INTERNATIONAL JOURNAL OF ORGANIZATION THEORY AND BEHAVIOR, 9 (3 ), 352-377 FALL 2006 SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT: THE CASES OF PAKISTAN AND BANGLADESH Habib Zafarullah* ABSTRACT. In line with contemporary trends in the developing world, countries in South Asia are under pressure from both political and civil societies and the international donor community to recast their administrative systems. New tools and practices in public governance have been advanced to remedy structural deficiencies, procedural flaws, managerial incompetence, and weak accountability in the public sector. International organizations emphasize the need to improve the relationship between governance and socio-economic outcome; and accountability, transparency, probity, predictability, and participation are acknowledged as essential ingredients for effectively managing development. This article focuses on two South Asian countries (Pakistan and Bangladesh) and examines the various measures adopted by their governments to reshape governance and public management in recent times. INTRODUCTION In line with the current trends in the developing world, South Asian countries are under constant pressure from internal political and civil societies and international donors to reform their administrative systems in order to serve the purposes of democratic governance and development. Various tools in governance and best practices in public management are being adopted to overcome structural deficiencies, procedural flaws, managerial incompetence, and weak accountability mechanisms in the public sector, which in the past worked either independently or concomitantly to inhibit ----------------------------* Habib Zafarullah, Ph.D., is Associate Professor, School of Social Science, University of New England, Australia. His major research areas include democratic governance, comparative bureaucracy, public policy, and development management. Copyright © 2006 by PrAcademics Press SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT353 poverty alleviation and the realization of social and economic development goals. International organizations such as the World Bank, the International Monetary Fund (IMF), the Asian Development and the United Nations Development Programme (UNDP), to name a few, emphasize the need to improve the relationship between governance and social and economic outcome of public policies and acknowledge transparency, accountability, probity, predictability, and participation as essential components of a sound development management system. Likewise, capacity building in government for the effective delivery of public service, infusion of service ethos among its members, decentralization of operations, and citizen participation in public affairs are recognized as conjointly significant in creating a robust state-people nexus. Thus, public management systems require recalibration of its roles, structures, and operations to effectively respond to the priorities and goals of development. Since the 1980s, the international donor community (IDC) has been persistent in demanding governments in developing nations to be more open to reform and change and to resolve the perpetual crises in governance. With the enthusiasm for democratic governance and economic liberalization constantly radiating from New York, Washington and Geneva to the developing world and as development assistance is conditional upon reforms to build and strengthen public institutions, the IDC entreaties have centered on elements of governance or the state’s capacity to govern effectively. The reconfiguration of the state’s role in economy and society, creating balance between national and sub-national power centers to rejuvenate the local government system, promoting civil society presence in policy structures, constructing public-private interface for better economic results, and repositioning and strengthening public institutions for social development are predicated on sustained public sector efficiency and performance, predictability, transparency, accountability, and integrity (World Bank, 2002a; ADB, 1997). This article focuses on two South Asian countries--Pakistan and Bangladesh--and examines a range of measures adopted by their governments in recent times to reshape core functions in governance and public management. It explores both domestic compulsions and external interventions that have propelled reforms in the public sector and encouraged moves to restructure the machinery of government, 354 ZAFARULLAH streamline policy development and implementation, facilitate information access, embrace anti-corruption measures, and create synergy between government and non-state organizations. From a contextual perspective, we also look at the attitudes and stance of the political leadership and the bureaucracy toward reform. POLITICAL CONTEXT OF REFORM Pakistan and Bangladesh, as one nation at independence from the U.K. in 1947, were bequeathed a common governmental legacy that had powerful influences on bureaucratic behavior and administrative structures and processes that were put in place to meet the needs of a post-colonial state. The inherited praxes were obtusely perpetuated by public officials indoctrinated in colonial rulemaking, rule-articulation, and rule-implementation. They formed the nucleus of the central and provincial bureaucracies and maintained ubiquitous influence on governmental affairs, including policymaking and implementation, in the absence of effective constitutional politics in the country. Indeed, the political milieu was depraved by wanton factionalism, polarization, and regionalism with profound implications for sound state management. The political executive being unwittingly callow in approaching administrative obligations was “thoughtless in reaching consensus on key issues, nonchalant of their proper role in governance and largely driven by parochial political interests” (Zafarullah, 2003, p. 266). The failure of democratic politics in the country ushered in military rule further entrenching bureaucratic domination in governmental affairs. For over a decade, bureaucratic-authoritarianism under the canopy of pseudo-democratic/military rule played a pivotal role in regulating the economy, influencing social life and intervening in policy development and implementation (Ahmed, 1980; Rizvi, 2000). The bureaucracy operated on the conscience of its own dictates, defined the guidelines to ‘control’ itself, demarcated the boundaries between its identifiable domain and political society, and restrained the crystallization of an effective civil society. Arguably, it distanced itself from society and grew insensitive to people’s needs. Until 1971, when the eastern wing of Pakistan seceded to form the independent nation of Bangladesh, several concerted attempts were made to reform the administrative system but these were essentially inhibited by tough bureaucratic resistance complemented SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT355 by weak political leadership despite favorable conditions for realizing them. External support for these reform efforts that sought to place the machinery of government and particularly civil service management on a rational footing was practically wasted (Khan, 1980). The governmental system, simulating colonial administrative attributes, was disorganized and thus incapable of achieving desired policy goals, processes were sloppy producing mal-coordination and inter-agency conflicts, checks and control mechanisms were flawed creating scope for bureaucratic malfeasance, relations between the political executive and the civil service were ambiguous leaving room for confusion and discord, and the structures for people’s participation in development were inadequate. These problems flowed on to the two countries after the dismemberment of Pakistan. Both faced the same sorts of challenges in transforming their administrative systems in post-authoritarian political settings. While the span of governance in Pakistan became smaller with the breakaway of its eastern wing, for newly independent Bangladesh it signified the enlargement of a provincial governmental machinery to serve the purposes of a sovereign nation. The task of redesigning the two nations’ administrative structures however was complicated by the prevailing bureaucratic culture that embodied such elements as elitism, conservatism, red-tapism, insularity, intransigence, intemperance, patronization, and self-preservation, and manifested a disdain for political controls and a predilection for political maneuvering for furthering group interests. Thus, the views of the bureaucracy, especially that of the elite corps within it, about its role in society and governance and its orientations and attitudes toward political and civic structures and the public, became significant factors in the success of any program for reform and change. Frequent political setbacks destabilized the governmental systems in both countries. The breakdown of constitutional politics and bouts of military rule have had wide ramifications for establishing democratic governance and building sound administrative systems. Since 1971, Pakistan saw two military takeovers by ambitious generals and several dismissals of universally elected governments by politically overly zealous and indirectly elected presidents. Similarly, in Bangladesh, political assassinations, two stints of military rule, and political malevolence by democratically elected 356 ZAFARULLAH governments and opposition forces characterized the political landscape. In reality, parochial political loyalties, the absence of commonly endorsed criteria for resolving and managing conflicts and the ubiquity of continued political distrust between social groups (including the bureaucracy and civil society clusters) have fabricated a fragmented political culture in both places, causing incongruity of views on national issues.(1) Consequently, the planning and implementation of public management reform measures have been constrained. Civilian rule in Pakistan (1988-1999) and Bangladesh (1991 to date) has been marked by pervasive political and administrative mismanagement. In the former, the reform agenda was virtually eschewed, while in the latter the two ruling parties have mainly used it as pretence rather than as substantive commitment to change. Ironically, in both countries, the principal thrust for public management reform has come from military rulers rather than by democratically elected governments. In Bangladesh, the militaryturned-civilian regimes of Ziaur Rahman and Hussein Ershad, despite failings in their political approaches to governance, accomplished significant changes in the governmental machinery, consolidated the civil service system, and moderately responded to external pressures for liberalizing economic policy and management (Zafarullah, 1996a; 1996b). On the other hand, the first military ruler in post-1971 Pakistan was obsessed with transforming the country into a religious autocracy and resorted to political machinations to appease fundamentalist and capitalist elements disgruntled with his predecessor’s socialist inclinations. MAJOR REFORM EFFORTS The restoration of civilian rule in 1972 ushered two leaders-Bhutto in Pakistan and Mujib in Bangladesh--who were keen to debureaucratize the administrative systems. Both leaders were wary of the past dubious role of the generalist corps in the bureaucracy in deriding political institutions, and took steps, indubitably guided by political motivations rather than technical considerations, to enforce political control and accountability in the civil service system. In Pakistan, the government took the shorter route to reform by enforcing changes through executive fiat,(2) while in Bangladesh a more realistic approach was adopted in terms of establishing bodies SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT357 to prepare comprehensive reform proposals. However, in the former the outcome was immediate with the near-complete transformation of bureaucratic structure, while in Bangladesh the comprehensive reform blueprints (GOB, 1973) hardly produced any positive result. While in Pakistan bureaucratic resistance to reform was neutralized or rather given no chance to transpire, in Bangladesh the protracted nature of the inquiries to assist in planning the changes gave the higher bureaucracy the time to mobilize its ranks in resisting any moves aimed at reducing its entrenched status and power in the governmental system (Zafarullah, 2002). The Bhutto reforms in Pakistan, however, were reversed under military tutelage as the old elite corps regained control over the administrative system. Several years later, a democratic government responded to growing concern for endemic corruption within the bureaucracy by establishing a proper accountability enforcing body, but recurrent political interventions encroached upon its autonomy. In Bangladesh the post-independence estrangement of the bureaucracy from the power center recoiled as the Mujib regime failed to initiate any changes in the face of political and economic uncertainties and subsequent military governments relied on the bureaucracy for regime-maintenance. The first military-cum-civilian regime (1975-81) reorganized the civil service system while the second military regime put in place a decentralized political and administrative structure. In more recent times, especially since the 1980s, the pace of governance reform in both countries has been both sporadic and expeditious depending on the areas covered, the policy priorities of the government in power, and the degree of external pressure for integrating into the world economic system. From the mid-1980s, structural adjustment programs (SAP) under the aegis of the World Bank and the IMF almost became mandatory for aid-recipient developing nations. One important component of SAP has been institutional and public management reforms for effectively responding to the influences of globalization. These reforms have included denationalization or privatization of public sector enterprises, outsourcing government functions, deregulating private sector activities, enhancing institutional and managerial capacity of public organizations, and expanding government-business relations. Institution building, necessary to strengthen governance, has 358 ZAFARULLAH encompassed several governmental sub-systems such as the civil service, financial management and public expenditure, and legal and judicial procedures (World Bank, 2000). Also critical have been issues such as integrity management, administrative structures, and decentralization. However, intermittent changes in government in both countries affected the proper and timely implementation of institutional and capacity-building reforms. More important were political commitment and sustained stewardship necessary to effect change, but these have lacked in vigor or direction, and hence been disincentives to the reform success. This is where the international donor community (IDC), particularly the World Bank, stepped in to assist Pakistan and Bangladesh to design and program the machinery of reform. In the following sections, the article examines a few of these reform areas. IDC INITIATIVES IN REFORM AND GOVERNMENT RESPONSES Apart from reforms under SAP toward macroeconomic stabilization and structural rearrangements in both economic and social sectors, both countries have been under intense pressure from the World Bank to renew and revitalize their public management systems. In 1996, the Bank produced its blueprint on reform for Bangladesh--Government that Works: Reforming the Public Sector (hereafter, GTWRPS) (World Bank, 1996). Two years later it called for changes in Pakistan’s administrative structure through a report entitled A Framework for Civil Service Reform in Pakistan (hereafter, FCSRP) (World Bank, 1998). Both plans were based on heuristic methods and had a similar objective--to provide strategies for comprehensive reform of public sector management and introduce best practices implemented elsewhere (in both industrialized and developing countries). However, while the plan for Pakistan was prepared in response to the Pakistan government’s appeal for assistance in designing a comprehensive civil service reform program (World Bank, 1998), in Bangladesh the World Bank itself took the initiative after perceiving the unwillingness or rather indifference of the government to bring about any concerted changes to the country’s governmental system (Zafarullah, 1996b). Inputs from civil society groups and parts of the governmental machinery, nonetheless, contributed to the framing of the plan. This section examines some significant proposals relating to public management SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT359 reform contained in these two documents as well as other IDC initiatives and the responses of the governments in the two countries. The two reports identified several problems pertaining to the respective governmental systems. The government in Bangladesh, according to GTWRPS, was too pervasive and centralized; its officials were overly bureaucratic and discretionary; the system was preoccupied with process and therefore ineffective and wasteful; public servants were unaccountable and unresponsive; and citizens tended to evade coercive and corrupt public organizations (World Bank, 1996).(3) The country’s development was encumbered “due to the weak implementation capacity and the inefficiencies of public institutions, the government’s inability to plan and manage key reforms, and its predilection to manage economic activities at the micro-level” (World Bank, 1996, p. i). This corroborated earlier views on the governmental machinery and its performance (see UNDP, 1993). The Pakistan situation reflected similarities. The FCSRP maintained that the bureaucracy “has been unable to cope with its increased responsibilities” engendered by the continued expansion of the role of the state. It was “ill-equipped to assume new and more complex roles” for accomplishing the goals of development because of lingering colonial administrative traditions that bureaucrats adhered to. The civil service system was “closed, hierarchical, ostensibly rules-based, and compartmentalized … held together by the glue of centralized management and personal relationships within elite generalist and subordinate specialist cadres” (World Bank, 1998, p. 1). For Bangladesh, the World Bank proposed certain coordinated initiatives that would: redefine the boundaries of the public sector by rationalizing its dimensions and widening the space for the private sector, nongovernmental organizations, and local government bodies; make public organizations more accountable to people’s representatives and responsive to citizens’ demand; improve interaction between the government and citizens by simplifying rules, regulations, and processes; enhance transparency of governmental operations, decision making, and policy implementation processes; and infuse professionalism and tenets of ethical conduct in the civil service (World Bank, 1996). 360 ZAFARULLAH Even though the FCSRP mainly focused on limited aspects of civil service management in Pakistan, it also covered other significant issues like accountability, corruption, devolution, and the nexus between a sound administrative setup and a productive development policy cycle. The World Bank informed by neo-liberal ideas, articulated the rationale for smaller government apparatus in tune with the changing role of the state in a globalized market-oriented system. The public sector required trimming, and the government liabilities overburdening the public purse called for mitigation. Small and effective government not only entailed the privatization of public sector enterprises, but also rightsizing the civil service and insulating it from wanton political influence. The FCSRP resonated the government’s “Pakistan 2010 Vision Statement” in 1998, which underscored “a new government, small but effective, decentralized, responsible, customer-oriented, and managed professionally” (cited in World Bank, 1998, p. 5). Redefining the Role of the State Redefinition of the role of the state for Pakistan and Bangladesh has meant a paradigm shift in governance. Apart from making the governments slender by shedding their several functions or sharing them with the non-government sectors, by retrenching superfluous employees, and by cutting back public expenditure, the state’s overcentralized character required substantial modification. As an attribute of democracy, decentralization has been espoused as a strategy for effective governance from social, political, economic, and administrative standpoints. Political and economic devolution has the facility to create an effective nexus between the state and citizens and a win-win situation for all stakeholders in governance, including the government, civil society, and the private sector. In both Pakistan and Bangladesh, the focus has been to relieve the national government from performing functions that non-government organizations (NGOs) and the private sector could more efficiently undertake. The GTWRPS argued that such off-loading or hiving-off of tasks would “broaden and clear the territory in which the private sector . . . can grow and prosper. It will have cut away at the thicket of regulations, sparing only those which are essential for the protection of the public interest and the promotion of equitable and productive business activity” (World Bank, 1996, p. xxiv). SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT361 As a facilitator rather than a regulator of social and economic activities, the governments of these two countries could foster better government-business relations, encourage entrepreneurship in small and medium-scale businesses, and attract overseas investment in core economic sectors. Expanded business activities in a deregulated or less regulated environment would boost employment opportunities in the private and non-government arenas and ease the burden on the public sector. Yet, with the state still expected to play a significant role in society, particular areas of the economy would require “a certain minimum, yet effective, degree of government regulation” (World Bank, 1998, p. 5). To offset the past counter-productive nature of the regulatory mechanisms in Pakistan, the government there created independent regulatory bodies for several sectors such as National Electric Power Regulatory Authority to implement power sector regulation under a special statute. The World Bank report on Bangladesh challenged the interventionist role of the state and the encroachment of the government into “purely private territory” (World Bank, 1996, p. 20). It recommended the closing down of public agencies that had outlived their usefulness or lost their relevance, divestment of certain public functions to the private sector or NGOs for efficient delivery, corporatization of public sector organizations for better performance, and separation of policy making tasks from their implementation and administration (World Bank, 1996). Deregulation, Privatization and Corporatization Deregulation or judicious regulation of public sector operations can ensure minimal state intervention in social and economic affairs, whereas denationalization or privatization, and even corporatization can further dilute governmental density, delimit state compass, and ease the pressure on the public coffer. The two reports echoed this view and pushed for reversing the policies that sustained sick enterprises or unproductive operations in the public sector. For Bangladesh, the World Bank favored two options: (a) privatization or total closure of enterprises that operated in competitive market situations and where privately produced products were accessible by consumers; and (b) corporatization of development-oriented and utility/service agencies (operating as monopolies in non-contestable markets) in order to make them operate based on market principles 362 ZAFARULLAH like private commercial enterprises (World Bank, 1996). In a similar vein, the World Bank advised the government of Pakistan to “exit from departmental and other non-commercial activities that [were] no longer necessary or [could] be effectively handled by the private sector” (World Bank, 1998, p. 5).(4) Both countries have embarked on the path to creating free market economies to promote private sector development and attracting foreign direct investment. Deregulation has therefore been high on their reform agenda. In Pakistan, the Committee on Reforms in Regulatory Legal and Policy Environment sought to “map out a comprehensive regulatory program and implementation steps needed to get rid of irritants and further free up the economy and to improve investment climate in Pakistan by lowering costs of doing business and enhancing export competitiveness” (GOP, 2003, p. 40). The government has articulated its commitment to confine its role to “policy formulation, regulation and facilitation, to enable the private sector to make investment decisions and to inculcate efficiency and competitiveness” (GOP, 2003, p. 41). In reality though, it has only partially succeeded. The privatization process in Pakistan has achieved some breakthrough, while in Bangladesh it has been moving at a very slow pace. In the former, a privatization law(5) has been put in place and the Privatization Commission has been actively engaged in the sale of public enterprises. Operational efficiency and economies of scale have been achieved by privatizing state-owned enterprises (World Bank, 2003). The current favorable regulatory framework with relatively fewer bureaucratic bottlenecks as well as transparency and certainty in the decision making process have bolstered prospective investors and entrepreneurs. However, global economic and regional political factors have had a delaying effect on privatization. The Privatization Commission in Bangladesh has been operational since 1993 and has been accorded a high profile in the governmental structure. A broad policy and detailed procedures regulate the privatization of state enterprises in 13 sectors, but despite repeated notifications and tenders for selling them or offloading their shares, the response from potential buyers or investors has been lukewarm. The last few years of the 20th century saw a sharp deceleration in the pace of privatization (Ahmed, 2000). SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT363 The absence of transparency and predictability in the decision making process in government and the lethargic attitude of the Privatization Commission have eroded investors’ confidence and have impeded the sale of state assets in Bangladesh. The fortitude and commitment exhibited by the current government in closing down the largest jute mill in Asia have not been evident in its actions on similar ailing public sector units. Corporatization of public sector organizations has not really taken off in either country despite IDC entreaties to overhaul their management and operations based on business principles. Notwithstanding the declared governmental strategy in Pakistan to improve operational efficiency, enhance managerial accountability, and ensure financial viability, reforms in only a few public sector bodies (especially in the power development and distribution sectors) were attempted, but the intended outcome has not been achieved. The Railways Department, though, has been a relatively successful case at restructuring (World Bank, 2001a). Corporatization or commercialization of public sector bodies in Bangladesh has been attempted sporadically and achieved only limited success wherever it has been introduced (World Bank, 1996).(6) Public Integrity Management In recent years, corruption, transparency, and accountability have taken on new meanings, that is, they have been widely debated, analyzed, and employed in recognizing their relevance in sound governance. Corrupt exchanges in public life, particularly in the government bureaucracy, have proliferated, raising concern about their implications for administrative performance and delivery of service to the citizens. Corruption accompanied by misuse and mismanagement of resources and dereliction of duty and responsibility by public servants can create debilitating effect on the economy and organizational efficiency, cause social dislocations and public distrust in government intentions, and lower the image of the civil service. Thus, managing public integrity has become an important dimension of sound governance, and it is recurrently espoused by the IDC. Focusing on Bangladesh, the GTWRPS identified the following: an extensive regulatory regime that “provides a fertile ground for rent seeking”, the lack of transparency in government that raises 364 ZAFARULLAH questions about the decision making process, the pervasive influence of powerful business interests, insufficient compensation for public employees, and flaws in the mechanisms for disciplining aberrant behavior in the bureaucracy (World Bank, 1996). The existing anticorruption body has been a failure in performing its tasks, and the successive governments have unabashedly used it to unleash vengeance against political opponents and those insensitive to their political beliefs. With corruption remaining endemic, the World Bank proposed the creation of an independent body, protected by law and endowed with subpoena powers, to combat corruption. To enforce accountability, it called for increasing the capacity of parliament and its committees, establishing the constitutionally-mandated ombudsman, effecting institutional reforms within the office of the auditor general, and enhancing openness in government (World Bank, 1996). The FCSRP noted the Pakistan government’s own perception about corruption that had engulfed “all three branches of government… [with] the result that none of [these] acts as a check upon the malfeasance of the other two”. An official document further stated: The power to appoint or reward public officials are used arbitrarily, public property is handled in a cavalier fashion, the system ignores (and often rewards) financial corruption and the misuse of powers, financial institutions have been burdened with unserviceable loans, public lands have been doled out in return for political or financial favors, and publicly controlled institutions are badly managed and respond neither to citizen needs nor to financial imperatives (quoted in World Bank, 1998, p. 2). The Ehtesab (or Accountability) Commission was appointed in late 1996 by the Nawaz Sharif government to control corruption, but a subsequent move by the executive to reduce its investigating authority severely curtailed its effectiveness. However, the prime minister’s Inspection Commission along with the Ombudsman addressed accountability and efficiency issues and acted in response to citizen complaints (World Bank, 1998). In spite of some positive initiatives until 1998 to improve accountability instruments, external accountability to the public remained restricted and age-old perplexities continued to unsettle the relationship between the SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT365 political executive and the bureaucracy (World Bank, 1998). The World Bank recommended several new measures to supplement ongoing initiatives. These measures were: increasing the flow of information to the public, improving citizen access to public offices, developing the system for data compilation and dissemination, adopting realistic performance indicators, and enhancing financial reporting and auditing (World Bank, 1998). The so-called independent anti-corruption agencies in either country have been ineffective. The National Accountability Bureau (NAB) in Pakistan and the Bureau of Anti-Corruption (BAC) and its successor, the Anti-Corruption Commission (ACC) in Bangladesh serve only a limited purpose in combating corruption in government. NAB is under the direct control of the head of government and thus has not been totally autonomous from government/partisan control. Until the military takeover in Pakistan in 1999, the political government abused the NAB’s forerunner, whereas in Bangladesh the BAC was used for a long time to harass political opponents and the agency itself was corruption-ridden, requiring a complete overhaul (Zafarullah & Siddiquee, 2001). On paper at least, the NAB has a wider role than the ACC in curbing corruption in government, particularly the financial sector. Its tasks and responsibilities are clearly set out and its organizational structure and processes well-defined (GOP, 1999). The demand for an independent anti-graft body in Bangladesh persisted for decades and after several failed promises by past governments, the creation of such an institution – the ACC -- was approved by parliament. It has been clothed with the power to take action against ministers and government officials on charges of corruption. However, even from a notional standpoint, this body, which subsumed the BAC, has been deprived from any form of autonomy that such a body requires and is beleaguered by organizational problems and other constraints. Public Financial Management The reform of public financial management (PFM) has been a continuing process in attaining sound governance standards in developing countries. Managing public revenue and expenditure funds in an efficient, appropriate, and transparent manner has become a hallmark of good financial management. The PFM reforms target effective outcome by rationalizing the public sector budgeting 366 ZAFARULLAH process, linking resource allocation and performance management at the meso and micro levels, and interfacing budgeting procedures with strategic planning methods (Bouckaert & Pollitt, 1999). Financial sector reforms have been an ongoing process in both countries since the 1980s mainly under the aegis of the World Bank, the IMF, and the Asian Development Bank. The PFM reforms, however, have been a relatively recent phenomenon. In its assessment of financial accountability in Pakistan, the World Bank identified weaknesses in financial management and gaps in the accountability arrangements due to flaws in financial reporting and internal controls, and located specific areas requiring intensive attention. The proper management of public expenditure is tied with prudent allocation of resources, choice of policies and priorities, sound implementation, efficient service delivery, sophisticated controls over financial operations, enhanced technical skills, and appropriate managerial infrastructure, all of which the government needs to address. It is imperative to strengthen the financial reporting mechanism to execute budget proposals efficiently, introduce performance auditing in the public sector, and enhance legislative oversight of financial procedures (World Bank, 2003). The IMF’s “Accountable Fiscal Management Framework” and the World Bank’s “Project for Improvement in Fiscal Reporting and Auditing” have worked in tandem to shape the reforms in Pakistan. Fiscal monitoring committees with the function of superintending financial reporting have been established at both the federal and provincial levels in Pakistan, and fiscal controls have been tightened. Legislative oversight has been somewhat enforced through an ad hoc public accounts committee (PAC) while the task of approving large public infrastructure projects has been thrust back to the Planning Commission. The government accounting system has been remodeled and the periodic reconciliation of federal budgetary accounts is gradually becoming a norm. The quick processing and dissemination of financial information is gaining ground with the use of the Internet by the Finance Ministry, but freedom of information legislation is yet to be finalized (World Bank, 2001b). Accounting and auditing functions have been separated under a new “Chart of Accounts,” which will also help ‘modernize’ budget presentation. Financial accountability has been ameliorated with timely submission of annual audit reports to the PAC, and the review of departmental SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT367 accounts is done by special committees (World Bank, 2002d). The public monitoring of budget implementation has been on the cards for a while, and the government’s plan to set up fiscal monitoring committees at the federal and provincial levels will further raise the extent of expenditure management. In the early 1990s, the UNDP and the British Overseas Development Agency (ODA) catalogued drawbacks in Bangladesh’s financial management system, and recommended the adoption of a results-oriented process that would apply performance criteria throughout the governmental machinery and ensure transparency and accountability in the budget process.(7) The World Bank’s GTWRPS confirmed the weaknesses and prescribed a robust audit system that would enforce rigorous transparency and accountability principles and link budgeting to outcomes (World Bank, 1996). However, the government has been slow in responding to these prescriptions. Incrementalism still characterizes the public budgeting process, which remains stereotypical and is devoid of any strategic framework. Goal-ambiguity, undefined responsibility, fiscal indiscipline, weak political oversight, and political meddling at all levels impair budget implementation (ADB, 2002). Nonetheless, the RIBEC project(8) has been instrumental in carrying out several changes in financial management. These include, among others, establishment of financial management units in several ministries, replacement of the old classification system of accounts and budgeting by a new digit-code system, electronic processing of accounts, and networking of all principal and regional accounts offices (CAG, 2001). The Public Expenditure Review Commission set up “to examine the public expenditure patterns and trends and to recommend efficient and effective allocation of public resources and their utilization” (GOB, 2002, p. 11), has exposed financial irregularities and the government’s extravagance and wastage in unproductive matters. Public Procurement Management Directly relevant to the notion of accountability is sound public procurement. In many developing countries public procurement rules are either deficient or inconsistent, or they are unevenly applied. A flawed regulatory environment, political influence, and errant bureaucratic discretion can also affect proper procurement in the 368 ZAFARULLAH public sector. Yet, a sound procurement regime is essential to ensure transparency, maintain accountability standards, and prevent public sector corruption. The public sector procurement performance has been poor in Bangladesh despite the practices being influenced by IDC guidelines. The World bank has identified certain unacceptable features of the procurement system: poor advertisement, short bidding period, poor specifications, nondisclosure of selection criteria, award of contract by lottery, one-sided contract documents, negotiation with all bidders, re-bidding without adequate grounds, corruption and outside influence, and other irregularities (World Bank, 2002b). The lack of a sound legal framework governing public sector procurement has generated, among other things, “proliferation of diverse rules and procedures among various agencies, protracted bureaucratic procedures allowing multi-point rent seeking, inordinate delays in completing the procurement process and ineffective contract administration; and absence of mechanisms for ensuring transparency and accountability in public procurement” (World Bank, 2002c, p. 2). Based on the World Bank’s recommendation, a Central Procurement Technical Unit responsible for carrying out procurement reforms has been created by the government, but its performance has been constrained by political indifference and lack of bureaucratic support. However, the need for a corpus of procurement rules and procedures for the entire administrative machinery has become imperative. The devolution of procurement powers to government departments and autonomous bodies would hasten the process, the training of procurement staff in techniques and methods would have a positive bearing on efficiency, and the introduction of a code of ethical practices would raise performance standards (World Bank, 2002c). Unlike Bangladesh, Pakistan has formalized its public procurement system by establishing the Public Procurement Regulatory Authority (PPRA) backed by wide-ranging statutory powers, including the monitoring of the application of laws and regulations relating to procurement (GOP, 2002). Its board, however, is dominated by bureaucrats, and even the three non-government members are also nominated by the government. How effective and impartial the body would be without any elective representation is open to conjecture. However, the commitment of the government to SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT369 improve procurement practices in some critical sectors (e.g., education) has been laudable (World Bank, 2001a). The PPRA has made significant strides in redesigning transparent procurement procedures to “promote fair competition and deter corrupt[ion]” in the public sector (ADB/OECD, 2003, p. 13). Civil Service Management The quest for efficient and effective government has generally focused on establishing best practices in managing the civil service, some of which the preceding sections have covered. Apart from the questions of accountability and performance, issues relating to civil service structure, personnel management, inter-cadre conflicts, and politicization have become prominent and intensely debated and scrutinized. The FCSRP reported mainly on structural and pecuniary aspects in the civil service, and related these to the overall position of the government on larger administrative issues. Thus, it focused on staffing matters such as adjusting the size of public employment through retrenchment or redeployment, streamlining recruitment procedures, eliminating ad hoc and contractual appointments, improving wage bill management, and adopting an integrated management on personnel expenditure (World Bank, 1998). In addition, compensation reform was a major highlight of the FCSRP. It argued for incorporating most allowances offered to civil servants into the basic pay, linking annual increments to performance, removing the system of “move over,”(9) factorizing inflation when reviewing increments, and “enhancing the usefulness of pensions as personnel management tools” (World Bank, 1998, pp. 33-38). The Pakistan government, however, went beyond these recommendations in reforming its civil service. The merit principle has been reinforced as the principal recruitment criterion with a strengthened and autonomous Federal Public Service Commission taking on the responsibility of both selecting mid-level officers and higher professionals and overseeing the promotions process in the civil service. The training system has been rejuvenated by incorporating a tighter selection process based on examinations “to ensure quality of high grade staff.” The new pay scales that reflected the current consumer purchasing capacity were introduced, but these 370 ZAFARULLAH allegedly increased the disparity between the highest and lowest scales (World Bank, 2004). The World Bank has supported the creation of a National Executive Service (NES) to encourage improved performance and skills enhancement by creating opportunities for training and higher education. Eligibility for entry would be factored by merit and competence. Sharp pay increases would also create more incentives for civil servants to perform while removing the mismatch between skills and rewards (World Bank, 2004). While there is some merit in having an apex civil service such as the NES, the government should take lessons from the past on the usefulness of an elite corps within the governmental structure vis-à-vis the occupational groups in the regular civil service. Perhaps, the World Bank, in line with similar schemes in the advanced democracies, would like to see a motley group of meritorious and accomplished people to advise the government on policy matters. The failure of public administration reform in Bangladesh has mainly been due to the internecine political conflict raging in the country since the restoration of democracy. Either of the two parties in power was or is unwilling to acknowledge, let alone accept, the reform plans designed during the other’s tenure. Thus, the Awami League ignored the report of the Administrative Reorganization Committee appointed by the Bangladesh Nationalist Party government in 1993, while the latter threw into oblivion the recommendations of the Public Administration Reform Commission appointed by its adversary (Zafarullah, 2002). The GTWRPS was critical of the civil service recruitment policy that supported a centralized and closed entry system and a selection process that was inadequate in matching pre-entry educational background with skills required of a cadre or position. The promotion system circumscribes the reward of merit and good performance, because opportunities for upward mobility are unequal between generalists and professional officers. The politicization of promotion process and a disguised protocol favoring either particular cadre personnel or ruling party sympathizers in the civil service, has been a major cause of inter-cadre or inter-personal friction. The GTWRPS proposed several basic reforms to rectify the morass in civil service management, such as establishing a “more pro-active lateral entry policy” and a specialized senior staffing pool--similar to the senior SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT371 services pool practiced in the late 1970s and early 1980s and the proposed NES in Pakistan (Khan and Zafarullah, 1982)--as well as employing more people on contracts, decentralizing recruitment, depoliticizing the promotion process and linking it to performance, rotating jobs more frequently, removing gender gap, enlarging training programs, managing staff rationalization and redundancies, and improving public service values (World Bank, 1996). In the civil service systems of the two countries, one notable feature is the strictly vertically oriented functional cadres fomenting distinctively inherent unease with rank and status. This untenable situation is an inherited British administrative tradition that has outlived its significance in the current age. The rank-in-corps classification pattern, a derivative of the colonial era when rank and status were accorded paramount importance in society, has survived albeit with some traces of egalitarianism. The craving for more power within the system, especially by generalist bureaucrats, has segregated the civil service into mini-bureaucracies, each advancing its parochial interests (Kennedy, 1983; Zafarullah, Khan & Rahman, 2001). In both Pakistan and Bangladesh, the reform of civil service management has received less priority than other areas in governance. However, some positive reforms have been implemented in Pakistan, while the democratic governments in Bangladesh have been rather passive in tackling bureaucratic problems. Politicization has gripped the Bangladesh civil service system, and bureaucratic resistance has thwarted moves towards rationalization. The generalists as a powerful group have always displayed a dislike for reform and change, and have always been successful in prevailing over a disinterested political executive. CONCLUSION The two South Asian countries, Pakistan and Bangladesh, face daunting challenges in achieving the goals of development. Both counties are placed in a lower stratum of the Human Development Index as they struggle to grapple with social and economic problems. Neo-liberal policies have been thrust upon by the international aid agencies often without paying attention to the countries’ traditions and value systems and the capacity of governments to effectively implement them without disrupting existing social and economic 372 ZAFARULLAH relationships. However, being on the receiving end of external aid (in the form of grants and/or loans), both countries have to, even if reluctantly, pursue these policies. On the other hand, the influence of economic rationalism and globalization has forced the governments to adopt decisions in line with the global and regional trends and integrate themselves with the world economic system. Thus, both countries have had to reshape their public management systems to respond to both external demands for political and economic liberalization and domestic needs for socioeconomic development and better services to citizens. Pakistan has adopted a much more coherent approach in tackling the governance problems. The commitment of the military regime to introduce reforms has been evident from the beginning of its takeover. It has targeted some key areas in governance, such as the public financial management system, decentralization and local governance, civil service management, delivery of basic services, commercialization of state enterprises, deregulation and privatization, and public integrity management. This commitment is not trapped at the level of rhetoric, rather concerted actions have been taken to implement the changes, and the results have been generally positive. The reforms in public management in Bangladesh have been slack and tardy with little political commitment and support. Both ruling parties, since democratization, have been long on rhetoric but short on action, and the continuing political strife between them has been a drag on some of the reforms attempted. Unlike the military government in Pakistan, neither of the two parties in power in Bangladesh has been able to present any concrete proposals for governance reform. There is no comprehensive strategy linking all areas of reform and integrating them toward a holistic objective. This has resulted in disjunctive or partial achievement of some of the efforts. It is crucial for both Bangladesh and Pakistan to draw lessons from other developing nations such as Singapore, Malaysia, South Korea, and Taiwan, which have successfully implemented state-ofthe-art structures and techniques in public management, and to take cues from IDC plans and recommendations that would best suit the needs of the two countries. Good governance cannot be assumed as an ultimate end; rather its best tenets should be adapted to create a SHAPING PUBLIC MANAGEMENT FOR GOVERNANCE AND DEVELOPMENT373 government system sensitive to the needs of society. The state may have rolled back in advanced nations, but developing countries such as Pakistan and Bangladesh cannot yet afford to delink the state from its time-honored role as the basic provider of social and economic services and in protecting citizens from the scourges of poverty. The state, therefore, needs a robust, efficient, transparent, and accountable public management system to accomplish its purposes. NOTES 1. For theoretical discussion on political culture, see Rosenbaum (1975) and Kamrava (1993). 2. The Bhutto reforms, inter alia, replaced cadres by occupational groups, discarded reservation of key positions for members of the elite cadre, and framed a uniform compensation system (See Kennedy, 1987, p. 54). 3. The police and customs departments are examples of such organizations, and the general public tends to keep away from them due to fear of being unnecessarily harassed. Other examples of organizations which place pressure on clients for bribes for services are the nationalized banks, public hospitals, and public utilities. 4. This involved contracting out to the private sector certain public welfare activities such as education, health, housing, sanitation, and so forth. 5. The Privatization Commission Ordinance provides legal cover to challenges, comforts investors, assures transparency in sale process, and mandates distribution of proceeds. 6. Several public agencies in Bangladesh, including the Building and Planning Design Unit of the Ministry of Health, the Rural Electric Society, and the Local Government Engineering Department, have exhibited improved performance by incorporating performancebased accountability mechanisms, regular monitoring of activities, improving principal-agent relationship, and introducing performance incentives schemes. 7. The UNDP produced a comprehensive report on Bangladesh’s public administrative system and recommended several 374 ZAFARULLAH consolidation and reform measures to improve financial management. The British ODA--now the Department for International Development (DFID)--made similar recommendations (See Zafarullah, 2002, pp. 59-60). 8. The “Reforms in Budgeting and Expenditure Control” (RIBEC) project of the Finance Division is financed by the British DFID. 9. 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