The World Bank has identified “incomplete devolution” and institutional weaknesses as significant challenges in Pakistan’s development and governance. In response, the World Bank has advised Pakistan to establish a ‘National Council of Ministers’ consisting of key federal and provincial representatives. This council would address the vacuum in coordinated efforts to strengthen poorly performing federal and provincial institutions, policies, and accountability systems.
The World Bank acknowledges that while technocratic measures may not lead to an immediate transformation of Pakistan’s institutional environment, current contextual factors such as deteriorating economic conditions, demographic changes, and the influence of social media may offer opportunities for positive change.
The World Bank highlighted that the ineffective implementation of devolution initiated through the 18th Amendment is one of the major issues, with the Centre continuing to handle many devolved functions. This has led to overlaps in service delivery, increased fiscal costs, and blurred lines of accountability. Fiscal arrangements in place weaken accountability for revenue collection and complicate tax administration. Performance reviews are infrequent, and promotions tend to be based on seniority and informal networks rather than qualifications.
To address these challenges, the World Bank recommends immediate measures to enhance coordination between different levels of government and provinces. With decisions made at the federal level no longer binding on the provinces, the Council of Common Interests (CCI) and the National Economic Council (NEC) should play crucial roles in supporting national policy coordination and coherence.
The World Bank suggests the creation of a National Council of Ministers, composed of federal and provincial ministers working under the CCI’s auspices. This council would formulate and monitor the implementation of key national policies in areas such as education, health, food security, agriculture, water and sanitation, and transport.
Federal-provincial fiscal coordination
Simultaneously, there is a need to enhance federal-provincial fiscal coordination, with a focus on further harmonizing tax policies and administration. This should also involve ensuring the effective implementation of a national medium-term fiscal framework, aligning with newly introduced federal and provincial fiscal responsibility legislation.
The World Bank recommends prioritizing a series of measures to reinforce institutions and facilitate implementation, thereby strengthening accountability and combating elite capture. This includes building the government’s administrative capacity to carry out essential reforms and investments. Such efforts will significantly impact private sector confidence and investment by enhancing public service quality, addressing policy instability and corruption, and aligning policies more closely with the interests of citizens and businesses.
Efforts to improve public sector appointment processes, performance management, and tenure are essential as vested interests among senior bureaucrats often hinder public sector reforms. To address this, strong political leadership is required to introduce a Performance Management System (PMS) across the public sector. Under this system, public servants would be assessed based on agreed performance indicators, with performance evaluations influencing career progression, salary increases, and, in cases of consistently poor performance, early retirement.
Additionally, there is a need to strengthen the security of tenure for government officers. The decision to remove a government officer from their position before the end of their term should require a written justification, and the affected individual should have the right to challenge this decision through an independent, formal process.
Competitive appointment
There is a need to enhance and safeguard the processes for the competitive appointment of chief executives to public sector agencies with critical economic and social roles, such as PIA, WAPDA, PSO, and Pakistan Railways, from political interference. These chief executives should be granted operational autonomy, and fixed tenures, and held accountable for achieving defined objectives and goals.
Furthermore, the government should strengthen in-service training for government officers to address critical skill gaps, and it should refocus recruitment to emphasize relevant skills and expertise rather than simply strong performance in the public service exam.
The World Bank also recommended leveraging digitalization to increase efficiency and reduce opportunities for corruption. Pakistan’s existing infrastructure, including widespread use of smartphones, electronic databases, computerized land records, automated banking applications, a vast fiber optic network, and a growing IT industry, provides a conducive environment for digital platforms and e-service centers. These could serve as a unified platform for various forms, clearances, NOCs, and seeking rulings.
