PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT

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PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT

• Financial Aspects
• Graeme Lee, SASEI

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THE PRESENTATION

• The presentation has three sections
• An outline of devolution in Punjab, Pakistan
• Discussion of the proposed Punjab Municipal
  Services Improvement Project
• Links with the National Improvement in Accounting
  and Reporting (PIFRA)

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LOCAL GOVERNMENT IN PUNJAB, PAKISTAN

• Devolution established by the Punjab Local
  Government Ordinance 2001 (PLGO)
• The PLGO created District, Tehsil, and Union
  Councils, and allowed for Citizen Community
  Boards
• Its overall objective to bring decision taking
  and accountability for services closer to
  citizens

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RESPONSIBILITIES

• Education and health functions were devolved to
  District Councils
• Water Supply and Sanitation services were
  devolved to TMAs
• Union Councils were set-up to provide grass
  roots political functions
• A Framework was established for Citizen Community
  Boards to undertake local projects on a cost
  sharing basis

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TEHSIL MUNICIPAL AUTHORITIES (TMAs)

• 122 TMAs now exist in Punjab
• Each comprises urban AND rural areas
• Typically the TMA is located in the largest
  town/city, but includes other urban centers
• It has often inherited some staff from the
  previous town/city government
• Hence it has a core of relatively experienced
  local government officials

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TMA SERVICES

• TMAs provide municipal services such as
• Water Supply and Sanitation
• Solid Waste Management
• Streets, street lighting and drainage
• Parks and open spaces
• They also are responsible for regulatory
  functions such as
• Enforcement of municipal laws
• Land use, sub-divisions, and zoning
• Prevention and removal of encroachments

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SOURCES OF FINANCE

• TMAs are funded by
• Own Revenues, such as water charges, fees for
  activities, and an annual property tax (collected
  by Provincial/District government)
• Grants, for revenue and development purposes,
  including a grant in lieu of octroi, which was
  abolished by Federal Government in 1999

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OVERALL FINANCIAL STATUS

• TMAs earn a surplus on recurrent accounts, which
  is applied to development
• The proportion of own revenue to total revenue
  varies. A small sample shows a range of 29 to
  71
• Service standards are usually poor, partly due to
  a lack of basic infrastructure and partly due to
  inadequate OM

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THE PROPOSED PROJECT

• Intends to address service delivery standards
  head-on
• Each TMA will make an informed choice about
  what service standard to improve
• It will then become eligible to receive a
  
  performance-based matching grant to support
  implementation of its improvement plan

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THE MATCHING GRANT

• The grant would finance a proportion of the cost
  of physical investments, and/or
• The full cost of capacity developments
• It would be available in annual rounds, with
  eligibility initially based upon the quality of
  an application, and subsequently on performance
  in achieving the agreed performance improvement
  outcome

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FINANCIAL CAPACITY IMPROVEMENT

• TMAs have different initial capacities the
  quality of leadership, manpower, local wealth,
  natural resources, all vary
• The type of assistance to develop financial
  capacity also varies
• TMA finance staff often request training but
  sometimes this is in the application of
  regulations rather than in financial management

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ANTICIPATED NEEDS

• These vary from assistance to apply the basic
  regulations of the LGO to introducing
  computer-based information systems
• Improved budgeting, with linkages to Development
  Plans
• A move towards service costing is seen as
  essential to aid efficiency
• Better management of the process of contracting
  out revenue collection services

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PIFRA

• PIFRA is a nation-wide effort to improve
  Government financial reporting and auditing
• Initially it was focused at Federal and
  Provincial levels, but it now includes local
  government
• In Punjab, the PLGO explicitly states that TMAs
  need not keep accounts as prescribed by the
  Auditor General till such time the adequate
  capacity is developed to conform to the national
  accounting system

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PIFRA and The Project

• So far the project shall not attempt to address
  this impasse
• This decision limits TMAs ability to develop
  cost accounts
• A follow-up PIFRA project includes a component
  specifically for TMA accounting
• There are some indications that PIFRA II will be
  asked to resolve the problem soon

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SUMMARY

• So the municipal services improvement project
  intends to allow TMAs to choose their own
  interventions
• A clear focus on the standard of service, and a
  way of monitoring progress is essential
• It intends to benefit the users of local services
  by improving the outcome of TMA activities