Report No. Public Disclosure Authorized Public Disclosure Authorized PAKISTAN Sindh: Public Expenditure Public Disclosure Authorized Review SOUTH ASIAN REGION JUNE 2017 THE WORLD BANK GROUP Public Disclosure Authorized Sindh: Public Expenditure Review 2017 STANDARD DISCLAIMER This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. COPYRIGHT STATEMENT The material in this publication is copyrighted. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, Email: [email protected] THE WORLD BANK GROUP 1 Sindh: Public Expenditure Review 2017 Government of Pakistan Fiscal Year: July 1-June 30 Currency Equivalents Currency Unit: Pakistani Rupees (PRs) US$1.00 = PRs 104.85 as of June 30, 2017 Regional Vice President: Annette Dixon Country Director: Patchamuthu Illangovan Senior Director: Carlos Felipe Jaramillo Practice Manager: Manuela Francisco Task Team Leaders: Muhammad Waheed THE WORLD BANK GROUP 2 Sindh: Public Expenditure Review 2017 Table of Contents ACRONYMS AND ABBREVIATIONS ....................................................................................................... 4 ACKNOWLEDGEMENTS ....................................................................................................................... 6 Executive Summary ............................................................................................................................ 7 1. Sindh Province: Unleashing Its Potential ................................................................................... 7 2. Maximizing the Resource Envelope .......................................................................................... 7 3. Improving the Efficiency of Public Spending ............................................................................. 9 4. Development Expenditures: Getting Better Value for Money ................................................ 14 5. Recommendations .................................................................................................................. 15 Chapter 1: Macroeconomic and Fiscal Trends .................................................................................... 20 1.1 The Socioeconomic Profile of Sindh ........................................................................................ 20 1.2 Macro-Fiscal Outcomes ........................................................................................................... 23 Chapter 2: Revenues and Expenditures .............................................................................................. 27 2.1 Revenues: The Revenue Challenge and Fiscal Space .............................................................. 27 2.2 Expenditures: The Challenge of Funding Development Priorities .......................................... 35 2.3 Recommendations .................................................................................................................. 54 Chapter 3: Sindh Education Sector ..................................................................................................... 57 3.1 Introduction ............................................................................................................................. 57 3.2 Sindh Education Sector Overview ........................................................................................... 57 3.3 Context and Policy Framework ............................................................................................... 58 3.4 Education Sector Profile Analysis ............................................................................................ 59 3.5 Profile and Trend Analysis of Education Sector Expenditure .................................................. 66 3.6 Expenditure Composition Analysis .......................................................................................... 68 3.7 Allocative Efficiency of Education Expenditures ..................................................................... 75 3.8 Sector Effectiveness and Equity Analysis of Expenditure........................................................ 82 3.9 Recommendations .................................................................................................................. 84 Chapter 4: Sindh Health Sector .......................................................................................................... 86 4.1 Introduction ............................................................................................................................. 86 4.2 Sindh Health Sector Overview ................................................................................................. 88 4.3 Context and Policy Framework ............................................................................................... 89 4.4 Sindh Health Sector Profile...................................................................................................... 91 4.5 Public Health Expenditure ....................................................................................................... 92 4.6 Allocative Efficiency of Health Expenditures ........................................................................... 98 4.7 Recommendations ................................................................................................................ 100 Chapter 5: Protecting the Poor and Vulnerable through the Public Sector ......................................... 103 5.1 Introduction ........................................................................................................................... 103 5.2 Social Protection Policy in Sindh ........................................................................................... 104 5.3 Impact of the 18th Constitutional Amendment and the Role of the Province in Social Protection .............................................................................................................................. 105 5.4 Poverty, Inequality and Vulnerability in Sindh Province ....................................................... 105 5.5 Labor-Force Participation in Sindh ........................................................................................ 108 5.6 Social Protection Expenditure in Sindh ................................................................................. 110 5.7 Institutional Arrangements for Social Protection in Sindh .................................................... 113 5.8 Inventory and Analysis of Sindh SPL Programs ..................................................................... 114 5.9 Efficacy of Sindh Social Protection Initiatives........................................................................ 116 5.10 Recommendations ................................................................................................................ 117 Annexes.......................................................................................................................................... 119 THE WORLD BANK GROUP 3 Sindh: Public Expenditure Review 2017 ACRONYMS AND ABBREVIATIONS ADB Asian Development Bank NGOs Non-Governmental Organization ADP Annual Development Plan NMR Neonatal Mortality Rate AG Accountant General NPPI Norway-Pakistan Partnership Initiative AIT Agriculture Income Tax NSER National Socio-Economic Registry ARV Annual Rental Value OOP Out-of-Pocket ASER Annual Status of Education Report OOSC Out-of-School Children ASPIRE Atlas of Social Protection Indicators of OPEC Organization of Petroleum Exporting Countries Resilience & Equity BBSYDP Benazir Bhutto Shaheed Youth OSR Own-Source Revenues Development Program BCG Bacille Calmette Guerin P&DD Planning and Development Department BHU Basic Health Unit PDMA Provincial Disaster Management Authority BISP Benazir Income Support Program PEFA Public Expenditure and Financial Assessment BOR Board of Revenue PER Public Expenditure Review BPS Basic Pay Scale PFM Public Financial Management BSP Budget Strategy Paper PGDP Provincial Gross Domestic Product CCT Conditional Cash Transfers PHC Primary Health Care CDL Cash Development Loans PIFRA Project for Improving Financial Reporting and Auditing CIF Community Investment Fund PIM Public Investment Management CIP Costed Implementation Plan PIMIS Public Investment Management Information