Passage of the finance bill

It was not unanimous this time around, but the budget has passed the National Assembly after almost three weeks of deliberations. While we have our disagreements with some of the specifics of the bill, we welcome its timely passage. Perhaps more important than the specifics of the bill was the fact that the government seemed to follow democratic parliamentary procedure in both letter and spirit. Recommendations from the Senate, which are constitutionally non-binding, were debated and 61 of the 74 were adopted by the National Assembly in the final bill. It may seem redundant to congratulate parliament on behaving democratically, but given the less-than-mature attitude of some sections of the opposition, particularly the PML-N, this is an important issue to highlight. It seems that the party is trying to pick a fight for the sake of picking a fight. It has no genuine policy debate with the government because the economic policy currently being implemented by the PPP-led administration was first initiated in Pakistan by the PML-N itself during their second term in office in 1997. If anything, they should seek to take ownership of the policy.

However, given the fact that the economy is not quite out of the doldrums yet, one can understand the opposition’s urge to distance itself from the administration’s approach to economic management. Yet they should understand that rather than staging meaningless walkouts, they should propose viable alternatives. This administration, more than most others in our history, seems to be open to ideas from the opposition. Beyond the politicking, however, it was also encouraging to see that the federal government lived up to the commitments it made under the Seventh National Finance Commission Award by allocating the majority of the divisible pool of revenues to the provincial governments. We agree with the prime minister’s characterisation of this budget as being a historic step forward for the country.

Provincial governments seem to be quite beside themselves with having genuine fiscal autonomy for the first time. The Balochistan government, because of its new-found financial resources, has begun talking about buying out the Oil & Gas Development Corporation (OGDC) – the largest publically-listed company in terms of market value – from the federal government. While this is unlikely to happen any time soon (given the fact that the company is worth over Rs600 billion, more than twice the Balochistan budget), all this is a reflection of the sea-change that has taken place since the NFC was agreed upon. We would also like to say that the new finance minister has been speaking sensibly, especially on the fact that the economy cannot and must not be held hostage to prop up a handful of loss-making public sector entities. These handouts must stop and the money redirected to sectors where it can be put to better use — and we are glad to see a finance minister say this.

The principle of crafting localised solutions to local problems is a sound one, though it requires a significant upgrade in the governing capacities of the provincial governments. While we share the enthusiasm with which provincial governments have embraced their financial autonomy, we would urge them to focus on building up their capacity to utilise the additional financial resources effectively. As they stand now, the provincial governments are opening themselves up to charges of corruption and wastage if they cannot properly manage their larger budgets effectively. Provincial governments must now ensure that they reconfigure their ministries and bureaucratic structures to enhance their governing capacity. In addition, provincial governments should not hesitate to devolve both political and financial power further downward to the district level and below. The federal government has lived up to its end of the bargain by granting true provincial autonomy. Now it is up to the provinces to prove that they truly believe in devolution of power and are not simply interested in hoarding it for themselves.

As for the federal government, it should now focus on ensuring that it lives up to its revenue projections and manages to stay within its expenditure layouts.

Published in The Express Tribune, June 28^th, 2010.