World Bank approves $24.5m for system improvement

Project extended for six months, $130m already spent.


Shahbaz Rana February 12, 2011

ISLAMABAD: The World Bank has extended a partly successful project for another six months and approved additional financing of $24.5 million for improving public financial management in Pakistan - a task that could not be fully achieved despite spending $130 million so far.

The additional credit facility was approved for the Second Improvement to Financial Reporting and Auditing Project, known as PIFRA II. The project started in 2005 at a total cost of $93 million over five years. The original closing date of PIFRA II was December 2010 that has now been extended for another six months.

The additional financing has been extended for a period of 35 years and the government will pay about one per cent interest on it. PIFRA II is an extension of PIFRA I that was approved in 1997 for five years but later on extended for another three years. The total cost of PIFRA I was $37.2 million.

The Executive Board of WB approved the additional financing with an objective “to further increase the accuracy and reliability of financial reporting, public financial management and oversight at all levels of government.”

Overall, an amount of $130.5 million has been spent on improvement of accounting and auditing system but still there are serious lapses in the system. According to finance ministry documents, from July through September 2010 the government spent Rs676 billion but it did not have record of Rs47 billion spending. This amount is shown as unidentified expenditures in the official income-spending account, evidence that indicates flaws in the financial accounting system.

Similarly, during the last financial year ended June 30, 2010, the government booked Rs31 billion more than what the federal and provincial governments spent during the course of the year. Official documents show that as against Rs3.007 trillion actual spending, the finance ministry booked Rs3.038 trillion.

However, WB terms the project a success. “The development of an accounting, reporting and auditing system that covers all levels of government is notable as these achievements place Pakistan at the forefront of public financial management reform in the South Asian region,” Rachid Benmessaoud, World Bank Country Director for Pakistan, was quoted as saying in an official handout.

The handout states that since the approval of the project in 2005, it has demonstrated notable results in improving the capacity of financial resource management, budgeting, expenditure control and accountability at national, provincial and district levels.

Published in The Express Tribune, February 12th, 2011.

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