SUMMARY of the Article A reform agenda by Miftah Ismail

SUMMARY of the Article “A reform

agenda” by Miftah Ismail, February
17th, 2024

The article addresses the challenges faced by the incoming government in

Pakistan, emphasizing issues in fiscal management, human development, and
governance. On the fiscal front, the country grapples with high inflation, a
budgetary deficit exceeding 7% of national income, energy crises impacting
industry and consumers, substantial foreign and local debt repayments, and a
sluggish export sector. In the realm of human development, Pakistan struggles
with alarming infant mortality rates, high female fertility rates, significant child
malnutrition, a large out-of-school population, and widespread poverty.
Governance concerns include an ineffective local government system, inefficient
state-owned enterprises (SOEs), a cumbersome bureaucracy, prolonged court
cases, and a beleaguered police force. The author proposes several reforms for
the incoming government, including urgent population control measures,
revisiting the National Finance Commission (NFC) award for balanced tax
distribution, empowering local governments constitutionally, privatizing and
regulating SOEs, reducing the government’s overall footprint, cutting
unnecessary ministries and divisions, direct cash transfers to citizens through
social programs, implementing education vouchers for poor students, legal
reforms for timely court decisions, and civil service reforms to enhance
bureaucratic competence.

Easy/Short SUMMARY:
The article discusses challenges faced by the incoming government in Pakistan,
highlighting fiscal, human development, and governance issues. Suggestions for
reforms include urgent population control, balanced tax distribution, empowering
local governments, privatizing and regulating state-owned enterprises, reducing

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 SUMMARY of the Article A reform agenda by Miftah Ismail

the government’s size, cash transfers to citizens, education vouchers for poor
students, legal reforms, and civil service improvements.

SOLUTIONS of The Problem:

Population Control Measures:

Implement urgent measures for population control to address the challenge of a

rapidly growing population.

Revisit NFC Award for Balanced Tax Distribution:

Gradually increase the federation’s share to 55% over five years in the National
Finance Commission (NFC) award. Encourage provinces, districts, and divisions
to collect their taxes for fiscal responsibility.

Constitutional Empowerment of Local Government:

Ensure constitutional empowerment of local governments, devolving

responsibilities like education and health to the district or city level, and
allocating funds directly from the federal divisible pool.

Privatization and Regulation of SOEs:

Initiate privatization and robust regulation of state-owned enterprises (SOEs),

starting with entities like PIA and PSM, to enhance efficiency.

Reduction of Government’s Footprint:

Reduce the government’s overall size, including ministries and divisions, and
delegate more functions to the private sector for improved efficiency.

Development Program Cutbacks for Cash Transfers:

Cut development programs to save money, redirecting the funds for direct cash
transfers to citizens through programs like BISP, with a target of at least 1% of
GDP.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

Vouchers for Poor Students to Attend Private Schools:

Expand successful pilot programs providing vouchers to poor students to attend

private schools nationwide.

Legal Reforms for Timely Court Decisions:

Implement legal reforms to ensure predictable and timely court decisions,

preventing government excesses and facilitating foreign investment.

Civil Service Reforms:

Reform the civil service, focusing on specialization, promotion based on merit,

and mandatory retirement for officials not meeting performance standards.

Additional Solutions for Pakistan’s Challenges: A

Comprehensive Approach
In navigating Pakistan’s current challenges, our comprehensive solutions
encompass a strategic vision for sustainable development. Our commitment to
excellence is reflected in the following strategies:

1. Pioneering Population Control Initiatives for a Sustainable

Future:

Emphasizing the urgency of controlling population growth, we propose a

multifaceted approach involving awareness campaigns, accessible family
planning services, and incentivized programs to stabilize population growth.

2. Optimizing Fiscal Distribution through NFC Award

Revisions:

Proposing a nuanced adjustment to the National Finance Commission (NFC)

award, we advocate for a gradual increase in the federation’s share over five
years to 55%. This recalibration ensures a balanced distribution of taxes,
fostering fiscal responsibility at all levels.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

3. Empowering Local Governance for Enhanced Services:

Advocating for constitutional empowerment of local governments, our proposal

seeks to devolve responsibilities like education and health to the district or city
level. Allocating funds directly from the federal divisible pool ensures effective
service delivery.

4. Privatization and Regulation: A Paradigm Shift for SOEs:

Initiating a transformative journey, our plan involves the privatization and robust
regulation of state-owned enterprises (SOEs). Starting with entities like PIA and
PSM, this approach aims to enhance efficiency, accountability, and overall
economic stability.

5. Streamlining Government Functions for Optimal Efficiency:

Advocating for a reduction in the government’s overall size, including ministries

and divisions, we propose delegating more functions to the private sector. This
strategic move fosters improved efficiency, innovation, and responsive
governance.

6. Redirecting Development Program Funds for Direct Citizen

Impact:

In response to fiscal constraints, we suggest cutting back on development

programs. Redirecting these funds towards direct cash transfers to citizens
through programs like BISP, with a target of at least 1% of GDP, ensures tangible
benefits for the populace.

7. Education Vouchers: Bridging Gaps for Underprivileged

Students:

Building on successful pilot programs, our proposal promotes education vouchers

for poor students to attend private schools nationwide. This targeted initiative
addresses educational disparities, offering equal opportunities for a brighter
future.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

8. Legal Reforms: Fostering Timely and Predictable Court

Decisions:

Recognizing the pivotal role of the judiciary, we advocate for legal reforms to
ensure predictable and timely court decisions. This initiative curtails government
excesses, facilitates foreign investment, and upholds the rule of law.

9. Civil Service Reforms: Cultivating Excellence and

Meritocracy:

Underscoring the importance of an efficient bureaucracy, our plan involves civil

service reforms. Specialization, promotion based on merit, and mandatory
retirement for officials not meeting performance standards are vital steps
towards cultivating a competent civil service.

10. Digital Transformation for Governance

Efficiency:
Proposing a transformative shift towards digital governance, we advocate for
comprehensive digital transformation initiatives. Integrate technology into
government processes, services, and communications to enhance efficiency,
transparency, and accessibility. Implement e-governance solutions, digital
platforms for citizen services, and data-driven decision-making mechanisms. This
digital paradigm aims to streamline operations, reduce bureaucratic hurdles, and
foster a more responsive and accountable governance system for the benefit of all
citizens.

11. Strengthening Healthcare Infrastructure:

Invest in healthcare infrastructure to provide better services and address issues

related to infant mortality and health. Build more hospitals, clinics, and
healthcare centers, ensuring accessibility for all citizens.

12. Technology Integration in Education:

Promote the integration of technology in education to enhance the learning

experience. Develop online platforms, provide digital resources, and introduce e-

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 SUMMARY of the Article A reform agenda by Miftah Ismail

learning initiatives to improve educational outcomes.

13. Environmental Conservation Initiatives:

Implement environmental conservation programs to address climate change

concerns. Encourage tree plantation drives, promote sustainable practices, and
enforce regulations to reduce environmental degradation.

14. Enhancing Judicial Efficiency:

Introduce reforms to expedite judicial processes, ensuring timely and fair

decisions. Invest in legal infrastructure, appoint more judges, and implement
technologies to streamline court proceedings.

15. Youth Skill Development Programs:

Establish skill development programs for the youth to address unemployment and
underemployment issues. Collaborate with industries to create vocational
training opportunities and bridge the gap between education and employment.

16. Inclusive Economic Policies:

Formulate and implement inclusive economic policies that benefit all segments of
society. Focus on poverty alleviation, wealth distribution, and create
opportunities for small and medium enterprises.

17. Public Awareness Campaigns:

Launch extensive public awareness campaigns on population control, healthcare,
education, and environmental conservation. Use various media channels to
educate citizens and promote behavioral changes.

18. Strengthening Cybersecurity Measures:

Invest in robust cybersecurity measures to protect critical infrastructure and

enhance national security. Develop frameworks, collaborate with international
agencies, and create awareness about cyber threats.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

19. Transparency and Anti-Corruption Measures:

Implement strict transparency and anti-corruption measures across government

institutions. Strengthen accountability mechanisms, conduct regular audits, and
ensure public funds are used efficiently.

20. Collaborative International Partnerships:

Forge strong partnerships with international organizations to garner support for

economic development, healthcare, and education initiatives. Collaborate on
research, share best practices, and attract foreign investments.

In conclusion, our holistic approach addresses the multifaceted challenges faced

by Pakistan. By implementing these comprehensive solutions, we envision a
future marked by sustainable development, social equity, and economic
prosperity.

IMPORTANT Facts and Figures Given in the

Article:
Inflation rate exceeds 25%.
Budgetary deficit is over 7% of national income.
58% of children under five are stunted or wasted.
26 million (40%) children are out of school.
39% of citizens live in abject poverty.
State-owned enterprises (SOEs) lost around Rs700 billion last year.
Printing presses have been actively used, resulting in the largest and longest
episode of money printing in the economy.
From May 2019 to March 2020, a strict IMF program was implemented,
showing some policy coherence.
In terms of population, 8 million babies are born every year.
63% of federal taxes go to provinces after the seventh NFC award.
A brief period of policy coherence was observed from May 2019 to March
2020 during the strict IMF program.
58% of children under five are stunted or wasted.
26 million (40%) children are out of school.
39% of citizens live in abject poverty.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

MCQs from the Article:

1. What is the proposed target for direct cash transfers to
citizens through BISP or provincially-run programs?

A. 0.5% of GDP
B. 1.5% of GDP
C. At least 1% of GDP
D. 2% of GDP

2. Which reform does the author consider the most important

for long-term economic growth?

A. Population control
B. Privatization of SOEs
C. Legal reforms
D. Civil service reforms

3. When did the loss of policy coherence start in Pakistan,

according to the article?

A. 2013
B. 2015
C. 2017
D. 2019

4. What is the author’s stance on reimagining Pakistan at the

moment?

A. It is unnecessary.
B. Reassembling Pakistan should precede reimagining.
C. Both should happen simultaneously.
D. Reimagining is more important than reassembling.

5. What is the primary reason for the loss of policy coherence

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 SUMMARY of the Article A reform agenda by Miftah Ismail

in Pakistan after 2017?

A. Lack of financial resources

B. Inefficient bureaucracy
C. Fractured executive decision-making
D. External pressures

VOCABULARY:
1. Abject (adjective) (‫)ذلیل‬: Extremely bad, unpleasant, or degrading.
2. Robust (adjective) (‫)مضبوط‬: Strong and healthy; vigorous.
3. Devolve (verb) (‫)منتقل کرنا‬: Transfer or delegate (power) to a lower level,
especially from central government to local or regional administration.
4. Largesse (noun) (‫)سخاوت‬: Generosity in bestowing money or gifts upon
others.
5. Bureaucracy (noun) (‫)بیوروکریسی‬: A system of government in which most of
the important decisions are made by state officials rather than by elected
representatives.
6. Prolonged (adjective) (‫)طویل مدت‬: Continuing for a long time or longer than
usual; lengthy.
7. Privatization (noun) (‫)خصوصی بنانا‬: The transfer of a business, industry, or
service from public to private ownership and control.
8. Voucher (noun) (‫)واچر‬: A small printed piece of paper that entitles the
holder to a discount or that may be exchanged for goods or services.
9. Legitimate (adjective) (‫)شرعی‬: Conforming to the law or to rules.
10. Fiscal (adjective) (‫)مالیاتی‬: Of or relating to government revenue,
especially taxes.
11. Muster (verb) (‫)جمع کرنا‬: Assemble (troops), especially for inspection or in
preparation for battle.
12. Bleak (adjective) (‫)سرد و خاموش‬: (of an area of land) lacking vegetation and
exposed to the elements.
13. Beleaguered (adjective) (‫)محاصرہ ہوا‬: In a very difficult situation.
14. Indiscipline (noun) (‫)لاتعلقی‬: Lack of discipline or control.
15. Dissolve (verb) (‫)حل ہونا‬: Close down or dismiss (an assembly or official
body).

Attention Please!

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 SUMMARY of the Article A reform agenda by Miftah Ismail

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A reform agenda
Miftah Ismail

THE incoming government will take over at a very challenging time. On the fiscal
side, we have inflation at more than 25 per cent, budgetary deficit at over 7pc of
national income, energy costs and its frequent unavailability a millstone around
the neck of industry and consumers, large foreign and local debt repayments that
keep us close to the brink, and underwhelming exports.

In the human development area, we have one of the highest infant mortality and
female fertility rates even among poor countries, 58pc of kids under-five are
stunted or wasted, 26 million (40pc) children are out of school, 8m-plus babies
born every year for whom we neither have schools nor teachers, and worst of all,
39pc of our fellow citizens living in abject poverty.

In terms of governance, we have a totally ineffective local government system —

the government tier that interacts most with people and is supposed to provide

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 SUMMARY of the Article A reform agenda by Miftah Ismail

services — leaving our citizens without health, education and other basic
services.

In fact, all areas of our governance are lacking in effective delivery. For instance,
our state-owned enterprises (SOEs) lost around Rs700 billion last year, we have a
bloated bureaucracy where there is no consideration of merit, cases linger in
courts unresolved for decades, and our police aren’t considered a service but a
burden by the citizens.

All areas of our governance are lacking in effective delivery.

Given these persistent problems, here are some reforms the incoming
government may undertake.

No other reform will succeed if we don’t urgently undertake population control.

The 8m babies being born every year will overwhelm every plan and resource we
can muster. Moreover, no economy can prosper if 40pc of its people remain poor
and illiterate, and the literate remain undereducated and unskilled.

Next, we need to tackle government financing. After the seventh NFC award,
about 63pc of all federal taxes go to the provinces (including AJK, GB and former
Fata), leaving the provinces with plenty of cash but the federation with not
enough money to even cover its interest payments. The next NFC award must,
gradually over five years, increase the share of the federation to 55pc and ask
provinces, districts and divisions to also collect their own taxes. The idea that one
government collects taxes and another gets to spend it is a recipe for fiscal
indiscipline. Responsible federalism requires that not just authority to spend but
responsibility to tax too is devolved.

Another reform should be constitutional local government empowerment that

cannot be diluted at the whim of the provincial administration. This means
education and health devolved to district or city level as appropriate, and police
and infrastructure to the division and city level. It also means elected tehsil,
district, city and division mayors who aren’t removed until a successor is elected.
Most importantly, these entities should be given funds directly from the federal
divisible pool, on a predetermined formula, and they need not depend on the
largesse of the provincial administration alone.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

Also on the agenda should be reduction of the government’s footprint. This would
mean privatisation and robust regulation of all SOEs. It should start with PIA and
PSM, already on the agenda, but must include all power and gas distribution and
generation companies, and oil-producing and distribution companies. Necessary
changes should be made in the law to allow for quicker privatisation (currently it
requires at least 460 days to complete a transaction).

Our electricity and gas distribution companies are allowed profits on the totality
of their assets, a formula which must be changed post-privatisation. The price
these companies fetch will depend on what profits they are allowed post-
privatisation. The government needs to carefully think about the new profit
formula and how to divide the surplus profit, after improvements in bill collection
and transmission and distribution losses that should accrue after privatisation,
between consumers and companies. The ultimate objective of this privatisation
should be the establishment of a wholesale market for electricity and gas and a
substantial reduction in consumer prices and improvement in services.

Beyond the privatisation of SOEs, we need to also otherwise reduce the footprint
of the government. This means, for instance, reduction of ministries and
divisions, especially in the areas devolved by the 18th Amendment, and by giving
more functions to the private sector.

For example, the Ministry of Food Security can easily be made into an office
within the commerce ministry. Or the Ministry of Education, which runs schools
in GB and Islamabad, should devolve those functions to the local jurisdictions and
just set national curriculum standards for education across the nation. We can
also dissolve the Trading Corporation of Pakistan and let the private sector
import food commodities. Much of the rest of the world is able to provide food
security to their people without a government company directly involved in
trading and imports. The government’s strategic storage of wheat and fertiliser is
warranted. However, the government will be able to buy and store wheat and
fertiliser more economically if it relied on the private sector.

Given the tight fiscal position, the federal and provincial governments need to cut
their development programmes. The money saved can perhaps be given as direct
cash transfer to citizens through BISP or provincially-run programmes, and their
quantum should be increased to at least 1pc of GDP.

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 SUMMARY of the Article A reform agenda by Miftah Ismail

My favourite reform is to give vouchers to poor students to attend private

schools. Sindh and Punjab have done successful pilot programmes in this area,
and now this programme should be expanded nationwide to all poor children.

Perhaps nothing is more important for long-term economic growth than legal
reforms that result in predictable and timely decisions by the courts. This will
keep government excesses in check, facilitate foreign investment, and disallow
elite interests from prolonging court cases to their benefits.

Finally, the best way to improve governance is to improve the competence of

bureaucrats. Civil service reforms should include specialisation, promotion on
merit, and mandatory retirement of officials not up to the mark.

If Pakistan is to compete with its peer countries and lift our people out of poverty,
these reforms are essential. Otherwise we will just continue to drift.

The writer is a former finance minister.

Published in Dawn, February 17th, 2024

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