Pakistan - Khyber Pakhtunkhwa : Public Expenditure Review

Abstract

Khyber Pakhtunkhwa (KP) is one of the
 least-developed and crisis-prone provinces in Pakistan.
 Located in far north of the country, the province covers 10
 percent of the total land area and is a home to 13 percent
 of the country's population spread over seven
 administrative districts. Majority of the population (83
 percent) is rural, averaging 7.6 members per household-well
 above the national average of 6.6. The literacy rate remains
 low at 49 percent with more than half of population having
 no access to tap water while unemployment runs at 8.5
 percent. KP's relative underperformance is primarily
 due to low levels of growth, socio-economic underdevelopment
 and lack of public services compared to other provinces of
 Pakistan. Cognizant of the challenges to growth in KP and
 acting upon the assessment of Pakistan Government's
 Post-Crisis Needs Assessment (PCNA) of the region in October
 2010, the donors agreed on a harmonized approach to meet the
 short- and medium-term social and economic needs of KP,
 including the establishment of a Multi-Donor Trust Fund
 (MDTF). This Public Expenditure Review (PER) of KP was
 undertaken in partnership with the government of KP and is
 one of the important outcomes of PCNA funded by the MDTF.
 The report on Operationalization of Post Crisis Needs
 Assessment (OPCNA) highlighted the need for strengthening
 KP's public financial management (PFM) as fundamental
 to improving public services and therefore the quality of
 life in KP. The report acknowledges the strong government
 ownership of reform initiatives which are taken with a view
 of strengthening all aspects of public finances. KP adopted
 a comprehensive fiscal reform program in 2001-02 based on
 four pillars, namely: 1) enhancing resources; 2)
 strengthening ex-ante and ex-post PFM reforms; 3) fiscal
 decentralization; and 4) instituting an output-based
 accountability mechanism.