Lack of understanding of the country’s complex issues by the consultants is apparently a major cause behind unsuccessful attempts to initiate critical reforms, designed by international lenders. DESIGN: FAIZAN DAWOOD
World Bank consultants, who were part of an earlier $149 million tax reforms programme that failed to hit targets, are in Islamabad once again in an attempt to persuade decision-makers to take another loan of $300 million, but they seem to be unfamiliar with the country’s tax institution and its working.
Michel Zarnowiecki, said to be an expert in customs affairs, gave a presentation over the weekend on “upgrading customs and border management” in Pakistan, but during his 30-minute lecture he did not mention Pakistan a single time. His speech revolved around basic concepts like what are borders, the role of customs, how customs works and integrated border management dotted with examples but all from the European Union and United States.
Zarnowiecki’s audience included professionals like first and second tier leadership of the Federal Board of Revenue. The government will bear expenses of thousands of dollars being incurred on his visit on account of travel, stay and consultancy fee.
He was involved in first phase of World Bank-funded $149 million tax reforms titled Tax Administration Reforms Project (TARP-I), which the bank itself dubbed in its report a failed project.
He along with another consultant William Mayville gave presentations during a two-day workshop on “accelerating tax reforms” over the weekend. Mayville too was part of the first phase of reforms and is considered an expert in human resource training.
When Zarnowiecki was asked by The Express Tribune to create a link between his presentation and ground realities in Pakistan, he replied, “FBR officials know what I am talking about.”
Lack of understanding of the country’s complex issues by the consultants is apparently a major cause behind unsuccessful attempts to initiate critical reforms, designed by international lenders.
An official of the Ministry of Finance cautioned that TARP-II costing $300 million might meet the same fate as the earlier project, but despite that an agreement would be signed allegedly because of nexus between bureaucrats and World Bank officials.
The bank, based in Washington, has already given $3 million for project preparation.
How FBR officials rate TARP-I and what are their views about the next phase can be gauged from comments of senior officials in response to the presentations.
“World Bank has destroyed the FBR’s functional infrastructure and after seven years of reforms we are standing on debris,” said Nisar Muhammad Khan, Member Strategic Planning, Research and Statistics of the FBR.
“One of the goals of TARP-I was to improve integrity of the organisation, which we have lost altogether. The programme also targeted to motivate the workforce, but we are the most demotivated force and above all rather than expanding the tax base has shrunk. What else World Bank wants by implementing second phase of reforms,” said Najeeb Abbasi, a senior FBR official.
Putting the entire blame on World Bank may be unjustified as spending of millions of dollars in loans in the name of integrity, motivation and broadening the base have also no rationale.
When TARP-I kicked off in 2004, Pakistan’s tax-to-GDP ratio was 11.5%, which slipped to a dismal 8.6% by the end of the project.
Comments made by FBR Chairman Ali Arshad Hakeem also indicate the ineffectiveness of reforms introduced with the help of loans. “The country should undertake reforms by relying on its own resources,” said Hakeem.
In the presentation, when William Mayville said “FBR inducted 2,000 people solely because of unemployment in the country, not because of need,” he was interrupted by Hakeem. “Please delete this portion from your presentation, it is incorrect as the FBR has not hired anyone in the last five years,” Hakeem said.
On the basis of his findings, Mayville also advised the government to lay off 12,000 people out of a total staff of 23,000 in the FBR. However, according to FBR officials, actual staff strength is between 26,000 and 28,000.
At the end of his presentation, he said if anyone wanted to ask question. But there was complete silence.
Published in The Express Tribune, February 26th, 2013.
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Bangladesh foreign aid is necessary for pakistan survival
Economic hit man at work :)
Take more loan and be servants of World Bank & IMF for life!!
There is nothing new in it. International consultants and experts never know and are least interested in domestic challenges of a recipient country. Their performance is being judged over signing huge loans and disbursements. So, they are more worried about meeting the expectations of their management in HQ; not the expectation of people of Pakistan. The government needs foreign exchange, and so this project will for sure approve shortly! The only solution is self-reliance through managing fiscal responsibility and taxation - and for that we don't need multi-million TARP-II project.