Pakistan is one of the leading borrowers of World Bank resources. The latest package approved is a dollar 825 million loan for improving the national power transmission system in the country and enhancing health and education service delivery by strengthening financial management and procurement systems. The dollar 425 million National Transmission Modernization Project-I (NTMP-I) will modernize the national transmission system to enable new power generation to reach consumers by upgrading, expanding and rehabilitating selected 500KV and 220KV sub-stations and transmission lines. The dollar 400 million Public Financial Management (PFM) reform programme will address PFM challenges in the education and health sectors through the enactment of a robust public finance management law, which will lead to decentralization of payment and empower the front-line service delivery managers. The programme will also focus on strong cash management, timely and comprehensive reporting; improved federal-provincial coordination, timely release of funds; streamlining payroll and pension system, efficient and transparent procurement; and ensuring user-friendly reports for citizen engagement. While the NTMP would be financed by the IBRD and is a fixed-spread loan with a maturity of 21 years, including a grace period of 6 years, PFM reform programme will be financed by IDA, with the maturity of 25 years and a grace period of 5 years.

It could be easily seen that both the above loans are on very soft terms and quite consistent with the requirements of the country. There is no doubt that the present PML (N) government had invested heavily and made a lot of efforts to generate electricity. As the reports indicate, load shedding for both households and industries has been reduced. The improved power supply will help meet the unserved demand from consumers and reduce the number and duration of power outages. However, with a substantial volume of new generation now coming online, the strengthening of the transmission and distribution system is equally important. If the latter is not attended to properly; mere production of electricity would not make the needed difference. The objective of NTMP-I is to upgrade the transmission network and lower losses by improving supply reliability. Besides, the project would modernize the information and communication technology infrastructure and strengthen financial and accounting systems of the NTDC. This will lead to more efficient operations and business decision-making processes, higher productivity and better staff skills. As for the PFM is concerned, we know that health and education sectors are not only starved of resources but there are other challenges that undermine the delivery of these sectors to the population at large. According to the Country Director, World Bank, "the new programme will support the government to strengthen their public financial management and make it more transparent and accountable by introducing new aspects like social audit of public expenditures by beneficiaries." The effectiveness of the PFM programme could of course increase with higher allocation of budgetary resources for education and health by the provinces. Another important aspect of these loans is their optimal utilisation in line with the stated policy objectives. We know that in many cases, loans are granted and received with the best of intentions but used somewhat imprudently with the result that while the country is burdened with more loans, there is nothing concrete to show on the ground.

Copyright Business Recorder, 2017