Public Administration Notes

 How to read an Act

 Policy Making Cycle and Planning Commission
 Budget
 Public Personnel Management
 State owned Enterprises
 Public Administration & Accountability
 Act no X of It is the 10th law passed by the parliament in 2017 and always donated by
Parlaiment roman
Long title The long title is the formal title intended to provide a summarised description
of the purpose or scope of the Act. It is important because it can be used in
Court to interpret the Act.
Short title short title is the name used when referring to the act in write ups. title by
which a bill is known during its passage through Parliament. this is the name
by which the Act is known (and includes the year in which it was passed).
Preamble This is a preliminary statement explaining why the legislation was thought
desirable. It so the rationale and defines the reason and purpose for enacting
the law3e
Extent Which places in Pakistan will it be applicable, if only Islamabad then it is
means it is a devolved subject and you can check through the constitution, if
issue is devolved yet it extends to whole of Pakistan then must be provided
rationale as Pakistan's compulsion under international agreements
Commencement When will it come into effect, immediately or after some months
Sections Each section has a heading, which is intended to indicate what that section is
about and so may help the reader to identify the relevant provisions more
quickly

Main body with Main body - the main body of an Act is divided into
sections, sections (1, 2, 3, etc.),
paragraphs and subsections ((1), (2), (3), etc.),
definite paragraphs ((a), (b), (c), etc.)
Each section has a heading, which is intended to indicate what that section is
about and so may help the reader to identify the relevant provisions more
quickly. The main body of an Act may be divided into Parts if it deals with a
number of different matters, and Parts may be further subdivided into
Chapters.
Paragraphs Section follows alphabetical order and (a) (b) are called paragraphs.

Definitions (a) (b) Definitions are powerful provisions because they control the meaning of
terms used throughout a legislative text

What is the difference between Policy and Law

Policy
Policies are only documents and not law
 Power to make policy depends on the
subject it addresses (Some policies
require approval of Cabinet others may
require approval of the minister etc.) Ie
 Federal cabinet has given the green
light to the country's first-ever National
Security Policy
Law
 These policies can lead to new laws.”
 “Laws are set standards, principles,
and procedures that must be followed
in society
Power to make Law rests with the Parliament
and any member of the Parliament can
introduce a bill which if passed will become the
law of the land.
Policy: Pakistan forest policy 1991
recommended integrated use of forest
resources in conformity with wildlife
conservation, environmental and social need
Law: Pakistan Environmental Protection Act,
 1997.
Law is bigger than policy

Planning Commission of Pakistan

 Planning Commission (denoted as PC) is a financial and public policy development

institution of the Government of Pakistan.
 The Commission comes under Ministry of Planning, Development and Reforms
 An apex body and a think tank for the government in the fields of economic planning and
development
 a Development Board was established in 1948 in Economic Affairs Division to deal with the
economic development of the country
 a permanent Planning Board was established on April 20, 1957
 re-designated as the Planning Commission on October 23, 1958
 Composition has changed few times to improve coordination and increase its powers and
now Prime Minister is the Chairman

Project planning and management

▫ Projects are unique

▫ Specific
▫ have a definite starting and ending point;
▫ Temporary in nature;
▫ Carried out to manifest an organization’s strategic objectives;
▫ Measurable in its costs and returns;
▫ Normally have a geographical location or an area of geographical concentration
▫ The rationale of the projects to be undertaken should
o be clearly mentioned and supported by well-designed development programmes,
o must be consistent with short, medium and long-term perspective plans of the
country
o For proper utilization of limited development resources and public money cannot be
materialised in its true letter and spirit
▫

Construction of Peshawar Karachi motorway

▫ shall reduce the traffic congestion drastically, particularly on n5 highway

▫ undertaken by China construction company in the world. Imporvig Pak China relationships
▫ project has employed more than 9800 local people.
▫ Approved Cost: Rs.298008.47 million
▫ Final Expenditure: Rs.267577.32 million
▫ Date of Commencement: January, 2016
▫ Date of Completion: November, 2019

PSDP-public sector development programme

 an annual financial outlay in the form of a document that lists all the public sector projects
and programmes with the specific allocations made for each fiscal year;
 portion of the country's annual budget which deals with development expenditure;
  PSDP document consists of all necessary information pertaining to the projects and
programmes including the total cost, foreign loan component, forum date of approval,
expenditure incurred up to the end of preceding fiscal year and allocation, in terms of both
rupee and foreign aid component, for the respective fiscal year

Importance of PSDP

 PSDP provides much needed physical and social infrastructure in the country for uplift of the
economy
 22,000 million was earmarked for the installation of 2,600MW Coal Fire Power Plan
 The 300MW coal-fired Gwadar power plant would cater the needs of some 150,000 local
people by the end of 2023
 The power plant was one of the key energy projects under the China Pakistan Economic
Corridor (CPEC), he added. The project is aimed at improving reliability on local power
supply that would help to resolve power outages in current economic development and
urban expansion in Gwadar region
 The official also hoped that the discussed plant would be operationalised soon to solve the
port’s power scarcity issues. Power plant is of great significance to deepening the energy
cooperation between China and Pakistan, boosting the development of the Belt and Road
Initiative, improving the overall power structure of Baluchistan, and promoting local
economic development in Gwadar Port.
 PSDP is source of employment generation and poverty alleviation
 Increase in PSDP spending results in corresponding increase in GDP growth.
 PSDP is aligned towards objectives / targets of annual / five-year plans / vision through
implementation of viable projects

all of Rs2.1 trillion have been proposed for the Public Sector Development Programme (PSDP) for the
fiscal year 2021-22 by the federal government, with Rs900 billion for federal and Rs1.235 trillion for
provincial development programmes

PSDP Cycle

 Development Expenditure Budget Estimates to be finalized by Principal Accounting Officers/

Secretary of Ministry concerned
 The M/o PD&R has been entrusted with the responsibility to authorise release of
development funds to the PSDP-funded projects
 Allocations are released in a quarterly basis

PSDP:
The development projects are prepared on the approved format, that is, PC-I proforma. Five PC
proforma (PC-I, PC-II, PC-III, PC-IV and PV-V) along with proforma for summary for the ECNEC and
working paper for the CDWP, for new projects and revised projects

Project Cycle: Planning, Implementation, and Monitoring Cycle, adopted for the PSDP funded
projects, is represented in figure-2
 Pc Identification and Feasibility study and preparation of projects
1/pc evaluation
2
Appraisal and Approval and authorisation
approval
pc3 implementation monitoring and controls and activation
pc4 completion closure
pc5 Ex post evaluation Annual operational report and verification of income
output and impact
Role provides timely and useful advices / guidelines feedback and systematic collection and analysis
of information as the project timely completion of the projects.

keep the work on track, and can let management know the problems and help them in taking
necessary corrective actions. It enables to determine the efficient utilization of the available
resources being used in a transparent manner.

Monitoring & Evaluation According to the ECNEC decisions, Planning Commission is responsible for
third party monitoring and evaluation of PSDP Projects

comparison of the actual project outcomes against the planned target. Looks at project items
deliverable in terms of input output comparing them with the actual accomplishments

sees. Planning Commission has also started mid-term & ex-post evaluation of ongoing and
completed development projects for assessing their efficiency, effectiveness, relevance, impact and
sustainability in relation to planned targets, goals and objectives. A number of completed
development projects Ministries/Divisions/Agencies, of different are being evaluated since 2006,
which was almost nonexciting earlier. The approach of project evaluation was progressed to the
program evaluation and subsequently to the institutional evaluation. The recommendations
contained in the evaluation reports are mandatory for implementation by the
Ministries/Divisions/Agencies.

1- Problem identification

Shipper glacier flooding

 Nature: disaster & disaster response

 History: is it a recent phenomenon?
 Identification of the Stakeholders: local community, local & provincial administration
  Short-term: evacuation
 Long-term: prevent future events

2- Policy formulation

Discussion & debate among stakeholders

 Encroachments
 Trash dumping site
 Population growth
 Greenhouse gas emissions
 Tourism
 Cutting of trees

3-Policy adoption

Alternative policies evaluated & best one selected

4- Policy implementation

 Coordination & communication between all stakeholders to implement the chosen policy

5-Policy evaluation

 How far the policy met its objectives

ECONOMICS AND BUDGET- Mcq key characteristics

 The British economist John Maynard Keynes showed how government spending could be
critical in managing an economy, by stimulating demand when resources were underutilized
and unemployment was high.
 His thinking created the notion of budgetary policy as an instrument—in some respects the
primary instrument— by which a nation could execute macroeconomic policy.
 Hayek’s book, which can be condensed into five words—government planning leads to
dictatorship

Objectives/Dimensions of Budgets

 Allocation: Ensuring that an appropriate level of funding flows into sectors of the economy
where it is required.
 Distribution: Ensuring that the balance in public funding between regions, between classes
of people in society, between public and private sectors, and between government and
business reflects public policy.
 We should keep in mind the distribution and redistribution so the welfare is maximised Ie
wheat price increase so keep in mind that doesn’t burden all
 Stabilization: Using public spending to stabilize the macroeconomy (or in some cases parts
of it)
Rs589.9 million has been allocated for the Poverty Alleviation and Social Safety Division. Similarly,
Federal Minister for Poverty Alleviation Shazia Marri distributing cheques among deserving women
under Interest Free Loan programme by Pakistan Poverty Alleviation Fund.
 Growth: Using the power of government spending to facilitate economic growth and wealth
creation.

Rs3.55 billion have been allocated for the Aviation Division, Gwadar International Airport will play a
major part in the development of infrastructure in Pakistan.

The new airport will strengthen Pakistan’s position as a future aviation hub.

It will also reduce the country’s dependence on other regional airports, shorten flight distances and
reduce fuel costs, lead to increased economic activity.

New Gwadar International Airport NGIA Project. the airport will help jump-start the process of trade
and commerce throughout the region. It will increase trade between China and Pakistan, as well as
other countries

 Accountability: An accounting instrument that holds government officials responsible for the
expenditure of the funds with which they have been entrusted.

Pad allocation of the billion-tree tsunami project ‘Ten Billion Tree Tsunami Programme’ of the PTI
government, and has earmarked Rs9.45 billion under the PSDP 2022-23

Key Characteristics of Budgeting System

Annularity: Prepared every year; covers fiscal year for Pakistan it is every 1st July

Pakistan fiscal year starts at 1 July

Unity: Public revenue, expenditure and financing are considered together to determine annual budget targets.
Presents a consolidated picture of the fiscal operations of the Federal Government.

Universality: All resources form part of a common pool which comprises Federal Consolidated Fund and Public
Account. All the money should come from the same source

The main issues preventing effectiveness & efficiency of public expenditure in Pakistan

Large recurrent expenditure

National security threats
Natural disasters

 The Government of Pakistan has announced a Rs1. 2 trillion economic relief

packages to help support businesses in response to the Covid-19 outbreak.
 No allocations have been suggested for the Covid-19 response and natural calamities in the
upcoming financial plan for the fiscal year 2022-23. However, the finance managers are
proposing to set aside Rs2.42 billion for the aviation division.
 leave little room for public investment in infrastructure and human resource
development
Weak monitoring and evaluation of projects by PC
 Pakistan spends billions of rupees in infrastructure development projects through PSDP every year
  these projects are delayed due to bad planning and a lack of proper monitoring and evaluation
mechanism. Delay in completion of projects results into time over-run, which leads to cost over-run
thus putting unnecessary burden on the national exchequer.
 M&E system ensures strong check and balances on the responsibilities and its absence breeds
corruption. The basic purpose of monitoring and evaluation is that it helps learning from past
experiences, improves service delivery and provides better planning and proper allocation of
resources. The development community strongly believes in results, which reflects the accountability
to key stakeholders.

Duplication of development programmes

 It takes place when similar projects addressing similar propjets addressing similar
issues are approved which leads to duplication
 Example climate change ministry this year proposed a project on drinking water
whereas similar schemes also included in ministry of water respires PSDP

Public Expenditure-Situational Analysis

 Federal Government’s expenditure on
o Debt servicing
o Givenement6 has earmarked trillion for interest rates and repayments on
domestic and foreign loans (debt servicing)
o . The government spent a huge amount of Rs3.555 trillion on public
debt servicing
o The public debt of an economy increases when it is unable to meet
its expenditures through its own resources (tax and others) and to
bridge the gap (fiscal deficit), it borrows more from local and foreign
lenders
o Defence

Interna and external security measures

Pakistan still deploys thousands of troops to deal with the threat of

terrorism. Similarly, the tensions between Pakistan and India
Salaries of public sector employees-
o According to the budget 2021-22 480 billion allocated to pensions Assistance
Fund e, Full pays an allowance of the families so the government till the day
of superannuation,
o Free education to all the children of the deceased government employees up to graduation in any
public/ government educational institution including expenses of tuition fee, books related material
and living allowances etc.

Marriage grant of 0.80 million of the maria Eo Fone daughter

o Government’s support to loss making public utilities
 o Costs of untargeted, hidden and cross subsidies

(2009 study identified Pak’s policies taxing farmers and supporting wheat millers)
REVENUE:

 Tax Revenue
o Tax collected by FBR
o Petroleum, gas levy etc.
 Non-tax Revenue
o Dividends from SOEs
o Profits of SBP
o Royalty from oil & gas
o Income from services provided

EXPENDITURE

 Current
o Debt Servicing
o Salaries and pensions
o Subsidies
 Development
o PSDP programmes Ie the tree tsunami, the Karachi Peshawar etc
o Ehsaas programme

the government has allocated budget for poverty alleviation and to

provide relief to the low-income people through Ehsaas programme
“Through Ehsaas Kafalat Programme, providing this financial facility in 124
districts to the low-income people in different regions of the country.,
‘Ehsaas undergraduate programme’ was also approved to provide
thousands of undergraduate scholarships to students from different
regions of the country in the upcoming budget.
Financing of Budget Deficit
 External borrowing
 Domestic borrowing from SBP
 Domestic bank borrowing from commercial banks
 Non-Bank Borrowing
 Policy setting 28th Feb statement laid in the national assembly
as required by the public finance management
act 2019.
Preparation Ministry of finance, spending ministries
Authorization
Implement Cabinet national assembly, president
Reporting and monitory Ministry of finance, spending minstries4
Review PAD, spending ministries
The end there is a meeting and review takes
place where have the planning commission,
Finance ministry
31st march there is meeting and review take
place where have the planning commission Nd
finance ministry
Understanding and Budget Documents

Budget Speech

 The speech is of 2 hours

 The speech is given By Finance Minister/ someone authorized by Leader of the House
 Review of economic performance

Annual Budget Statement-

 It is in article 80
 The Annual Budget Statement is presented in the National Assembly of Pakistan by the Minister of
Finance every year
 Writes the expenses and revenue of the government
 The Federal Government is responsible and it is laid before the National Assembly
 statement of the estimated receipts and expenditure of the Federal Government for that
year, in this Part referred to as the Annual Budget Statement
 The Annual Budget Statement shall show the sums required to meet expenditure described
by the Constitution as expenditure charged upon the Federal Consolidated Fund; and
  b. the sums required to meet other expenditure proposed to be made from the Federal
Consolidated Fund; and shall distinguish expenditure on revenue account from other
expenditure.
 The rules and regulation of the National assembly also suggest that on the day the Budget is
presented, no other business, including questions, calling attention notices, question shall be
transacted except introduction of Finance Bill.
 Budget not to be discussed on presentation: Except for the speech of the finance minister when
presenting the Budget, there is no discussion on the Budget on the day on which it is presented to the
Parliament.

Budget in Brief

 Review of current year’s budget

 Salient features of next year’s proposed budget. Economic Survey of Pakistan
 The Budget-in-Brief attempts a presentation of the budget in a simple language. This
document contains the brief features of revenue/ expenditure. It also contains the main
features of past year achievement/ performances. This document is printed both in Urdu and
English

Economic Survey of Pakistan

National Finance Commission (NFC)

 it is constituted by the president consisting of the Minister of Finance of the Federal
Government, the Ministers of Finance of the Provincial Governments and such other persons
as may be appointed by the President after consultation with the Governors of the provinces
 NFC to make recommendations to the President on:
o Talks about how there will be the distribution of taxes between the Federal
government? Federation and the province. Ie if borrowing between each other or
federal government, how to be done
o The making of grants-in-aid by the Federal Government to the Provincial
Governments;

o The exercise by the Federal Government and the Provincial Governments of the
borrowing powers conferred by the Constitution; and
o Any other matter relating to finance referred to the Commission by the President.

Public Finance Management Act, 2019

 It manages and strengths the management of public finances, how to take and utilise the
public finances including checks and balances of the government so it manages the public
finances smoothly
 improving implementation of fiscal policy for better macro-economic management,
 to clarify institutional responsibilities, and
 strengthen financial and budgetary management

Fiscal Responsibility and Debt Limitation Act, 2005

 To provide for reduction of Federal Fiscal Deficit and ratio of Public Debt to Gross Domestic
Products (GDP) to a prudent level by effective Public Debt Management
 One of the checks and balance top ensures you downvoter borrow
No taxation without representation

 Budget is introduced in the National Assembly as a Finance Bill under Constitutional

requirement
 Senate can only make recommendations which are debated in Senate’s Standing
Committees on Finance & Planning and within

Problems with Budgetary System

1- Limited role of Parliament

o Government wants to pass it within 1 month of introduction in National Assembly so
little time. The budget is released on the first week of June and senate has to pass till
30 June. There is less than a month to debate on the budget
o Senate can only make recommendations which are not even binding
2- Inadequate participation of citizens
3- Bureaucratic Exercise
4- Tedious Processes
o Line wise review very difficult
5- Supplementary Grants: article 84
 The amount authorized to be expended for a particular service for the current financial year
is insufficient, or that a need has arisen for expenditure upon some new service not included
in the Annual Budget Statement for that year;
 Money has been spent on any service during a financial year in excess of the amount
granted for that service for that year;
 need permission for supplementary grant. They shouldn't give it and if not approved then
the project stays in between.
 It is the additional grant required to meet the required expenditure of the government\
 In 2019, r major supplementary grant was sought for the Ministry of Federal Education and
Professional Training.
 The finance ministry also issued supplementary grants to the aviation division to meets
expense overruns by the Airport Security Force

6- Excess expenditure also given approval in a rush

Relevant Legal Provisions name 2-3

 Constitution of Pakistan, 1973
 Federal Treasury Rules
 Rules of Business, 1973

Federal Consolidated Fund Vs Public Account

Custody of the Federal Consolidated Fund and Public Accounts of the Federation shall be regulated
by the Parliament

 Federal Consolidated Fund

o All revenues received by the Federal Government
o all loans raised by that Government
 o and all moneys received by it in repayment of any loan shall form part of
consolidated fund to be known as the federal consolidate fund
o When return or loan or if any loan is granted
 Public Account of the Federation
o Money received by or deposited with the Supreme Court or any other court
established under the authority of the Federation shall be credited to the Public
Account of the Federation.

Organizational Structure of the Accounting System

 The Accounting Side
o The Auditor General of Pakistan & the Controller General of Accounts (CGA)
o The Auditor General Pakistan Revenue (AGPR)
 The Executive Side
o The Principal Accounting Officer= Secretary of Concerned Ministry
o The Drawing & Disbursing Officer

Public Personnel Administration (PPA)

Public Personnel Administration is a branch of human resource management focusing on the

o Acquisition;
o Utilization;
o Compensation; and
o Development of a public organization’s workforce

Its purpose is to keep personnel way that organisation meet its objectives

If they don’t work properly then opinion about the government deteriorate, even if it is one
person's only

Importance of PPA
 Work of government depends on workforce hence it aims to employ and develop employees
for the benefit of thru organisation since they are an important asset
 Ensure public organization has competent staff to carry the tasks of the organising
 Improve contribution of public servants

Entry into Public Service Political Appointees- Cabinet Level

 General Civil Service System- through competitive exams
 Career system outside General civil service system
Yō sees the job requirement Abd determine which type of job you need Ie, a forest officer at
Margallo hills

Determination of qualifications: should be a chairperson with experience in national park, climate

environment. If they have worked in national park, it will be more advantageous

Advertisement:

You will have an age relaxation Ie 40/50 years and not 65 and then make an advertisement and
specify the requirement

Shouldn’t have a stringent criterion, as no applicant will come

Scrutiny of application:

You should scrutinise the applications

Ie, if one is in park, one involved in the policy made of the forest then you should scrutinise and e

Placement

Examination and interview should be taken and medical rest see and no conflict of interest should
exist while doing the placement

Probation

Check and balance meaning that if they work for a one year period they have to follow certain sops

District minister is tenure specific and if their performance is not up to the mark then they have the
right to fire you

Kept so that the organisation has the margin to get rid of the people who don’t perform well

Appointment

Selection

Conducting examination

Orientation

You take them in park visit

Constitutional/ Legal Provisions

  Article 240 of the Constitution provides basis for Civil Services at federal & provincial level
 Civil Service Act 1973
o Provides legal basis for civil services
o Applies to all civil servants

Overview
Total 1-22 classes
 All jobs in the Federal Government are classified in terms of grades ranging from 1 st
to 22nd called Basic Pay Scale (BPS)
 Grades 1-4: unskilled tasks Ie guests providing tea, mess Chacha
 Grades 5-15: clerical tasks Ie numbering of pages, recording a tallying the files and
typing or the dictating staff
 Grade 16: Superintendent (Overseeing 1-15)
 Grades 17-22: Officers, Ie they are on the policy side
22- secretary of the ministers and special secretary
Central Superior Service Examination Prerequisites
o Written Exam
o Medical Examination
o Psychological Assessment
o Viva Voce
o Max Age 30
o Citizen of Pakistan/ AJK
o Minimum Bachelor's Degree

Central Superior Service Examination

 Entry in BPS 17/ Grade 17

 In any one of the 12 occupational groups including
o The Commerce and Trade Group (CTG)
o Information Group (IG)
o Postal Group (PG)

Training & Development of Public Servants

CSS – step special training for the department which is od 6 months
To move from 18 to 19 grade you need mm training
Move from 19-20 SMC has to do training
20 onwards you need NMC training

Issues with public personnel management in Pakistan

 Generalist model:
Presently, government of Pakistan is following a generalist model for the Secretariat,
whereby, career civil servants rise through the ranks and hold the position of the Federal
Secretary.
 These position in Secretariat starts from the induction level at BS-17, which is known at
Section Officer.
 This gives rise to mismatch between the core competencies of the officer and the
requirements of the job. Under the present system, an officer having background of Finance
may end up in Religious Affairs or Culture Divisions

Means that our secretary of grade 22 that heads the organization are not competitive heads and
during the course of service, choose and prick for different organisations. Since the secretary is the
minister head and if he is not competent, he doesn’t know everything. Ie if he hasn’t read a word
about finance and has only the Knowledge of the briefing not okay. For climate change you need to
have knowledge and briefing is not enough aloe

Carbon theory: the skill set is compromised and a broad skillset is required rather than a narrow one

Huge reliance on support staff

 The total strength of the civilian employees at the Federal level was 491,860 in 2009 and has
risen to 663234 by 2019—an increase of 35 percent.
 85 percent of the total wage and salary bill is claimed by the support staff who account for
95 percent of the total employees while 15 percent goes to the officers in Grades 17-22 who
form 5 percent of the total strength
  Typing, file maker and no need to have so many people in the office

Risk averse

 Civil servants have become risk averse and avoid taking timely decisions.
 Fear of inquiries by opposing political governments leaves little incentive for civil servants to
show initiative and undertake innovative project

Prioritisation of civil service decision making

 Politicisation- Political Interference has reduced the effectiveness and professionalism of the
civil service.
 The threat of frequent transfers and unfavourable postings acts as a disincentive to restrict
political interference.

How to solve this issue?

Issues with currency system and way forward

 The tasks should be computerised

 Then those people who are removed and free, the government building space can be rented
and a lot of rent will be generated can be given to those people so their situation gets better.
 The introduction of e-government should reduce the need for support staff which, in turn,
would lower the recurring expenditure of running of the Federal Government
 Cluster of Divisions and the ministries should be in in clusters – specific skill set is given so
their pomace increases
 Officers could be transferred and posted in the same cluster
 Example
o CLUSTER A: Technical Ministries / Divisions I) Aviation ii) Communications iii) Climate
Change iv) Housing & Works v) Information Technology vi) Law and Justice vii)
Maritimes Affairs viii) Power ix) Petroleum x) Railways xi) Science and Technology xii)
Water Resources
o CLUSTER B: Economic Ministries / Divisions I) Commerce ii) Economic Affairs iii)
Finance division iv) Industries v) National Food Security vi) Planning, Development
vii) Privatization viii) Revenue
 State-owned enterprises
they (SOEs) are classified as those enterprises in which the state exerts
significant control through full, majority, or significant minority ownership. This
definition includes SOEs that are owned by the central or federal government
as well as the ones owned by regional and local governments (Sturesson,
McIntyre, and Jones 2015)
SOE landscape
 At Independence, Pakistan inherited 12 SOEs
 This number rose by a bit in the 1950s and 1960s as some development authorities and
corporations (e.g., PIDC and WAPDA) were established.
 Then an explosion in numbers took place in the 1970s with the nationalization of large-scale
industries, banks, insurance companies, and educational institutions.
  A process of reversal eventually began in the 1990s.
 Between 1991 and 2015 as many as 172 privatization transactions were completed.

Most companies were nationalised in 1970

Timeslot for privatisation 1991-2015

Active privatisation- 1991-2015

213 federal level soe and 85 commercial and 44 non-commercial. 84 subsidiaries

Include transportation and railways, engineering, service sector Ie water supply and medical and
pack steel mill

 Soe account to the total employment at under 1 percent.

 In Pakistan, the majority of SOE employment is in gas- WISCO and electricity sector
 in Pakistan a large share of SOEs is loss-making total
 there are 213 federal-level SOEs operating in various economic sectors, made up of 85
commercial SOEs, 44 non-commercial SOEs (trusts, universities, training institutions, and
welfare funds), and 84 subsidiaries of commercial SOEs

Importance of SOE

 SOEs are different from private enterprises in that they are often granted favourable
treatment such as subsidies, debt waivers, favourable loans, and protection against
bankruptcy. As such, they are also expected to provide pivotal public goods and services to
their citizens, which is often not financially profitable. Since we know that the private sectors
aim and objective is profit maximisation so they have an incentive to produce goods as they
are not financially profitable. The population's access to water, electricity,
sanitation and transportation is almost entirely dependent on the state.
 triple role of the government as the regulator, enforcer of those regulations, and owner of
SOE assets in their respective country can sometimes undermine the SOEs’ competitiveness
and efficiency because of corruption, mismanagement, and technical incompetence of their
staff.

Some examples

Despite their important role in the economy, financial performance of many SOEs is weak, with one-
third of them consistently generating losses. the top ten soe contributing to loses include national
highway authority, power sector distribution companies (DISCOs), Pakistan Railways, and Pakistan
International Airlines that owns the Roosevelt Hotel in New York and the Scribe Hotel in Paris are
among the major ones.

One concern is that many SOEs tend to have relatively weak performance which can have
macroeconomic implications:

 SOEs are the dominant in the provision of water and public transportation and electivity. If
the state-owned enterprises are ineffective and unreliable affecting the economic sectors
and industries well as the economy. We can see since that are the providers of electricity,
poorly managed soe can lead to unreliable provision of services Ie there may be power
shortages r high input cost. We can also witness how there and there is widespread
loadshedding in daily life. Prime Minister Shehbaz Sharif increased electricity load
 shedding in July. These constant loadshedding affects the industries where they t decrease
in the overall sales and have to lay off workers as well. It can also affect household, for
example daily lives impacted.
 Also, not reliable as, if the SOEs undersupply core public services, like public utilities and
transport and ineffectiveness impact us
 If SOEs are less efficient than private competitors but are protected from competition it can
undermine productivity in the economy as a whole. One channel goes through the
misallocation of resources and can be an important source of aggregate productivity losses
(Restuccia and Rogerson 2019; Song and others 2011)
 The main problem is that the government ha sot financially supports the SOEs at a hefty cost
to the budget. A large share of SOEs suffer from persistence loses across all sectors as
governments may need to bail out firms which wouldn’t exist in case of a private sector.
They also pay subsidised and government support is through foreign and domestic loans
which causes increase in the Fregin and domestic debt
 Many SOEs face soft budget constraints as, contrary to their private peers, they can survive
for long with systematic losses. that governments may need to bail out firms. Soft budget
constraints may be exacerbated by complex holding structures, which make them less
transparent and difficult to monitor. Pia and wade are in loss
 Javed Hassan The top ten loss-makers, International Airlines (PIA), Pakistan Railways,
National Highway Authority, account for around 90 percent of the total losses each
year. Despite attempts by successive governments to turn them around, they have
failed in making these entities even break even.
 The risks from the sheer size of SOEs operations implies potentially large risks including the
credit and operational risk (Figure 2).
 \circircularcler debt is another issue as if debt is not played the government body if becomes
greater
 The risks are exacerbated by three is e limited transparency on their operations and there is
no s financial accountability in the process of staffing and recruiting and it is not based on
due diligence, instead they are nut hired on outer motives and not for reorganisations
benefit and how they can impact the health of the overall public sector.
 Moreover, since they know they will be saved by government, Soe therefore are inefficacies
and lag knowing they will get away and these the losses result into dependence on Gopp
support or lead to gradual erosion of eye. Budgetary grants to Railways and other
enterprises are in addition to this amount of Rs. 1 trillion shown in the SOE Annual Report in
2020

What to do with the state-owned enterprises

 The authorities have recently undertaken a comprehensive exercise to examine SOEs based on their
functions and financial performance to identify those to be
o (1) retained under state ownership;
o (2) restructured; and
o (3) privatized

Retain soe
Fulfil Public Policy Objectives- as enshrined in the Constitution through principles of policy
or security of the country (defence) or provision of a service like infrastructure project which
is not commercially viable for a private sector organization (example National Highway
Authority-projects in Baluchistan)

Restricting
There should be restructuring of the railways and human resource needs to be restructured
and there should be skill development of the ones already hired rather than haring new staff

 Workforce restructuring, including a basis for computing early retirement

compensation, rehabilitation and retraining of displaced employees; Rationale
Workforce at Pakistan Railways
 business-restructuring measures while taking into account existing or new
businesses, existing or new technologies, and keeping in view environmental issues,
investment requirements, and emerging market trends over the next 3–5 years;
Freight Trade
 financial restructuring measures that include debt restructuring, capital
restructuring, and financing investment plans;
Privatisation of soe

 Evidence from OECD countries also strongly suggests that privatization leads to
“significant” increase in profitability, real output, and efficiency of privatized firms
 Across the globe t is very difficult to end soe and according to IMF studies, they do
exist in China Asia and Africa and by virtue can't end soe
 Even in 2008 financial cirri's the government bailed out many private companies an
at the emend of the day government has to step up
 However, efficiency gains from privatization are largely dependent on continued
political commitment by the government to overcome bureaucratic inertia, ensuring
a transparent privatization procedure, clearly delineating privatization motives and
goals to the concerned stakeholders, and allocating the necessary human and capital
resources to achieve those goals
 Overall have to find a middle ground
why privatisation may not be best for developing countries

 Most SOEs, especially in developing countries, are not just expected to be financially
profitable, but are also tasked to provide crucial public goods. (Like provision of
clean water, electricity, and sanitation services in remote towns and villages), might
not be as financially profitable as they would be in big towns, but they are equally
essential for both sets of populations.
 Unpopular for governments in developing countries to remove subsidies and charge
market rate.
 Some countries may be unwilling for security reasons to privatize, even partly, their
“strategic” industries—those that a government considers to be very important for
the country’s economy or safety (Cambridge Dictionary 2017).
These issues, among others, suggest that privatization of SOE shares might not always best
option
Pakistan state owned enterprise act 2021

 introduced in the National Assembly but not yet passed

 The Federal Government owns and controls a number of SOEs established under various
laws and incorporated under the Companies Act, 2017.
 Clause 4 that the shareholding responsibilities of the Federal government with
respect to its state-owned enterprises are clarified
 One act covering all the aspects of the state-owned enterprises
 They will see which are important immigrate a then negotiate on the
important aspect and then keep ones and discard the rest
 In order to ensure
o Good quality of services
o Fiscal discipline
o Improve Accountability

Governance
 ‘The manner in which power is exercised in the management of a country’s economic and
social resources for development.’
 Governance consists of the traditions and institutions by which authority in a country is
exercised. This includes:
o the process by which governments are selected, monitored and replaced
o the capacity of the government to effectively formulate and implement sound
policies; and
o Effective functioning of institutions that govern economic & social interactions
among citizens and the state.
o and the respect of citizens and the state for the institutions that govern economic
and social interactions among them.

5 dimensions of governance

 Efficiency: govt’s ability to est. predictability in the institutional and policy environment.
Also, clear prioritization of govt. services with respect to citizen's needs & preferences.
 Equity: existence of a fair and just legal system which provides access to all. Equitable
distribution of public services to all.
 Transparency: availability and clarity of information provided to general public about
government activity.
 Accountability: establishment of a criteria for evaluating the performance of public sector
institutions.
 Participation: engaged civil society, media, etc.

Indicator producer and purpose

1. Annual Survey of Freedom

 Producer: freedom house
 Purpose: The survey is designed to measure progress in developing political freedoms
 2- Corruption Perceptions Index
 Producer: transparency international
 Purpose; To provide data on ‘corruption in international business transactions

3- Governance Matters I-III (KK)

 Producer: world bank Insititute
 Purpose: to provide periodic cross-country point estimates of six dimensions of governance

i. ‘‘voice and accountability= how those who are in authority are selected
ii. ‘Political stability and absence of violence’= likelihood of govt being destabilized
iii. ‘‘government effectiveness’’ relates to quality & provision of public service
iv. ‘‘regulatory quality’ type of policies
v. ‘‘Rule of law’’- citizens abide by laws
vi. ‘‘control of corruption,’
 Features of accountability:

It is external: Account is given to some other person.

 It involves social interaction and exchange One side seeks answers and rectification while
other side responds and accepts sanctions
 It implies rights of authority: Those calling for an account are asserting rights of superior
authority over those who are accountable
 Perspectives on accontbaikity Accountability has been traditionally viewed in terms of
 How can parliamentarians scrutinize the actions of government including public servants and
make them answerable for their mistakes?
 How can voters make elected representatives answerable for their policies?
 How can members of the public seek redress from government agencies and officials?
 Concern for the public interest expected from public servants
 Views accountability as responsiveness :
o The extent to which governments pursue the wishes or needs of their citizens
o Two distinct relationships between officials and wider public:
o Public agencies are expected to be responsive to elected officials
o Agencies providing services should be responsive to the needs of their clients

Main sytem of administrtaive cintrol

 Internal Control
o operates within the administrative organization
o Hierarchy in an organization
o Annual Confidential Reports
o Budgetary Controls
 External Control
o Works within the general constitutional framework of the system.
o Exercised by external bodies like legislature (Question Hour, Calling Attention
Notices, Point of Public Importance)
 o Public Accounts Committee (Review of financial statements of public sector
organizations, parliamentary committee also mentioned in the Constitution=
members from both Senate & National Assembly)
o Judiciary
o Ombudsman

Ombudsman

 In the modern world, an ombudsman was first established in 1809 in Sweden. The word
"ombudsman" is of Swedish origin and means "representative or agent" of the people.
 An independent and non-partisan officer appointed by legislature
 Legally established,
 Answerable to the Legislature

S. No Name Nature of Work

1 Wafaqi Mohtasib Plus 4 in deals with complaints from

provinces citizens against administrative
injustice and
maladministration.
(Includes nepotism, bribery
etc. ) established in 1983
2 Tax Ombudsman to address the prevalent
maladministration in taxation
system established in 2000
3 Insurance Ombudsman The institution is meant to
provide analysis, investigation
redressal and rectification of
any injustice done to a person
through maladministration by
any of the insurer in the
private sector. established in
2000.
4 Banking Ombudsman To settle disagreements and
differences between banks
and consumers through
mediation between the two
parties so that an amicable
and acceptable solution can be
found. Established in 2005
5 Federal Ombudsman for the protection against
Secretariat for Protection harassment at the workplace
Against Harassment and recently also given
authority to decide women's’
inheritance related cases
Benefits of ombudsman:

 Improved service delivery: Ombudsman schemes worldwide prove to be very successful, not
only in resolving disputes but also in improving service quality and efficiency levels.
 Cost saving due to quicker decisions compared to standard courts which reduces litigant's
costs.
 Compared to the arduous and lengthy legal process, the ombudsman process is informal,
flexible and quick.
 Another important and beneficial aspect of the schemes is that complainants lose nothing
and retain the right to seek legal redressal later through appeal in courts

Public control

 The public exercises control over administration through

1. Elections

2. Pressure Groups

3. Advisory Committees

4. Public Opinion