Allocations versus Expenditures in Education Finance – Policy Note

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The policy note titled “Falling Through the Cracks: Allocations versus Expenditures in Education Finance” highlights the issue of underspending in the education sector in Pakistan. Despite an increase in the total education budget, underspend remains a significant problem. Pakistan’s investment in education, at 1.7% of GDP, is below the international norms of 4% minimum or allocating 20% of the total budget to education. Only Sindh and Khyber Pakhtunkhwa (KPK) met the 20% benchmark in the 2022-2023 budget. This indicates that provinces miss opportunities for progress due to underutilization of allocated budgets.

The policy note identifies several reasons for the underutilization of education budgets. One major factor is the late release of funds, making it difficult to effectively plan and execute spending. Moreover, challenges persist in meeting internal and external commitments, such as the provision of free and compulsory education. Millions of children are still out of school, and there is a decline in participation rates and quality of education.

The note emphasizes that addressing budget allocation and execution issues is crucial to resolve Pakistan’s education challenges. These issues cut across federal and provincial governments, with many projects not receiving full allocations or funds being released too late for effective execution. Additionally, there is a lack of regular tracking of budgetary releases and utilization. External factors like the COVID-19 pandemic and emergencies also divert education budgets to other sectors.

The policy note analyzes education budgets, highlighting the growth of budget allocations and spending. While the cumulative education budget has increased over the past decade, the development budget has grown at a slower pace compared to the recurrent budget. In recent years, education spending has improved, with around 90% of the allocated budget being utilized. However, the breakdown of spending into salary, non-salary, and development areas reveals challenges. Spending on salaries exceeds the allocated budget, while development schemes and non-salary budgets face underspending.

The note outlines key reasons for low budget utilization, including delays in fund release, untimely reallocation of funds, inefficiencies in approval processes, and teacher deployment issues. Complex public procurement procedures also contribute to underspending in the development budget.

Read Allocations versus Expenditures in Education Finance – Policy Note

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