In Pakistan the budget allocated to education is low. Pakistan is now on just twelve
countries that spend less than 2 percent of GDP on education (ICG, 2004). Although
education enjoys the highest priority on the social sector agenda, which as a whole is
poorly funded when compared to defense, general administration and debt servicing,
allocations are modest due to indispensable rigidities such as resource constraints, large
establishment bills due to a large salaried-workforce and heavy debt interest repayments,
arising from different priority commitments of the country in the financial system of
Pakistan (MOE, 2003).
As national expenditures have always far exceeded revenue collection, fiscal deficits
have remained high. Historically, there has been a heavy reliance on external borrowing
to close the resource gap. In addition a much higher segment of the budget is allocated to
defense. Interest payments and defense expenditures constitute the highest proportions of the expenditures (MOE, 2003).
Federal to provincial
In Pakistan, revenue sharing is the dominant form of federal-provincial fiscal relations.
The main source of provincial revenues is a transfer, based on a share of federal tax
collections. The decision on the list of taxes to be shared (divisible pool), the ratio of the
provincial-federal share of the pool and the formula for its distribution to the provinces is
to be fixed at least once every five years by the National Finance Commission (NFC)
established under Article 160 of the Constitution. The NFC last rendered a decision
(called an Award) in 1997, allocating to the provinces 37.5 percent of the divisible pool,
comprising all major federal taxes, with distribution to the provinces according to a single
criterion—population (based on the 1981 Census of Population) (ABD/WB/DFID, 2004).
Besides determining the taxes to be included in the Divisible Pool and the respective
shares of the federal and provincial governments, the NFC also determines other tax and
non-tax revenues that would be provided to the provincial government as Straight
Transfers7.
The 1997 NFC awards consisted of three components (ADB/WB/DFID, 2004):
(a) revenue sharing—distribution of a pool of federal revenues to provinces by formula;
(b) straight transfers—returning to the province of origin resource royalties, charges and
excises after deducting a federal collection fee; and
(c) Special lump-sum transfers to NWFP and Balochistan provinces to compensate for backwardness.
Provincial-local
Changes in fiscal transfers have been made to complement the devolution of expenditure
responsibilities. Mirroring the federal-provincial arrangements, transfers to local
government are accompanied by a system of unconditional fiscal transfers from the
provinces determined by Provincial Finance Commissions. However, and importantly,
the claims of local governments over the provinces are not the same as the provincial
sharing rights with the federal government, since local governments have no
constitutional rights to revenue sharing9 (ABD/WB/DFID, 2004).
All provinces have now established Provincial Finance Commissions, which have made
awards for the distribution of provincial resources to local governments. According to the legislation establishing each PFC—containing only slight variations from the NRB’s
suggested model—the PFC evolves a formula for distribution of resources, including
distribution of the proceeds of the Provincial Consolidated Fund between the provincial
government and the local governments.
The statutory basis for the PFCs was created through amendments to the Local
Government Ordinances nearly a year after local governments were created as
administrative entities. The legal provisions of the Ordinances aim at the creation of
medium-term, formula-based transfer systems. Progress in creating the necessary
secretariats and establishing the required analytic support for the PFCs was initially slow.
The absence of a secretariat, offices for private members and budgetary allocations
represented a serious constraint on the PFCs’ work, but their situation has now grown
significantly better. The capacity of the Secretariats, the frequency of meetings and public
reporting and their interest in developing multiple grant systems are all improving.
Population is the most important indicator used in all provincial awards. A backwardness
index is used by three of the four provinces, and the two largest provinces incorporate
tax-effort provisions.
Earlier the district departments were just de-concentrated arms of the provincial
government with, by definition, no transfers. The lower tiers of local government
received no transfers from the province except for discretionary specific-purpose grants.
Now, predetermined shares of the Provincial Consolidated Funds are passed as transfers
that are non-lapsing. To enable this, district funds and TMA local funds were created as
accounting entities distinct from the provincial consolidated fund to prevent reappropriationy the province. The intention was that all local government expenditure
would be financed from own-source revenues or formula-based unconditional transfers.
Three tier system
Funds at the provincial level
Provincial expenditure on education is made up of the current expenditure and
development expenditure. The expenditure on provision of these services is incurred both
by the provincial and district governments. Primary, secondary education and colleges
are the responsibility of the district governments while professional colleges are the
responsibility of the provincial governments (HRCP, 2004).
Prior to the introduction of the new local government system in 2001, expenditure for
these services was borne by the provincial government and was therefore reflected in the
provincial budget. The devolution of functions has resulted in a massive decrease of
provincial education budget in Pakistan.
From the federal divisible pool federal share is kept and provincial share is transferred to
the provincial governments. From the provincial divisible pool, a certain proportion is
retained and the rest is allocated to the districts.
Funds at the district level
The share of the district governments determined by the PFC award is transferred as a
single line transfer to the district governments. The district governments are fully
empowered to allocate expenditures to various sectors in accordance with their own
spending priorities that are evident from the annual budgets approved by the zila
councils. The discretion of the district governments is, however, restricted by the demand
for salaries of the staff of the devolved departments which forms a major portion of the
recurrent budget (HRCP, 2004).
In the education sector, the district governments now have the lead responsibility in
deciding where to locate new schools and how to finance their construction, in addition to
inspecting schools to ensure that they comply with the standards and in carrying out the
annual evaluation of teachers and head teachers12. Under the District Coordinating
Officer, the Executive District Officer Education (EDO-E) is a new position at district
level with responsibility for the entire education sector as opposed to a particular branch
within the sector, as was previously the case. The EDO-E is required to take decisions on
allocation of resources across branches and levels of education (MOE, 2003).
With the setting up of district governments, a new Account No. IV, which is the district
account, was created under the LGO. All finances generated at the district level or
allocated to districts under special programs/grants are placed in this account The
ESR/EFA funds, president’s program grant under the education sector and the Khushal
Pakistan program funds13 are also allocated to this account.
The National Reconstruction Bureau (NRB)14 attempts to facilitate bottom-up financial
planning through CCBs, which are to operate at the village and union council levels. The
CCBs as explained in the last section are to be composed of non-elected citizen
volunteers who come together as an organized body. Access to funds is through a
matching grant scheme, whereby the CCBs must provide 20 percent of total funds in cash
to receive 80 percent of the approved budget. All registered civil society organizations,
including PTAs/SMCs, are to re-register as CCBs if they want access to district funds
(NRB, 2002). In addition, CCB projects must go through a complicated nine-step
process to receive grants.15
processes (Shah, 2003) is that the EDO (Education) makes proposals and identifies
schemes, which are submitted to the EDO (Planning/Finance). EDO (Finance) makes the
budget by prioritizing schemes and sends these schemes to the District Assembly/District
Development Committee (DDC) for consideration and approval. The DDC is chaired by
District Nazim among others EDO (education) is the member of DCC. The District
Coordinating Officer (DCO) presents ADP and schemes for approval in view of the
District budget provision. The approval limit of schemes by the DDC varies from
province to province. Usually it ranges from Rs two million up to four million. The DDC
can be an effective mechanism for community participation if all funds utilized come
under discussion and the District Education Department and schools are to show the
evidence of the money they spent. In principle if a scheme does not come under the
purview of DDC then it is usually sent to the province for consideration and approval by
the Provincial Development Working Party. The PDWP can approve schemes costing up
to Rs 200 million.
NGOs- Private organization in Pakistan:
Pakistan has a vibrant diaspora of civil society organizations These range from: a) large government organized non-government organizations (GONGOs)at national and provincial levels b) Independent NGOs working at national and provincial levels c) District level NGOs d) small local level registered CSOs and e) Networks and alliances at national, provincial and local levels. In the education sector, the role of CSOs has always been vibrant in Pakistan. It has been expanding consistently since 1980s and exponentially during the 90s,as a response to: a) the poor quantity and quantity of public sector provision, b) neglect of, out of school children and youth and the vulnerable with particular focus on girls/women and c) inability of government to respond rapidly to challenges of emergencies and hard to reach. It is also important to add that since, 1990 Dakar Call for Action for Education For All (EFA)the government has been under enormous pressure to explore multiple options for widening its net in partnerships with non-state partners either through direct or indirect platforms. Whist the development partners are preferring budget based support through pubic financing systems, there is an underlying preference to engage with CSOs in service delivery options.
NCHD:
In 2001 the National Commission for Human Development (NCHD) was also established as a federal statutory body through citizen led effort driven by expatriate Pakistanis. This was to be in partnership with the Government in terms of, location, endowments and recurrent budgets. The NCHD mandate is to support basic education/literacy and health programs along with encouraging youth volunteerism (www.nchd.org.pk) NCHD’s coverage was 84 districts of the country supporting basic education and literacy.
In their governance, such organizations GO NGOs, statutory an and semi autonomous bodies, dependent entirely on government goodwill and resources, have a large number of ex-officio members of the government on their Boards as well as representatives from the private sector including CSOs. These GO NGOs and semi autonomous bodies have helped the government enormously with outreach in over 124 out of 132 districts7 in addressing the vulnerable and to overcome the ‘trust deficit’ that exists between government and communities, and above all handling large amount of public funds. However, they have also crowded out smaller NGOs both in terms of government and development partners’ preferences. A glance at their annual budgets is quite self-explanatory
Taxes:
Tax collections historically have constituted a smaller proportion of GDP than that of many other countries--between FY 1984 and FY 1992, they averaged 13.8 percent. The 1993 budget estimates called for an increase to 15.1 percent, up from 13.9 percent in FY 1992. Income and corporation taxes provided 12.9 percent of tax revenues in FY 1993. Tax evasion, however, is thought to be widespread. The agricultural sector was exempt from income tax until 1993, when a temporary levy on large landowners was introduced by the Qureshi government. In early 1994, it appeared unlikely that this tax would be reimposed by the new government led by Benazir, herself a large landowner in Sindh.
indirect taxes are the main source of revenue. They provided 84 percent of tax revenues in FY 1991 and an estimated 83 percent in FY 1992 and FY 1993. Customs duties were expected to account for 35.0 percent of all government taxes in FY 1993. Excise duties made up 17 percent of revenues, and sales taxes made up 10 percent. Potential foreign aid donors consider the heavy reliance on indirect taxes regressive and inflationary and an impediment to the general policy of trade liberalization. Under pressure from the International Monetary Fund (IMF--see Glossary), the government reduced import duty rates in the FY 1992 and FY 1993 budgets.
Fee:
Tuition and fees, which currently cover a rather small portion of costs, should reflect the real cost of an educational program, but should neither be the main source of institutional funding nor an impediment to access for those who cannot afford the cost of education and subsistence. The full cost of the academic programs should be stated in the student's bill, with institutional subsidies clearly indicated, so that students and parents are made aware of the extensive support they are receiving.
Foreign Aid to Education in Pakistan
The public sector resource gap is also widely recognized as a reason for dismal education
outcomes, and financing this gap is a raison d’être for donor involvement with the education sector in Pakistan. While Pakistan is not as aid-dependent as some of the African countries, foreign aid - both multilateral and bilateral - makes up a significant proportion of resources being allocated to the social sectors and their development in Pakistan. Pakistan is seventh in a list of twenty countries receiving the highest absolute amounts of aid for education over the period 2003-04. Pakistan received US$ 150.4 million as aid for its education sector in the year 2003. China leads the list with US $826.2 m in receipts, followed by Bangladesh (US$ 516m) and India (US$ 472.1m) (UNESCO, 2007). It is interesting to note however that though India receives more aid than Pakistan for its education sector, Pakistan is the more aid dependent country.
Loans:
Asian Development Bank: ADB’s interventions in the education sector go back to the late seventies. The interventions, classified as program support, are mostly project-based. The predominant modality is budget support. Financial assistance to the government of Pakistan is through loans. The assistance is structured so the government puts in a specific proportion of the finances for each project while the rest is provided by ADB. While the proportion varies with different projects, ADB has funded up to 80 per cent of particular projects at one time. Recently the government’s funds make up a higher proportion of total project funding. Unlike the shifts in world bank’s policy foci, ADB’s policy has been fairly consistent over the decades with projects spanning most sub-sectors of the education sector including primary, secondary, technical and vocational training (Table 4). Project interventions aim at quality control in service delivery, teacher training, infrastructure development and improvement of facilities in addition to organizational management and planning. All projects have a federal and a provincial component for each of the four provinces: the loan agreement is at the federal level and the project agreement at the provincial level. Project coverage is national unless a province opts out of a project or is left out for a specific reason (e.g. a girls secondary school project was not implemented in Punjab because the World Bank had a similar ongoing project in the province). Project design and their
implementation mechanisms have evolved over time. In the beginning a single project design was
implemented across the four provinces. Recently project design and implementation has become more province specific, with greater role given to the district and provincial governments in project design and implementation.
The Department for International Development (DFID):
UK provides both financial and technical assistance to the education sector in Pakistan. DFID’s aid to Pakistan has risen dramatically since 2001. Annual support from DFID in the nineties averaged 20-25 million pounds. This increased to 70 million pounds a year in 2002 –2003 and is expected to rise to 90 million pounds by the end of 20084. Although at present most of the large scale commitments are negotiated with the federal government, DFID is looking to increase interaction with provincial and district governments with regard to program planning and implementation. Until 2005/06, DFID interventions in the education sector have been restricted to project support mainly in Punjab and NWFP.
World Bank:
The Bank’s assistance to the education sector evolved in four phases. During the
early 70s, they concentrated on vocational and higher education projects. In the late seventies, as financial and administrative support shifted towards primary education projects reflecting the view that primary education carried the highest social rate of return, experimental primary education projects were supported in a number of districts throughout the country. The third phase began in 1985 with increased emphasis on province-based primary education projects. During this time the Bank focused its efforts and resources towards one province in particular – Punjab. In the 1990s the bank entered its fourth phase of aid policy evolution. Maintaining its focus on primary education the bank shifted its support from isolated project inputs in various locations all over the country to province-based sectoral programs.
No comments:
Post a Comment