In the recent years, the multilateral donors have applauded the governance and social sector reforms programme of the Punjab government and its implementation.

The Manila-based Asian Development Bank (ADB), which financially and technically assisted the provincial government in putting together its first-ever comprehensive agenda of governance reforms in the financial, production and social sectors in 2003 under the $500 million Punjab Resource Management Programme (PRMP) spread over five years, has dubbed the programme as a model to be replicated by the bank elsewhere in the world.

The World Bank too appears to be impressed by the performance of the $450 million Punjab Education Sector Reforms Programme (PESR), and is supporting its second phase.

“The multilateral donors are very much pleased with the province as it has evolved and executed the reforms over the last few years. That is precisely why we have easily managed to obtain fresh funding for our second-generation reforms programme from the ADB,” says a senior official of the Punjab Planning & Development (P&D) Department.

Officials are happy that the external financial capital assistance from the multilateral donors has come without any strings attached. “The entire funding for our reforms programme is released by the donors as budgetary support. We are neither under the donor pressure to utilise that money for any particular project or purpose nor are told to pursue a particular set of reforms programme. We are free to utilise money as we deem fit to and implement our home-grown reforms agenda. In the recent years, the provincial government has sold its reforms agenda to the multilateral lenders and sought their capital assistance for achieving accelerated growth in priority areas,” claims a senior PP&D official, who does not want to be named because he is not authorised to talk to the media.

What is officially described as successful implementation of governance reforms has paved the way of increased inflow of external capital assistance from the multilateral lenders on soft terms. “Up to 2002, the province had received $2.058 billion from the international lenders. Between January 2003 and August 2007 we have obtained $1.692 billion. So you can imagine the kind of support we are getting from the donors for our home-grown programme,” says the P&D official.

The officials also claim that the focus of the government policies has also shifted in the recent years towards human resource development. “There is a growing emphasis on social sector, governance improvement and strengthening of institutional capacity rather than economic sectors as was the case in the decades from the 1970s to 1990s,” the official says.

The provincial reforms programme focuses on alleviation of poverty through increased development spending on the social sector like health and education and improvement in public sector governance and efficiency and facilitation of the private sector for providing quality public services to the citizens of the province.

“For achieving the objective of the reforms and the Vision 2020 of the government, we need to enhance public sector efficiency, increase access to and improve the quality of the public services – particularly in education, health and water and sanitation – and accelerate private sector participation in the provision of these services. That requires money, which is coming from external sources in the shape of financial assistance from the ADB and the World Bank,” the P&D official says.

The Punjab government claims that its reforms programme and the shift in the policy emphasis on human resource development, governance improvement and institutional strengthening has yielded huge dividends for the economy and people of the province. It is claimed that the provincial GDP (gross domestic product) has expanded in the last five years by above eight per cent and poverty reduced by over 10 per cent to around 21 per cent.

Similarly, the huge increase in the provincial development spending – the provincial development budget for the current fiscal has grown to Rs150 billion from a mere Rs20 billion less than a decade ago – and facilitation of the private sector generated over 3.5 million jobs.

The ADB too says the provincial economy has staged a major turnaround from a 0.9 per cent contraction in 2001 to a 7.1 per cent expansion in 2006. “The province (of Punjab) has been a pioneer in first generation public sector reforms. It has emerged as a model reforms programme within the ADB and we are willing to replicate elsewhere in the world,” a senior ADB official had told us during a workshop held to assess the impact and range of the reforms under the PRMP in Punjab during last summer.

Impressed by its commitment to the reforms agenda, the ADB will provide Punjab credit facility of $750 million to pursue its wide-ranging second generation governance reforms programme. The money has to be disbursed by the bank to the province under the Punjab Government Efficiency Improvement Programme (PGEIP) designed and implemented through three sub-programmes from 2007 to 2011, each within about 18 months. A $250 million loan will fund the first sub-programme.

In addition to the credit line, the ADB has also agreed to give $400 million to the provincial government to help it achieve millennium development goals (MDGs) – the provincial administration says it will achieve the MDGs in all sectors except health – and $400 million for the provincial access to justice programme.

As the ADB agreed to financially and technically support the second generation reforms in the province, its officials stated: “The province needs continued infusion of public and private investments to keep pace with the growth requirements of the economy, while at the same time ensuring sound maintenance of the investments made.”

In the absence of an independent appraisal of the outcome of the governance reforms initiated under the previous provincial government, it is hard to measure the programme’s exact impact on the economy as well as on the life of the people of Punjab.

Though the governance reforms have definitely improved the provincial financial systems, procedures and management and created fiscal space for enhanced public spending on the social sector, the change has been painfully slow. Besides, the experts believe that the reforms programme and the huge inflow of external financial assistance and improved revenue stream due to higher tax collection by the federal government and its distribution among the provinces have created little change, if any, in the quality of the life of the people of the province.

The public confidence in the government, its reforms agenda and its ability to change and improve the public service delivery is also very low at the moment because the previous rulers of the province had used the reforms programme for drawing political capital.

As the new government is likely to be handed power in the next few weeks, the future of the existing reforms programme hangs in balance. Most officials believe that it would be difficult for the new government to call off the reforms programme. “As the economy is slowing down a bit and tax revenue generation losing its previous momentum, the province will be in greater need for multilateral assistance. No government can afford in the given circumstances to back off on the reforms programme and lose the money,” says a provincial finance department official.

Yet, some officials fear that the reforms programme may be called off – at least partially, because it is generally associated with the former rulers of the province. “That would be unfortunate. We should remember that the reforms programme has been initiated and owned by the provincial government in the larger public interest. It does not belong to any political party or an individual,” says the finance department official.

“We need to reform our civil service to make it more responsive and efficient, strengthen institutions and private sector and escalate economic growth to improve the quality of life in the province. For that we must carry on with these reforms irrespective of the fact that these were initiated under the previous government,” he says. But, he adds, the new government could, if it felt like, change the emphasis and include some other areas left out of the present scheme. “The new government could also use this opportunity for getting an independent review of the impact of the reforms,” he says.