ISLAMABAD: The Ministry of Finance is going to hold its first Fiscal Coordination Committee (FCC) meeting this week to discuss the annual reports of the National Finance Commission (NFC) and the implementation status on World Bank’s financial management and service delivery programme.
According to sources, the finance ministry will be holding the first meeting of the FCC, which was constituted in April 2018 to strengthen fiscal coordination between the federal government and the provinces with the objective of achieving consolidated fiscal targets as well as macroeconomic stability.
The meeting will include both federal and provincial finance ministers.
The decision to constitute the new committee was made in 2016 by the ministry as it was committed to the International Monetary Fund (IMF) under the $6.64 billion Extended Fund Facility.
Subsequently, the proposal for constituting the committee was forwarded to the Council of Common Interest (CCI) with a request for consideration and approval of the fiscal coordination committee after consultations with the provinces.
The meeting of FCC, according to sources is scheduled to be held on October 31, 2018, and will be chaired by the finance minister Asad Umar and finance ministers of provinces.
The important meeting, sources say, will discuss the annual reports of NFC from 2016 to 2018 and give an approval to the annual reports of implementation of the NFC.
According to sources, the NFC Monitoring Committee, which is similar to FCC, has not been able to hold its meeting for a long time. Therefore, the FCC was also scheduled to discuss issues related to NFC.
Another agenda of the said meeting would be the establishment and approval of an incentive system to improve fiscal performance and service delivery in selected areas for the release of funds under the World Bank’s $400 million loan program.
Previously, the IMF had also stressed the importance of strengthening intergovernmental fiscal policy coordination saying that the federal government should encourage, and work with the provinces to improve sub-national revenue collection by modernising agriculture taxation, developing electronic fiscal systems to improve property tax collection, and improving taxpayer compliance to bring underdeveloped tax bases more effectively into the tax net.
It may be recalled here that Pakistan had signed the loan agreement with the World Bank for Public Financial Management in November 2017 to address the impact of the ongoing health and education operations through inefficient and ineffective management of funds, lack of transparency which can undermine accountability, and coordination challenges between federal and provincial governments.
The Washington-based lender had approved the $400 million loan so that Pakistan could mitigate challenges through transformative measures like the enactment of a robust Public Finance Management (PFM) law which leads to the empowerment of front-line service delivery managers by decentralisation of payment processing and availability of real-time budget execution reports for timely decision-making.
However, despite a lapse of over 10 months, the Ministry of Finance has been able to disburse only 20 per cent of the total fund, according to the documents available with this scribe. Out of the approved fund, only $80 million was released while $320 million, 80 per cent of the amount, is yet to be released.
As per the documents, a number of targets were given to the finance ministry to be met by June 2018. However, the ministry could not show satisfactory performance during the given period due to the elections and subsequent change of government in the past six months.
