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PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT

PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT. Financial Aspects Graeme Lee, SASEI. THE PRESENTATION. The presentation has three sections: An outline of devolution in Punjab, Pakistan Discussion of the proposed Punjab Municipal Services Improvement Project

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PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT

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  1. PUNJAB MUNICIPAL SERVICES IMPROVEMENT PROJECT Financial Aspects Graeme Lee, SASEI

  2. 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)

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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 O&M

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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”

  14. 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

  15. 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

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