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Dr. Vaqar AhmedPlanning Commission

Pakistan Institute of Development Economics

15 Feb. 2010

Planning & Planning Process in Pakistan

Contents

• Current Economic Milieu

• Planning Myths

• Planning in International Context

• Approaches to Planning

• Planning Process & Machinery in Pakistan

• A Path Forward

2

Current Economic Milieu

3

Planning Myths

4

Myth 1: Planning is useless because policies lack consistencyMyth 1: Planning is useless because policies lack consistency

5

Myth 2:Myth 2: LDCs including Pakistan have not LDCs including Pakistan have not completed the tenure of their economic policiescompleted the tenure of their economic policies

The discontinuity was not in policies but projects.

6

Myth 3:Myth 3: Pakistan Vs. South Korea Model Myth Pakistan Vs. South Korea Model Myth

• Aid Received

• Model Focus

7

Planning for GrowthPlanning for Growth

• Financing for Growth

– Debt Funding

– Equity funding

– Public Sector Funding :

– PSDP

– Assistance

– Equity

8

GDP Investment Savings

Planning for Income DistributionPlanning for Income Distribution

• Can growth & distribution be achieved simultaneously?

• Is growth necessary for distribution?

• Is it economic growth that leads to reduction in poverty or the process of distribution?

– Case of Trade Liberalization ?

9

Planning in International Context

10

Changes in Planning ParadigmChanges in Planning Paradigm

11

From Planning to Policy

12

Policy Implementation StagesPolicy Implementation Stages

1. Data Collection

2. Analysis

3. Planning & Prioritizing

4. Implementation

5. Monitoring

13

Approaches to Planning

14

Approaches to PlanningApproaches to Planning

• Reactive Past oriented

• Inactive Present oriented

• Preactive Predicting the future

• Proactive Create the future

15

Planning Process and Machinery in Pakistan

16

Objectives of Economic Planning

1. To increase per capita and national income

2. Higher level of employment

3. Price stability

4. Reduction of inequalities in income distribution

5. To remove BOP difficulties

6. Reducing regional disparities

7. Self-sufficiency in food

8. Redressing imbalances in the economy

9. Increase in savings

10. Reducing population growth

11. Reducing poverty levels

12. Provision of social services

13. Long term economic growth

17

Conditions or Requirements of Successful Planning

1. Realistic goals of the plan

2. Appropriate policies and instruments

3. Adequate information

4. Rational institutions

5. Suitable administrative and technical apparatus

6. Public cooperation

18

Main Instruments of National Planning

1. Policies

2. Plans

i. Perspective Plan 10-25 Years

ii. Mid Term Plan 04-07 Years

iii. Rolling Plan 03 Years

iv. Annual Plan 01 Year

3. Transformation of plans into projects/programmes

19

Plan Periods in Pakistan

20

Plan Period1. Colombo Plan (Six Year Plan) 1951-57

2. 1st Five year Plan 1955-60

3. 2nd Five year Plan 1960-65

4. 3rd Five year Plan 1965-70

5. 4th Five year Plan 1970-75

6. 5th Five year Plan 1978-83

7. 6th Five year Plan 1983-88

8. 7th Five year Plan 1988-93

9. 8th Five year Plan 1993-98

10. 9th Five year Plan 1998-2003

11. 10 Year Perspective Development Plan 2001-11

12. Medium Term Development Framework (MTDF) 2005-10

13. Vision 2030

14. 10th Five year Plan (under construction) 2010-15

Chronology of Planning Machinery

1. Development Board established in 1948 in the EAD

2. Planning Board set up in 1953. First 5 year plan prepared for 1955-60

3. National Planning Board established in 1957

4. Planning Commission setup under the Chairmanship of President in 1959

5. Second five year plan prepared for 1960-65 followed by the third five year plan for 1965-70

6. Fourth Five Year Plan (1970-75) prepared but remained dormant due to separation of East Pakistan

7. 1970-77 non plan period: Development on basis of Annual Plans

8. Fifth Five Year Plan 1978-83

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Chronology of Planning Machinery

9. Sixth Five Year Plan 1983-88

10. Seventh Five Year Plan 1988-93

11. Eighth Five Year Plan 1993-98

12. Ninth Five Year Plan (halted due to changed in government)

13. 10 Years Perspective Development Plan 2001-11

14. MTDF 2005-10 July, 2005.

15. Planning Commission restructured on 20 April 2006 with P.M. as Chairman.

16. Vision 2030 launched in August, 200722

Functions of Planning Commission

• Consultation with:– Federal Ministries / Provincial Governments– Donors – Civil Society

• Formulation of National Plan– Annual Plan– Five Year Plan– Rolling Plan– Perspective Plan (15-25 Years)

• Project Management– Approval of Development Projects– Monitoring of Major Projects– Evaluation of on-going and completed projects– Association with EAD in matters of Foreign Assistance

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Planning Process

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Planning Commission• Preparation of approach paper

• Formulation of technical working groups in all sectors

• Preparation of sectoral chapters by working groups

Consultations with all Federal Ministries for input

Consultations with all Provincial Govts. for input

Sent to all Fed. Ministries and Dev. Partners for comments and input

Sent to all Provincial Govts. for comments and input

Finance Division

(Resource Availability)

Economic Affairs Division

(Foreign aid availability)

Finalization of draft plan by PC and its presentation before President/Prime Minister

Submission to National Economic Council (NEC)

Circulation of approved plan to all Provincial Govts. And Federal Ministries for implementation

Transformation of plan into viable projects/programmes

Draft Five Year

Plan

How Planning Leads to Development

• Plans are transformed into viable project programmes

• Relationship: Projects and Plans

• Ensure Desired Objectives of Development Plan

• Crowding – in phenomenon: – Investment Coefficient– Which modes of public investment?

25

Project Management Life Cycle

1. Identification and Formulation

2. Appraisal and Approval

3. Implementation

4. Completion and Closure

5. Ex-post Evaluation

26

How are Projects Identified in Pakistan?

• National Economic Council

– Planning Document (Annual / Medium Term Plan)

– Assistance and partnership strategies with donors

• Line Ministries / Public Sector Corporations

– Based on their sectoral strategies / work plans

• Public Representatives/NGOs/Pressure Groups

– Policy Debates

27

Project Preparation – PC I Performa

• History

– Introduced in September 1952

– Revised by Group of Experts 1995 including World Bank.

– 14 Forms of Various Sectoral Projects

• Present

– Only 3 sectoral PC-I Performa (Infrastructure, Social Sector and Production Sector)

28

Project Preparation – PC II Performa

• Need for Feasibility Studies

– Projects costing Rs. 300 million and above

• Financing the Cost of Feasibility Studies

– Provision under PSDP

– Proposal to be submitted in the form of PC II Performa

• Highly Technical Projects

– Request donor for Technical Assistance Grant

29

Project Preparation – Project Formulation

• Overall Objective

– Financial and Economic Viability of the Project

• Indicators – over the life of project

– Inputs

– Baseline data

– Output

– Expected Outcomes

• Sustainability aspect after completion

– Yielding the required outcomes

30

Project Appraisal & Approval

• Appraisal involves a careful check of:

– Basic data

– Assumptions and methodology used in project preparation

– In-depth review of work plan, cost estimates and proposed financing plan

– Assessment of organizational and management aspects

– Validity of financial, economic and expected social benefits

31

Project Appraisal & Approval

• Approving Authority

– Departmental Development Working Party (DDWP) Up to Rs. 40 million

– Central Development Working Party (CDWP) Up to Rs. 500 million

– Executive Committee of National Economic Council (ECNEC) More than Rs. 500 million

– Provincial Development Working Party (PDWP) Up to Rs. 5000 million

– Corporations and Autonomous Bodies No Limit*

32

Project Appraisal & Approval

• PC III, PC IV, PC V

• PC-III: Designed to furnish information on the programme of on-going projects on quarterly basis

–Any Changes in Scope of Design

–Any Revisions

–Any Changes in Management of Project

• PC-IV: Project History (Physical Completion of Project)

–Accounts Closed/amount unaccounted

–Employment generated by the project

–Suggestions for future planning

–Name of the operating agency33

Project Appraisal & Approval

• PC III, PC IV, PC V

• PC-V form is to be furnished on annual basis for a period of five years by operating agency

– Review of costs

– Review of financial results

– Arrangements for maintenance of project

– Difficulties experienced in operation, marketing etc.

– Repercussion of scheme

– General observation of Federal Ministry

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The Need for Monitoring

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Project Monitoring

• Internal Monitoring – Sponsoring Ministry

• External Monitoring– Provincial P & D Dept. – Projects Wing at Planning Commission

• Monitoring Cells– Establishment of Planning and Monitoring Cells in ministries

as directed by ECNEC.

• Monitoring Methodology– Results Based Monitoring

36Stages of

Monitoring?

Project Monitoring

• Stages of Monitoring

– Starting Phase

– Investment / Execution Phase

– Completion / Operating Phase

37

Project Monitoring

• E-connectivity through Project Monitoring and Evaluation System (PMES)

– Project Director Provincial P & D Departments Line Ministries Planning Commission Prime Minister Secretariat Funding Agencies

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Pending Weaknesses

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Weaknesses – Need for Further Reform

• Weaknesses in Project Management

Financial. Unrealistic cost estimates

. Delay in financial arrangements (Local/FEC)

. Proper cash plan not prepared

. Inadequate allocations/funding

. Late release of funds, lengthy procedures

. Cost over run

Monitoring & Evaluation

. Need for more effective monitoring

Political Intervention

Others40

Boundary,

Private,

Capacity-

Rural

Weaknesses – Need for Further Reform

• Planning Issues

o Management

o Human Resource Development

o Lack of Policy Formulation and Analysis

o Depleted Physical Infrastructure

41

Path Forward

42

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9-Point Program for Economic Reform and Sustainable Development

• Achieve Macroeconomic Stabilization

• Establish Social Safety Net

• Develop and mobilize human resources (HRD)

• Expand agriculture production and galvanize Agro-Business potential

• Galvanize industrial competitiveness with supporting strategies

• Integrated planning for Energy Development

• Deepen and diversify domestic Capital Markets

• Establish Public-Private Partnership as major method for infrastructure development

• Administrative Reform: Consolidation, Specialization and Devolution

Final Message

Water for agriculture

Energy for industry

http://www.pc.gov.pk/

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