Monday July 15, 2024

How to make a budget transparent

By Dr Naazir Mahmood
December 31, 2023

Karachi is a happening place, and on my recent visit there, I had the opportunity to attend two events that may be of interest to my readers.

Ishaque Soomro, a civil-society activist, invited me to the launch of the 2023 report on the state of budget transparency in Pakistan, and Dr Irfan Aziz of Federal Urdu University was the moving force behind a successful conference on the state of the media in the country.

this representational image shows a calculator on the table. — Pixabey
this representational image shows a calculator on the table. — Pixabey

The Centre for Peace and Development Initiatives (CPDI) has been working for over 20 years now as a civil society organization that focuses on issues of peace and development in Pakistan.

Mukhtar Ahmed Ali is leading this centre, doing some valuable work to inform and influence public policies through advocacy and research. Nearly 10 years ago, the CPDI established its budget study centre to undertake analysis of the federal, provincial and district budgets. It has been releasing its annual reports on budget transparency in Pakistan.

Amer Ejaz has produced his fourth report on this essential component of democratic governance. The 2023 report once again highlights the significance of citizens’ participation in budget making. Ultimately, it is ordinary people who are likely to reap the fruits of fiscal transparency or bear the consequences of its absence. All citizens have a right to information concerning public matters, more so if they relate to financial wellbeing.

Traditionally, budget-making exercises both at the federal and provincial levels (what to talk of districts) have remained unaccountable to the people of this country. They have a right to know and be present at – or at least have a voice in – the budgetary process that is going to affect them.

Public resources are essentially for the benefit of the people, but in Pakistan – like many other countries – they are at the mercy of the bureaucrats (both civil and military) and of the politicians who get support from technocrats hardly interested in public welfare and development.

The fourth edition of the report tries to navigate through the fiscal challenges that Pakistan is facing in terms of their transparency. Dissecting and improving financial transparency practices in the country should be one of the primary tasks of any budget-making team that must involve facilitation of dialogues. Citizens and civil society organizations are the key stakeholders that this report takes into account.

The report presents findings of its research that examine processes from the provincial to federal levels and looks at them in the light of international best practices. According to the CPDI report, Pakistan has taken some steps towards fiscal transparency, but the challenges persist and the roadmap for a more transparent fiscal future needs more clarity.

Unless a wider citizenry gets engaged in building a ‘robust and transparent financial framework’, there will be lack of insights and budget-making will remain questionable. Successive governments in the past have failed to initiate fruitful discussion, and there have not been many collective efforts towards a transparent budgetary process.

In most cases, budgets have been just about numbers on the paper, and they do not build trust or foster development. For a transparent budget-making exercise, the people of Pakistan must feel themselves a part of their country’s fiscal journey as a cornerstone of good governance. The bottom line is promoting greater government accountability and improved public trust. The fiscal landscape in Pakistan lacks budgetary clarity and there is a need for more openness.

One of the first key findings of the report is that Pakistan has made some progress in making budgetary documents more accessible digitally. Credit must also go to the last PPP government in Sindh that developed an impressive web portal for budget-related information.

The federal government has also taken some steps in the right direction by sharing development project information. Still, both at the federal and provincial levels, updating the portals is a major issue. In most cases, the portals tend to give information that is not up to date. The reports laud the auditor general of Pakistan (AGP) for ‘impressively addressing’ previous backlogs and sharing current year’s data online. “This marks a clear step towards improved transparency.”

The second finding of the CPDI report for 2023 is that the Citizen Participatory Audit (CPA) has taken the shape of a ground-breaking initiative indicating Pakistan’s intent to actively involve its citizenry at least in the auditory process, if not in budget making itself.

The report clarifies that the CPA is still in its initial stages, but its potential impact is significant. The CPA now claims to encourage inputs from the general public and CSOs working in the country, but these claims need more substance for a transition from merely traditional audits to more ‘nuanced and project-centric evaluations’.

The report also found that there are uniform shortcomings across provincial reporting on debt data. From federal to provincial levels, there is a concerning trend – seen uniformly – that there is absence of crucial debt data.

In Punjab, there is a conspicuous lack of details about new debt for the ongoing financial years and year-end total debt. Similarly, details about any allocations for debt servicing and repayments are also missing. Punjab’s reporting also omits the permissible debt limit as a GDP percentage. The situation became strange as the caretaker governments in Khyber Pakhtunkhwa (KP) and Punjab outlived their constitutional duration of 90 days.

Sindh’s reporting also reflects the same concerns as it is also missing clear data on the current year’s debt and year-end outstanding debt. Data regarding the annual debt requirements and potential creditors is accessible at the federal level, but several vital specifics remain absent, whereas details concerning the cumulative debt at year-end are also missing.

The report underscores the concerns about lack of clarity on the acceptable debt boundary relative to GDP. Looking through the lens of international best practices, the report presents an insightful analysis showcasing the potential path ahead for Pakistan.

Of a significant value is the practice in Canada that involves a participative and transparent model to budget-making. South Korea’s citizen-centric approach to budget formation also gets a relevant mention as a valuable lesson for Pakistan.

Finally, in terms of recommendations, the report gives at least four solid suggestions. First, it recommends a unified digital platform for public engagement that should draw from South Korea’s successful model. Pakistan may consider launching a centralized digital platform that should foster citizen participation. It may also present details that citizens could easily digest, rather than complicated rigmaroles.

The report recommends that national and province-wide public consultations should get a priority from finance ministries at both levels. The budget-formulation phase should ideally start with meetings and workshops to ensure adequate representation from every sector and region.

Individual departments and ministries should arrange such meetings rather than relying entirely on the finance ministry or the Planning Commission. They should also engage with media and educational institutions for public awareness and capacity enhancement. Finally, there must be a transparent feedback mechanism to nurture public trust in budgetary processes and participatory audits.

The report is mysteriously silent about the attempts some senators and media persons made to get access to information from institutional personnel about their perks and privileges. There is no mention of a complete absence of details in security-related budgets. This practice should also come to a halt as people are entitled to know where their money is going.

The writer holds a PhD from the University of Birmingham, UK. He tweets/posts @NaazirMahmood and can be reached at: