International comparison shows spending on education and health is lower in Pakistan as compared to regional countries
ISLAMABAD: The Finance Ministry feels an urgent need to enhance financial capacity of the provinces to ensure their significant contribution to national economic growth by channeling fiscal resources to priority areas.
“An international comparison suggests that the spending on education and health is lower in Pakistan as compared to regional countries,” a ministry source told Customs Today.
He added, “As a result, investments in huge projects (buildings, highways and airports) attract more public funds compared to social sector rather than in education, health or other critical social sectors.”
The source said that development spending of provinces had grown substantially in the last two years, after the complete transfer of additional spending responsibilities was implemented in FY12 and as anticipated, provincial development spending had to bear the brunt of the fiscal consolidation efforts, falling by 9.2% in the current fiscal year too.
“In terms of average provincial expenditure in Pakistan, social and community spending is the biggest claimant on development funds, followed by transport and construction. Furthermore, education, agriculture and health seem to get equal importance at the provincial level. Provinces in Pakistan allocate a significant amount of resources to transport and construction,” he added.
The source said that one-fourth of the entire development budget in Punjab and Khyber Pakhtunkhwa (KP) was allocated to this head, however, there was some difference in spending over education as this critical social service captured a large share of development spending in KP, while it accounted for a small share in Punjab and Sindh.
“Furthermore, spending on agriculture and irrigation is low in Punjab and KP, while health captures about the same share of the development budget across all provinces,” the source said, adding that the sharp contrast in the provincial allocations for education was surprising and it could be traced to the fact that education was recently transferred to the provinces as a result of the fiscal devolution process started in fiscal year 2011.
The source said that provincial capacity to identify development needs would take some time to develop and importance given to transport and construction at the provincial level was also intriguing, while differences in sub-national development priorities could be attributed to individual provincial needs as a review of literature on the determinants of public spending provided another perspective.
“The composition of government spending is often shaped by the degree of inefficiencies and wastages of financial resources in a country,” he said.
