Money Matters

Fiscal transparency

By Majyd Aziz
Mon, 12, 16


Pakistan became the 74th Member of the Open Government Partnership (OGP) recently in Paris when Finance Minister Ishaq Dar signed the documents. OGP was launched in 2011 by eight countries to provide an international platform for domestic reformers, committed to making their governments more open, accountable, and responsive to citizens. OGP is a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance.

According to Hammad Siddiqui, Country Director of Centre for International Private Enterprise (CIPE), “Pakistan is now eligible to be an OGP member as the country has fulfilled the minimum criteria of fiscal transparency, access to information, public officials’ asset disclosure and citizen engagements.”

However, it took the government some time to sign the Letter of Intent despite the fact that under Vision 2025 of government of Pakistan, the concept of the OGP initiative is vividly enshrined. The commitment given by Senator Dar at the Paris Summit is testimony to the changing global governance environment and reflects the process of real time democratic process in the country.

The role of the private sector becomes critical if OGP is to maintain importance and implementation. The private sector leadership, through Chambers and Trade Associations, must study the concept of OGP and must ensure that trade and industry embraces the initiatives. This is essential if private sector desires a comprehensive and active public private dialogue with the policymakers. The traders and industrialists have often complained about many government decisions that are enforced without a structured consultative process with the private sector. A disconnect has usually resulted in hyped up conflicts that widen the trust deficit.

It is, therefore, crucial that the public-private dialogue becomes a formidable channel to undertake reforms, transparency, and acceptance in at least seven essential factors. Under the canvas of OGP, there should be focus on the subject of hidden costs of doing business. It is also important to streamline the cost of tax compliance because the present taxation structure is cumbersome and non-business friendly. The FBR focuses on tax-to-GDP as its prime objective. Until the cost of tax compliance is reduced, there would be a continuation of tax evasion and staying out of the tax net.

Fiscal budget transparency is another crucial factor that needs to be addressed. Successive governments have relied on a revenue-driven budget instead of a pro-people and business-oriented budget. Despite the hard work and strenuous efforts of chambers and associations in preparing and presenting budget proposals, the net result has been overwhelmingly negative and it is a rare event when the proposals are given due consideration by the budget planners. The general complaint is that these proposals are consigned to the proverbial dustbin in the corridors of the Federal Board of Revenue (FBR).

The private sector, the think tanks and research organisations, the economists, as well as students, face the frustration of obtaining reliable data from the government and various state agencies and organisations. The statistics, information, and feasibility reports prepared by the government leave much to be desired. It is imperative that the government, in consultation with the private sector and other stakeholders, undertakes a massive reform of the data collection system. The government must bear the responsibility of providing accurate, timely, and practical data so that the private sector can utilise these for dependable business reports, workable feasibilities, and obtaining worthwhile information to prepare their own assessments of future business and investment potential.

An important tool in world business is the availability and critical mass of international indicators. Every now and then, these indicators are highlighted, discussed, and promoted. Pakistan has a very dismal track record in various global indexes and ratings. It has always been the contention of private sector that not only transparency, but also judicious implementation of progressive policies, would enhance the ranking of the country and would enable domestic and foreign investors to increase their investment and business exposure. Pakistan is 144 among 190 countries in the ranking in the Ease of Doing Business Index issued by the World Bank. Pakistan was 138 out of 189 countries last year. Moreover, Pakistan is way down, 156 in "paying taxes" index, among 190 countries. At the same time, Pakistan has been included by World Bank in the list of 10 economies showing the most notable improvement, in terms of regulations and performance, on the Doing Business indicators in 2015/16.

A healthy competition environment is required to provide impetus to the private sector, especially small and medium businesses, to flourish and become contributors to the economic prosperity of the nation. It is high time that there is openness in the government procurement policies, in providing on-time information on government projects, in reducing bottlenecks, red tape, and hurdles, in disseminating information on rules, regulations, and terms and conditions, and in ensuring that decisions are merit-based and not discriminatory or arbitrary.

A revisit and revamping of Public Procurement Regulatory Authority Rules 2004 is needed to ensure that the purchases of government organisations are quality and quantity compliant and there is minimal misuse of the procurement process.

There should be a focused and concerted public-private dialogue to identify industry-specific issues so that sectors that are presently at a disadvantage are able to join the mainstream. There is need for capacity building of women entrepreneurs, technically qualified micro-entrepreneurs, and small service providers, who face innumerable difficulties and problems in surviving in the present tough environment.

A nexus has to be developed that would link them with chambers and trade associations and it would be obligatory on these organisations to assist them in navigating through the maze of bureaucracy and the plethora of rules and regulations. These organisations must spearhead their cause so that their presence in the centre of economic activity would provide them access to government and enable them to control their cost of doing business.

The acceptance of OGP by Pakistan has come at a very crucial juncture of the nation's march towards economic prosperity and self-reliance. The China-Pakistan Economic Corridor (CPEC) is a spectacular project that would put Pakistan on a higher plateau in the comity of nations. CPEC did create negative misgivings among the smaller provinces and the vociferous objections did put a damper on the progress of CPEC. The overarching reason was the reluctance of the government in providing transparent facts, figures, and roadmap of the CPEC.

Thus, a brouhaha was created that could have undermined the whole initiative. Hence, OGP, as the beacon of light, would be instrumental in getting rid of all such non-transparent, hidden, or secretive mindsets of the decision makers. Moreover, the attainment of Sustainable Development Goals would become a national priority if the government sincerely involves the citizens, especially private sector, under OGP.

There is always the hope that gradually, both the public and private sector would also understand, adopt, and ensure that real self-accountability of decisions and policies would become a norm and not a case for any judiciary to decide.

Andrew Wilson, managing director of CIPE, in Washington, while talking to Money Matters said, “The principles of transparency, good governance, and accountability found within the OGP movement are critical elements for sustainable development. OGP provides for a results-oriented road map that at its best comes from a public dialogue that engages the broadest cross-section of society. The private sector has both, much to gain, and much to offer in terms of insight and expertise within an OGP framework. OGP works best when its goals are based on true dialogue and real needs, not a one-way government dominated effort. When developing its plan, the public sector would do well to engage the private sector along with civil society at an early stage to ensure realistic goals and results.”

The writer is former president Karachi Chamber of Commerce and Industry