Budget Management Analysis in Khyber Pakhtunkhwa for Improved Service Delivery

The role of public financial management (PFM) as a contributory factor in improving service delivery and stimulating economic progress is getting greater attention in the sector-related literature. A robust PFM can provide an enabling environment for improving service delivery and promoting economic growth. This report acknowledges that PFM and other factors influence the quality of service delivery. It also makes a case for how in the existing dispensation in the Khyber Pakhtunkhwa (KP) province, enhanced budget management can contribute to infrastructure development and improved service delivery. Inherent deficiencies in budget utilization in KP imply that high-budget execution needs to be looked at in combination with the quality of budget formulation in order to make the budget contributions to service delivery more meaningful. The Government of Khyber Pakhtunkhwa (GoKP) has undertaken significant reform measures to improve PFM and to assess the impact of reform efforts, the GoKP commissioned PFM assessment using the upgraded PEFA Framework (2016). The results of the KP PEFA review(2017) highlighted gaps on the PFM continuum, necessitating scrutiny of the causes resulting in such gaps. The GoKP in formulating its second-generation of PFM reforms considered it an opportune time to diagnose the system and process deficiencies to ensure that the greater resources made available to KP by virtue of the NFC1 Award (2009) are prudently managed to improve the infrastructure and the quality of service delivery. In the last decade, GoKP has displayed strong ownership for reforms. The GoKP formulated a PFM reform strategy in 2010; based on this experience, GoKP is devising another and broader strategy to sustain the pace of reforms. The report presents a number of findings and recommendations for reform. The World Bank has been engaged with the GoKP and particularly since the establishment of the Multi Donor Trust Fund and during the design phase of the Governance and Policy Project(KP) aided the government in problem-articulation. During the course of the PEFA assessment, a government-wide Steering Committee was constituted to provide oversight to the PEFA assessment. The same forum was used to commence a dialogue with the government and engage them in finalizing the recommendations based on the appetite for reforms.