The budget process

Published in The News International on October 23, 2010:

Drawing attention to the budget process during the month of October may appear a little out of step specially when there are so many other governance-related storms whipping. A closer look however indicates otherwise. The budget process for a fiscal year starts in the month of October with the Ministry of Finance issuing budget calls to all the ministries and departments seeking detailed reports of expenditures and estimates of demands for grants. Subsequently, the standard momentum takes course with the process coming to fruition in June with the budget’s presentation in the National Assembly. Rallying cries to reform the budget process when the process itself is well underway doesn’t allow space for change. If change is being advocated for, now is the time to reiterate its importance so that the new parameters can be shaped in time.

The budget process and the budget itself are critical this year round. Pakistan’s grinding fiscal crunch in the face of many existing competing priorities has been compounded by the unprecedented need to divert resources in the aftermath of the floods. Using the budget as a key instrument to signal the government’s priorities is therefore an imperative in the face of these constraints.

Over the last few years a number of gaps have been pointed out in the existing budget process. Of these the most critical is lack of effective engagement of the parliament in the budget making process. There is a huge paradox evident in this. The budget is the most important piece of legislation, but legislators feel disempowered with respect to their role in this process. The parliament is almost a rubber stamp when it comes to the most important law. There are many determinants of this practice, of which process limitations—a factor amenable to reform—is one. Last week the Pakistan Institute of Legislative Development and Transparency (PILDAT) released a Budget Process Guide, a capacity building tool, which is worthy of being commented on within this context. The guide bases its recommendations on a review of case studies in other countries, which have some level of institutional similarity with Pakistan’s system with reference to its budget process. Insights from case studies on Turkey, Canada and India’s budget process have been triangulated with an in-country analysis, which draws on stakeholders’ views and process analyses conducted by the organization over the last one year. Recommendations have the potential to increase the space for parliamentary engagement in the budget making process—increasing the duration of the parliamentary budget process from an average of 10 days at present to 60 days, active engagement of parliamentary Standing Committees, empowering the Finance Committee to conduct pre-budget consultations with stakeholders, creation of technical capacity at the parliamentary level for independent budgetary review and scrutiny of the defense budget, are the key recommendations.

The case study from Canada provides some useful insights for implementing these recommendations. For instance, it reaffirms the importance of engaging parliamentary committees but cautions that specialized committees with broad mandates should preferentially be engaged as opposed to departmental committees, which might have a problem separating assessment of budget estimates from their regular ongoing work involving oversight of departmental policies and practices. The Finance Committee’s role has been regarded preeminent in the Canadian budget process system in terms of spearheading pre-budget consultations and engaging civil society stakeholders in this process—an insight relevant to Pakistan. Indeed one of the recommendations draws insights from this and calls for creating a sub-committee of the Finance Committee on budget issues. Such a structure must be complemented with grant of mandate to engage civil society actors, allowed sufficient time to hold pre-budget consultations and supported with efforts in parallel to build technical capacity within the parliament to conduct independent budgetary analyses. The latter has been captured in the recommendations in the call for creating a ‘budget unit’. The Canadian experience has some valuable insights with reference to the latter, which can help avert turf rivalries.

Reform of the budget process must also create space to involve civil society stakeholders. As entities organized around shared interests, purposes and values, they can be an important countervailing power to the state. Think tanks, policy institutions, NGOs, professional associations, communities, activists, support groups, volunteers, social enterprises, trade unions, cooperatives and academia can help set intra-sectoral and inter-sectoral priorities and strengthen analytical ability.

By allowing more time and meaningfully engaging all stakeholders, the budget process can be made more participatory and transparent. However, rigor at the process level needs to be applied all year round with engagement of FBR, Budget Wing of Ministry of Finance and parliamentary committees, given the strategic significance of the budget as being reflective of country plans. It must be appreciated that the objective of parliamentary engagement should be to help overcome certain fundamental budget anomalies, which are currently pervasive—and it is within this context that many questions emerge.

Would the parliament, currently dominated by the elite, subscribe to the notion of taxing certain elite sectors and broadening the tax net while those that benefit from the current policy sit in the parliament and continue to wield great influence? Would the influence exercised through political party finance come to play in deliberating on such issues? Would they support easing the burden of indirect taxation which hurts the poor, which virtually have no voice in the parliament? Would the tax evaders in the parliament support policy changes that are meant to address the loop holes that they exploit? Would the parliament support tough decisions that relate to reforming/privatizing public sector enterprises, when this may entail thousands of their party workers loosing jobs, while they are on their way to massive retrospective reinstatements on the other hand?

Would parliamentarians be committed to supporting allocations for procurement reforms, judicial reforms, transparency building measures in public finance management, actions for checkmating cartel activity, when it is precisely these gaps in the system that are exploited by some non-bonafide elements within the political system? Would parliamentarians have the capacity and commitment to act as honest brokers, make a meaningful contribution in exercising oversight so that fiscal discipline is ingrained, debt remains within manageable levels, aid is used to build productive assets, development assistance doesn’t become fungible, and mini-budgets and development cuts don’t erode away the budget as the year passes?

As parliamentarians get drawn into the budget process—as they should—these questions will become part of the armamentaria of accountability parameters. There are some sane, progressive, liberal voices and clean hands in the parliament, which can join forces for change. With the media and civil society on their side, there might be place for hope.

The author is the founding president of the thinktank, Heartfile.

The flood and disaster observatory

Published in The News International on October 02, 2010:

In the last eight weeks, ‘coordination’ has come to be viewed as the epitome of flood relief, and the lack thereof, a major failure of stewardship agencies. The emphasis on coordination in the given context is not without reason. The massive need for response that the flood has generated, coupled with grinding fiscal constraints, create an imperative to minimize duplications and maximize synergies. Whilst the need cannot be overemphasized, it is the approach to coordination that needs to be placed under the analytical lens. What do we mean by better coordination? What should it achieve? What are the difficulties, which stand in the way of enabling that? Do we have structures to build upon? And where are the existing competencies and institutional arrangements?

In relation to the first question, one thing to note whilst making a case for optimizing coordination is to take stock of existing arrangements. There are a plethora of coordination arrangements already in place. The armed forces have their own system, the donors led by UNOCA have likewise, as do the National Disaster Management Authority (NDMA) and several provincial agencies. Civil society has its own mode of collaborating.

There are coordination arrangements within individual sectors, in addition. The health sector, for example, has a health cluster, themed task forces, and mobile teams in the field, a mechanism for operational control of field and mobile hospitals, and some level of oversight over fixed facilities; they publish a bulletin, maintain a website, provide for linking volunteers and have a mechanism for inter-cluster coordination. Other sectors have analogous arrangements. In addition to interagency coordination intra-sectorally, there are some mechanisms in place for inter-sectoral coordination. What exactly do we mean by enhancing coordinating then?

Most references to coordination in the present context refer to a supra-organizational structure or mechanism. In terms of what it should achieve, a number of objectives are noteworthy. Synchronization and integration of activities, minimizing duplication and wastage, ensuring efficient use of resources, and harmonizing civil society and volunteer contributions with the states’ response, are to mention the important ones. The latter is important since volunteers are generally first on the scene in disaster situations, as also outlined in Resolution 56/38 of the UN General Assembly. The massive mobilization of individual volunteers and organized civil society in wake of the recent floods is evidence of the need to develop a mechanism to harness their potential.

There are many difficulties, which stand in the way of creating a supra-organizational coordination structure, which can achieve these objectives given the extremely broad landscape of actors involved in disasters. Agencies have varying mandates, missions, and objectives and diverse administrative and reporting relationships. When they are asked to synchronise, share information and come under the control of another structure they fiercely guard their turf and independence. Coordination cannot be aligned on vertical principles, when agencies don’t have reporting hierarchical relationships.

The command and control model of coordination often perceived as the ideal mode of engagement doesn’t appear feasible as agencies have a disincentive to participate in such an arrangement. Any supra-organizational coordination structure, therefore, has to offer two things to be successful. One, it has to offer incentives for agencies to participate, and secondly, it should add value to what the existing arrangements have to offer.

It is in view of these two prerequisites, that the idea of a Flood and Disaster Observatory is being mooted in this comment. The word ‘observatory’ is conventionally used to describe a location for observing terrestrial and/or celestial events. There are many examples of disciplines for which observatories have been constructed; these can be ground, radio, web, space or air-based.

The proposed Flood and Disaster Observatory is envisaged to be a dynamic user-friendly web-based portal/interface. Such an interface can enable information to be updated in real time about the needs of various geographic regions and the agency commitments and actions in response. It would also enable assessment of gaps in the field and outline requirements.

In discussing this idea with a technical colleague, certain technical aspects became clearer. If the system is to be brought in immediate use then a simple database application, where the data is entered in forms and rendered in tabular reports with the help of built-in queries, can be implemented in a matter of a few weeks. However, the ideal solution would be to provide a user-friendly interface, where the user could click on a map and drill down to the level of the Tehsil and then enter the requisite information. An even higher level of sophistication would be to make use of a GIS-based system such that the information is not only entered with the help of a graphical interface but it can also be rendered visually on a map. A GIS-based system works off the same database hence no additional information is provided but the visual display superimposed on a map helps in quickly identifying the target location where the specific type of aid is to be provided. A visual map also provides better context and makes it convenient to see the status of the neighbouring areas rather than having to rely on successive queries.

Any system, whether GIS-based or a simple database application, would have to provide a mechanism for authenticating users. It is this system of information and authentication, which can enable coordination implicitly. Real time updating, interaction, and visibility would be an incentive for agencies to participate; and since the mechanism would not be coercive it would be acceptable to most stakeholders. It would also make perfect sense given Pakistan’s excellent telecommunications infrastructure.

The strength of this approach also lies in the fact that state agencies are already working with something that can be a stepping stone to developing this. For example, the flood relief pages of NDMA, and PDMA’s websites have many useful features; they post regular weather forecasts and flood warnings and information about relief camps and urgent needs. Punjab DMA has information for registering NGOs and volunteers and has many active features related to flood relief. The inclusion of interactive features for updating the information dynamically from a variety of sources can significantly enhance use of the web-interface for enabling agencies to use it as a common platform for coordination, hence maximizing synergies and minimizing duplication.

Pakistan must enhance its capacity to cope with disasters. Unfortunately, the country is amongst the top twenty global warming hotspots in the world with low adaptive capacity. Findings of a vulnerability mapping of Pakistan clearly indicate that “climate change will increase the variability of monsoon rains and enhance the frequency and severity of extreme events such as floods and droughts”. In attempting to prepare ourselves for next year, cost effective strategies as the one being proposed offer value. The government could convene technical experts to explore its feasibility further.

The author is the founding president of the NGO think-tank, Heartfile.