds. Public financial management can be strengthened with better expenditure tracking. Last year the enactment of the Balochistan Public Finance Management Act 2020 in a province that is known for its bad governance, corrupt practices, and swindling development projects were a pleasant surprise for its critics.

Though the said Act was a replica of the Public Finance Management Act of Pakistan 2019 with some modifications, but in line with Article 119 of the Constitution of Pakistan to regulate the Provincial consolidated fund and public account of the Province, it was a good step in the right direction.

The long preamble of the Act ensures better macro-economic management, clarifying institutional responsibilities related to financial management, strengthening budgetary management. All ingredients to regulate the Provincial Consolidated Fund and Public Finance were incorporated in the Act. It starts from budget strategy paper for preparation and management of budget, development projects maintenance and use of public assets, control of the provincial consolidated fund and public account, Treasury management, special purpose funds, accounting and reporting, and end to regulate the public entities.

For the last ten months, the Act was kept on the beautiful shelves without any action, and the routine work was carried out with an old, weak mechanism. Some smart bureaucrats smell the future repercussions for noncompliance and asked the political leadership that they cannot get their demands done unless Act is amended because any activist can file a constitutional petition on the violation of the Act. 

Realizing the gravity of the situation, both bureaucracy and political boss reached to consensus for taking out the problematic tooth from the Act, and an amendment was passed.

What are the significant amendments done in the Act?

Obviously, the target was the provisions relating to development projects where one can easily pickpocket the public money, and out of 14 amendments, 80% relate to development projects.

Section 13, 14, 15, in which conceiving, preparation, and quality assurance of development projects were well elaborated, has been made ineffective by replacing the word “shall” with the word “may” through amendment for the bureaucracy’s convenience.

In section 16, originally, it was mentioned that no development project should be included, which has not been granted technical approval and a budget allocation of thirty percent. The present Government granted the blanket exemption for its remaining period from this provision by inserting a sentence “within the period not exceeding two years from the date of promulgation of this Act,” and the threshold of 30 percent also reduced to 20%.

In section 17, defined monitoring and evaluation criteria were replaced with P& guidelines. Section 18 was omitted, which compelled the departments to demand adequate funds for physical infrastructure repair and maintenance. Perhaps, it was omitted to ensure the availability of more funds for new schemes. The nameplate of the new project is good for publicity rather than spending on old schemes which were left to ruin.

The Principal Accounting officers were bound to maintain the fixed assets register and maximum return on these assets in Section 19; through amendment, the period extended to two years and omitted the return on assets clause. In this regard, the report was required to be submitted to the Finance department diluted by substituting the word “Shall” by “May,” thereby an obligatory/binding section converted into a discretionary/non-binding one. A bad relief to the bureaucracy by compromising the efficiency.

Most importantly, the Provincial Government’s commitment to reducing the 10 billion deficits annually was deleted in the amendment, reflecting the continuation of bad fiscal management by the present regime.

Still, some uncomfortable provisions of the Act are intact for the Government machinery, which might be done away in the second round of amendments. The Government has not progressed in preparing budget strategy paper, notification of policy and rules under this Act, placing mid-year reports before the assembly, and publishing of budget manual on the website. Even the Government has not constituted the committee to oversee the implementation as required under the Act.

The amendments are relatively contrary to the statements and reason attached with the bill stating that the purpose of this bill is to streamline the law for better macroeconomic management, clarification of institutional responsibilities, and strengthening of budgetary management. Generally, the legislation is done for the benefit of the general masses, but in the Balochistan Public Finance management Act amendment, it is the other way around, and the people of Balochistan are the bad losers. The current budget planning and preparation process is not conducive to proper fiscal discipline and efficiency.