Publication: Pakistan - Public Expenditure Management : Strategic Issues and Reform Agenda
Date
2004-01-28
ISSN
Published
2004-01-28
Author(s)
World Bank
Abstract
This report focuses principally on three
key dimensions of better public expenditure management in
Pakistan. First, it is paramount to continue financial
discipline and reduce the overall size of the public sector
deficit, including the sizable losses of public enterprises.
The modest progress made in reducing the government's
fiscal deficit during the past few years has been undermined
by the persistence of high level of losses of public
enterprises, especially Water and Power Development
Authority (WAPDA), and Karachi Electricity Supply Company
(KESC). To reduce the unsustainable burden of public debt,
the fiscal deficit, which has averaged 5.5 percent of GDP
(excluding grants) and 3.4 percent (including grants) during
the past three years, must be brought down further.
Provision needs to be made for the large and continuing
public enterprise losses and unfunded contingent liabilities
of the public sector. A strong and successful government
revenue mobilization effort, which will gradually raise the
ratio of revenues from 17 percent of GDP (FY02) to say 20
percent over the next decade, remains central to restoring
Pakistan's fiscal health. But as the experience of the
past few years shows, the structural weakness in the
taxation structure (relatively heavy dependence on trade
taxes) and the institutional weaknesses in the tax
collection machinery (especially on the income tax side)
will continue to dampen revenue growth for some time. Thus
it will be prudent to assume, at best, only moderate growth
in the ratio of government revenues to GDP over the next
five years. Even on the assumption of a steady increase in
the ratio of government revenue to GDP, the growth in
overall public spending in real terms will be modest over
the next few years because of the need to reduce the deficit
further and to fund public enterprise losses and contingent
liabilities. Indeed, in the medium term overall public
spending as a proportion of GDP is unlikely to increase from
the level of 22 percent witnessed in recent years, even if
grant assistance remains at a relatively high level.
Link to Data Set
Citation
“World Bank. 2004. Pakistan - Public Expenditure
Management : Strategic Issues and Reform Agenda. Public expenditure review (PER). © http://hdl.handle.net/10986/14679 License: CC BY 3.0 IGO.”