Financial Analysis

Financing education, in general, and especially in the context of the six goals of EFA has

emerged as a key area, which needs urgent attention. At the sub-regional meeting in Kathmandu in April 2001, the South Asia Forum, all Ministers/Secretaries expressed an urgent need to have a comprehensive grasp of “financing”, ensuring that it reflects strategic policy shifts vis-à-vis education, both for advocacy within countries and better use of resources for EFA. It was envisaged that this area as a key theme is a priority for South Asia and most appropriate for the sub-regional forum’s second Ministerial meeting scheduled to be held in May 2003.

According to the constitution of the Islamic Republic of Pakistan, the state is responsible “...to provide basic necessities of life, such as food, clothing, housing, education and medical relief for all citizens, irrespective of sex, cast, creed or race” [Article: 38(d)]; “…to remove illiteracy and provide free and compulsory secondary education within a minimum possible period” [Article : 37(b)]. This places a heavy responsibility on the public sector – to provide free and compulsory education to all citizens. In this context, Pakistan conducted this study, primarily focused on estimating the financial resources required to meet the educational needs to meet EFA targets/goals in three areas i.e., primary education, adult literacy and early childhood education, assessing the resources which would be available to meet these needs and highlighting the corresponding financial “gap” which would have to be filled with increased domestic effort and external assistance.

Education For All (EFA):-

Financing education, in general, and especially in the context of the six goals of EFA has

emerged as a key area, which needs urgent attention. Some recent developments have led to the need for undertaking a review of the financial framework within which EFA activities will be implemented:

a. The EFA National Plan of Action, being prepared by each member country, will contain time-bound targets for all six (or selected) goals to be achieved by a set of strategies ,inter-linked with a concurrent set of other macro-level national initiatives, implying certain costs. Some of the costs will be borne by available national resources while others will have to be arranged through various development partners and donors. The Dakar Framework of Action clearly stipulates that countries demonstrating commitment to the EFA goals will be supported in resource mobilization from all partners: “No country seriously committed to basic education will be thwarted in the achievement of this goal by lack of resources” – (Article 10 of Dakar Framework for Action).

b. At the sub-regional meeting in Kathmandu in April 2001, the South Asia Forum, all

At the sub-regional meeting in Kathmandu in April 2001, the South Asia Forum, all

Ministers/Secretaries expressed an urgent need to have a comprehensive grasp of

“financing”, ensuring that it reflects strategic policy shifts vis-à-vis education, both for

advocacy within countries and better use of resources for EFA. It was envisaged that this

area as a key theme is a priority for South Asia and most appropriate for the sub-regional

forum’s second Ministerial meeting in 2003, preceded by the technical group meeting in

2002.

c. As a follow-up to the sub-regional meeting in Kathmandu in April 2001, the Technical

Group Meeting of the South Asia Forum, in March 2002, expressed an urgent need to

have a comprehensive grasp of “financing”, both for advocacy within countries and better

use of resources for EFA. In this context, each member country of the South Asia EFA

Forum will commission its own study, within its own national framework, to reflect the

Financing Plan underlying its National Plan of Action.

In this context, Pakistan has developed a study, primarily focused on estimating the financial resources required to meet the educational needs to meet EFA targets/goals, assessing the resources which would be available to meet these needs and highlighting the corresponding financial “gap” which would have to be filled with increased domestic effort and external assistance.

EFA GOALS / TARGETS & FINANCIAL REQUIREMENTS

At the World Education Forum in Dakar (2000), over 1,500 participants from 182 countries and major development agencies adopted the Dakar Framework for Action to achieve a set of educational goals/targets by the year 2015.

In Pakistan, the response to the Dakar Framework for Action has been very positive. A

comprehensive package of educational reforms with medium term targets, the Education Sector Reforms (ESR) Action Plan for 2001-2005 was finalized through a consultative process involving over 600 partners. ESR is linked to four concurrent macro level initiatives i.e., the Devolution and Local Government Plan 2000; the Interim Poverty Reduction Strategy Paper 2001-2004; SAP II restructuring; and the Task Force on Human Development. ESR also serves as a foundation of the National Plan of Action (NPA) for Education for All, developed as a long-term framework (2001-15) to achieve three EFA goals of universal primary education; adult literacy; and early childhood education.

Similar to the NPA, this Study also focuses on the above three key themes, with a set of goals to be met under each theme in each of the four provinces and federal areas over a period of 13 years, divided into three distinct phases of implementation i.e., 2003/04-2005/06; 2006/07-

Primary Education: Goals and Resources Required

GOALS

1. Ensuring that by 2015 all children with special emphasis on girls and children in

    difficult circumstances have access to and complete free and compulsory primary

   education of good quality;

2. Eliminating gender disparities in primary and secondary education by 2015 and

   achieving gender equal access to and achievement in basic education of good quality;

   and

3. Improving all aspects of the quality of education and ensuring excellence of all so that

    recognized and measurable learning outcomes are achieved by all, especially in       

    literacy, numeracy and essential life skills.

Situation Analysis:

The Government of Pakistan recognizes education as one of the fundamental rights of a citizen as well as extends its commitment to provide access to education to every citizen. According to the Constitution of the Islamic Republic of Pakistan, the State is responsible, “to provide basic necessities of life, such as, food, clothing, housing, education and medical relief, for all citizens, irrespective of sex, caste, creed or race, to remove illiteracy and provide free and compulsory secondary education within minimum possible period.”.

Following are the cost estimates of providing universal primary education by 2015/16 to all girls and boys in Pakistan:

For urban areas, the total cost of achieving universal primary education is Rs. 48,579 million for boys (with almost 40% on development heads) and Rs. 51,923 million (with 44% on development heads) for girls).

Adult Literacy: Goals and Resources Required

GOALS

1. Ensuring that the learning needs of all young people and adults are met through

   equitable access to appropriate learning, life skills and citizenship programmes;

2. Achieving 50% improvement in levels of adult literacy by 2015, especially for

    women, and equitable access to basic and continuing education for adults;

3. Improving all aspects of the quality of education and ensuring excellence of all so

   that recognized and measurable learning outcomes are achieved by all, especially

   in literacy, numeracy and essential life skills.

Situation Analysis

According to the 1981 census the overall literacy rate of 10+ age group was 26.2 percent, which increased to 34.8 percent in 1990-91 and to 36.8 percent in 1993-94. According to the Population Census (1998), the average adult literacy rate rose to almost 44 percent.

Literacy statistics show wide discrepancies across gender, provinces and location (Table 7).While the overall literacy rate of Pakistan in 1998 was 43.9%, with 54.8% for males and 32% for females, it ranged between 24.8% in the province of Balochistan to 72.4% in the Islamabad Capital Territory. NWFP, with a literacy rate of 35.4%, is the second lowest in literacy ranking.

The provinces of Punjab and Sindh have slightly higher literacy rates than the national average

Early Childhood Education: Goals and Resources Required

GOAL

Expanding and improving comprehensive early childhood care and education, especially for the most vulnerable disadvantaged children GOAL Expanding and improving comprehensive early childhood care and education, especially for the most vulnerable disadvantaged children.

Situation Analysis:

According to the recent Population Census, the total population of under 5-year age group in Pakistan was 18.6 million in 1998 - 14.2% of the 130.58 million total population of the country. In the year 2000, the population in the 3-5 years age group was 8.61 million (4.40 million boys and 4.21 girls).

The importance of early childhood care and development (ECCD) in general and early childhood education (ECE) in particular, is now well established. It is widely acknowledged that the effects of the kind of early care a child receives from parents, pre-school teachers and caregivers, determines how well a child learns and performs throughout his/her entire life. Other benefits of early care and education relate to increased economic productivity over a lifetime and better standards of living when the child becomes an adult.

In Pakistan, Early Childhood Education had been well organized and formalized till seventies. Katchi or pre-primary classes were organized in the formal primary schools. However, officially this practice was almost discontinued during eighties. Realizing the role and significance of early childhood education, especially for improving the learning achievement/ competencies, provision has been made in the current National Education Policy (1998-2010) to reintroduce Katchi/pre-primary class as a formal class in primary schools, extending the primary education for six years - Katchi to grade V.

In the public sector primary schools, especially in rural areas, children below 5 years of age do attend school informally, and learn basic concepts of literacy and numeracy. Available evidence indicates that the average ECE participation rate is almost 25%. Of the total enrolment in preprimary and primary classes, the share of enrolment in pre-primary classes ranges between 4.73% in Islamabad Capital Territory and 30.11% in Federally Administered Tribal Areas.

The total cost of early childhood education for both boys and girls in both urban and rural areas

is Rs. 48,329 million with almost 20% as development costs and 80% for recurrent expenses).

Education Budget in Pakistan

According to the National Finance Commission Award, provinces receive funds from the federal divisible pool in accordance with a formula, largely based on the provincial shares of population.

The provinces then, along with their own resources, allocate funds across various sectors,

depending on their respective priorities. Since the early 1990s, provinces realized the need for improvements in the social sectors (education, health, and water and sanitation) and made allocations accordingly. Education, too, received an impetus and supported by donor assistance, substantial investments were made to improve the access to, and quality of, education. Information regarding national and provincial budgets as well as budgets allocated to education

sector during (1998/99-2002/03) shows that in Pakistan, slightly more than 7 % of the national budget is spent on education. However, at the provincial level education gets an allocation between 20% - 30 %, with Punjab allocating the highest proportion of funds to education, closely followed by NWFP (Table 20) It is also evident that the highest proportion of education budgets are spent on recurrent heads – mainly as salaries and for operations and maintenance. At present, this proportion ranges

between 80% in Balochistan to 95% in Punjab. As such, little amounts are left for development expenditures. Particularly, in Punjab only 5 % of the education budget is spent on development heads. On the other hand the proportion is close to 20 % in Balochistan.

Problems faced by Provinces in allocations to education

Since the 1996 National Finance Commission (NFC) Award (which became effective with the 1996/97 budget) and the tax and tariff reforms falling immediately after the announcement of the NFC Award (GST rate was lowered from 15% to 12% and custom tariffs, too, were lowered, the

provinces experienced a drastic slow down in growth of their revenue resources. The problem was further compounded by: (i) a change in financial procedure regarding federal tax transfer to the provincial governments (rather than making monthly transfers on the basis of budgeted amount, with adjustment made at the end of the year, transfers were made on the basis of actual monthly collections) and (ii) the perpetual revenue shortfalls at the federal level. The resulting resource crunch in the provinces, coupled with their own budgetary rigidities (such as falling resources, large establishment bill due to a large salaried workforce, heavy interest repayments to development loans from federal government, etc.) implied a sharp reduction in development and non-salary expenditures in the provinces. With education sector being the largest sector in terms of its budgetary allocations, development and non-salary allocation sector for the education sector were the worst hit, affecting the outreach and quality of service delivery.