In Pakistan’s fiscal landscape, Sindh province stands out for its ambitious yet uneven journey toward modernizing public financial management (PFM). With a provincial budget of ₨1.7 trillion for FY2023-24—over half allocated to development—Sindh’s reforms aim to curb chronic underspending and leakages. Initiatives like the Sindh Public Financial Management Act (2019) and the World Bank-funded Sindh Public Financial Management Reform Program (SPFMRP) have digitized processes and enhanced oversight. Yet, persistent execution gaps plague high-priority sectors: 35% of development funds remained unutilized in FY2022-23, reflecting systemic bottlenecks in translating policy into practice.
Strides in Transparency and Digital Governance
Sindh’s PFM reforms since 2019 have targeted fragmentation through technology and accountability measures:
- Integrated Financial Management System (IFMS): Rolled out in 2021, the IFMS connects 22 departments for real-time expenditure tracking, reducing payment delays by 50%.
- E-Budgeting Portal: Launched in 2022, it publishes citizen-friendly budget data, increasing public access from 8% to 42% by 2024.
- Audit Automation: AI-driven tools detected ₨14.2 billion in irregular expenditures in FY2023-24, up from ₨3.6 billion in 2020.
Budget Execution Efficiency (2019 vs. 2023)
| Metric | 2019 | 2023 |
|---|---|---|
| Development Funds Utilized | 58% | 65% |
| Time to Release Funds (Days) | 120 | 75 |
| Unauthorized Spending | ₨32 billion | ₨19 billion |
Institutional and Operational Hurdles
Despite progress, structural flaws undermine reform efficacy:
- Capacity Deficits: Only 30% of Sindh’s 1,200 accountants are trained in IPSAS, leading to errors in grant reporting. A 2023 audit revealed ₨9.3 billion in misclassified health expenditures.
- Political Interference: 40% of SPFMRP survey respondents cited pressure to divert funds to non-priority projects, notably in irrigation and transport.
- Fragmented Systems: Key programs like the Sindh Education Sector Plan operate outside the IFMS, creating parallel reporting channels.
The 2022 Benazir Income Support Program (BISP) scandal—where ₨4.7 billion was diverted to ghost accounts—highlighted weak controls in social safety nets, a sector excluded from initial digitization drives.
Bridging the Implementation Gap
To consolidate gains, Sindh must address three priority areas:
- Capacity Building: Certify 1,000 finance officers in IPSAS and data analytics by 2026 via partnerships with institutions like ICMA Pakistan.
- Expanded Digital Integration: Migrate all 54 departments onto IFMS, leveraging Punjab’s model of 95% integration.
- Stakeholder Accountability: Enforce Section 14 of the PFM Act, which mandates penalties for fund diversion but remains unused since enactment.
The province’s 2024 decision to link future budget increments to departmental performance scores—piloted in health and education—offers a template for incentivizing compliance.
The Road Ahead: From Systems to Culture
Sindh’s PFM reforms, while technologically robust, require cultural shifts to achieve lasting impact. The World Bank’s 2024 interim review warns that without addressing patronage networks and bureaucratic inertia, digitization alone cannot ensure fiscal discipline. Upcoming initiatives like blockchain-based grant tracking (set for 2025 pilot) could enhance traceability, but only if paired with political will to prosecute misuse.
As Sindh contends with climate-induced fiscal pressures—such as 2022 floods that diverted ₨70 billion from development budgets—strengthening PFM systems isn’t just about efficiency; it’s a lifeline for resilience. The province’s ability to marry innovation with integrity will determine whether its reforms become a national model or a cautionary tale.
This article was published on PublicFinance.pk.
