Pakistan’s public financial management (PFM) landscape exhibits a diverse scenario at the federal and provincial levels, with continuous efforts directed towards reform and structural betterment. At the federal level, a significant challenge lies in the large, persistent, and escalating fiscal deficits which contribute to macroeconomic volatility. This scenario adversely impacts both public and private investments, consequently stalling long-term economic growth. A continuous agenda for PFM reforms is being pursued to enhance budget effectiveness. These reforms aim at improving aggregate fiscal discipline, allocation efficiency, and service delivery, which are crucial for addressing the key drivers of fiscal deficits and advancing towards fiscal and debt sustainability.

On the provincial front, different regions have embarked on varying strategies to improve their PFM systems. For instance, Punjab has outlined a PFM Reform Strategy 2025, which is structured around nine pillars addressing major areas within the PFM system. This strategy includes a results’ framework specifying the vision, result areas, issues, and recommended actions to overcome these challenges. Similarly, in Khyber Pakhtunkhwa, efforts are directed towards improving budget execution and reporting. The government, through Project to Improve Financial Reporting and Auditing (PIFRA) systems, is able to prepare real-time budget execution reports which are crucial for effective financial management.

Our team supported a provincial Planning & Development Dept. to better manage the allocation and expenditure of development spending total portfolio of more than $1.5 billion. This work required a systematic and structured methodology to address the inherent challenges and optimize the processes across allocation, execution and management processes.  

An analytical approach was adopted to address budget allocation challenges. A prioritization framework was drafted to identify 218 high-priority (HP) schemes for a more focused allocation of resources, shown in Exhibit A.

Subsequently, a results framework was developed to map sectoral targets for these identified schemes. The budget allocation for High Priority Schemes increased by 154%, equivalent to around PKR 44 billion in the fiscal year 2021-22.

To enhance budget execution, detailed work plans that spanned three months for the high-priority schemes were created. These workplans were built around a results framework for High Priority schemes which was developed through a meticulous process. This was necessary for the government to be able to gauge the impact of budget utilization effectively,  

The initial step involved a PC-1 Review of 218 schemes across 14 sectors, generating approximately 500 output indicators populated with data gathered from line departments and district staff. Following consultations with department/planning officers, around 300 output indicators were shortlisted. Subsequent consultations with departmental planning officers and experts led to the collection of quantitative data for baseline, targets, and progress against targets for finalized 226 output indicators. A data collection mechanism for all these indicators was also established under P&DD. Using an already existing digital portal was strengthened as a one-window solution to track the progress of all schemes.  This initiative aimed at improving leadership oversight through more granular tracking of these schemes. As a result, the expenditure for high-priority schemes increased by 83%, amounting to PKR 25 billion in the fiscal year 2021-22, helping align financial spend with identified priorities, refer to Exhibit A.  

The results framework charted sector-wise physical progress of all high priority schemes for the first time and as a result improved scheme tracking.  shows a sample output from the results framework. This was enabled through an improved digital portal. A thorough assessment was conducted on the original digital portal created and developed by the CM Delivery Unit, which included a detailed mapping of the portal’s data flow, functionalities, and their utility. In order to obtain a well-rounded review of the portal, a comprehensive questionnaire was developed for Key Informant Interviews (KIIs). These KIIs were carried out with 16 respondents from different cadres, providing a valuable range of feedback. Based on the review, 41 new and improved functionalities were added to the portal, enhancing its overall performance and user experience.

A detailed review of management processes was then undertaken to enhance operational efficiency of the results framework. Periodic scheme reviews with Additional Chief Secretary (ACS) P&D were strengthened to ensure follow-ups on operational issues in scheme implementation. The aim was to create more consistent oversight and address operational bottlenecks as they arise instead of waiting for them. There was also an endeavour to clarify and redefine responsibilities to rationalize the workload for department level planning cells which enabled optimizing scheme implementation.

Under the previous management processes, each scheme was reviewed once every six weeks, and the selection of schemes or sectors to be reviewed was arbitrary and lacked a structured approach. Moreover, there was no formal follow-up process in place for actions decided upon in previous meetings, which could potentially lead to oversight or lack of progress. However, with the introduction of the new management processes, the review frequency had been increased to once every two weeks, enhancing the monitoring and evaluation process. Additionally, a High Priority portfolio had been established and divided into two sets, with each set of schemes being reviewed on alternate weeks, ensuring a systematic and prioritized review process. Furthermore, the new routine ensured that the last action was discussed along with the latest updates on each issue during reviews, thereby promoting accountability and continuous progress tracking. See Exhibit C for more information.  

Last, the team also designed a communications strategy was designed with an intention to showcase success and generate administrative support and political buy-in. This strategy was seen as a medium to communicate the achievements and gather support for the ongoing and future projects, recognizing the importance of stakeholder engagement and communication in ensuring the success of public financial management reforms and operational strategies.