The World Bank has given its nod to the restructuring of the financing agreement for Pakistan’s Public Financial Management (PFM) and Accountability for Service Delivery Program, now valued at $380 million. Initially approved on December 19, 2017, and effective from December 29, 2017, the program has undergone two restructuring phases. The first, on November 22, 2021, extended the closing date to June 30, 2023, and reduced the program’s size to $380 million. The second, on June 25, 2023, further extended the closing date to October 31, 2023, aiming to reallocate financing across Disbursement Linked Results (DLRs).
In response to a request from the Ministry of Economic Affairs on October 18, 2023, funds attached to DLRs, amounting to $5.5 million, are set to be reallocated to DLR 2.7. This DLR focuses on bringing an additional 5 percent of baseline or an additional Rs. 50 billion under the Treasury Single Account (TSA), a crucial intervention consolidating and centralizing government funds. The TSA, already supported by the PFM program, is expected to create savings of Rs 33 billion annually.
The increase in allocation by $5.5 million aligns with the original assessment of ambition and effort, partially restoring the DLR’s allocation reduced in the first restructuring.
The International Development Association (IDA) has concurred with this request, leading to the amendment of the financing agreement. The PFM Program targets improvements in Public Financial Management and procurement systems to enhance management and accountability in health and education sectors. The five key result areas include strengthening legal frameworks, improved procurement performance, enhanced payroll and pension payment systems, external audit and social accountability, and performance-based grants.
The program aligns with the Government of Pakistan’s PFM Reform Strategy (2017) and initiatives following the PFM Act 2019. It embraces the transition toward the Treasury Single Accounting (TSA) system, decentralized payment processes, and delegation of financial powers to Principal Accounting Officers (PAOs) for improved service delivery.
With progress assessed as Moderately Satisfactory for the Program Development Objective (PDO) and Satisfactory for Implementation Progress, the implementation remains on track. The report highlights achievements in the legal framework, internal management systems, cash management policies, TSA implementation, electronic fund transfer, and improvements in budget transparency.
In Result Area 2, focusing on improved procurement performance, the implementation of an E-Procurement system is underway, piloted in Federal Ministries of Health and Education, with adoption by the Government of Punjab. Further collaborations between federal and provincial procurement authorities are enhancing the efficiency and interoperability of e-procurement systems across the country.
