Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No. 38884-PK

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM DOCUMENT

FOR A

PROPOSED CREDIT

IN THE AMOUNT OF (SDR 66.1) MILLION (US$lOO MILLION EQUIVALENT)

TO

THE ISLAMIC REPUBLIC OF PAKISTAN

FOR A

FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT

May 8,2007

Human Development Sector South Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not otherwise be disclosed without Wor ld Bank authorization.

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A D P AEO ADB AY B I S E BOT CAS CBR CBT CFAA CGA CIDA C M I S COA CPD C P I DAC DAO DCA D D A C s DFID DMO DO DOE DPC D S D DSS DTE DTSC E C EDOs EFA E M I S F A S FDI FY GDP GFR GOP GTZ HEC HDI

PAKISTAN - GOVERNMENT FISCAL YEAR July 1 - June 30

CURRENCY EQUIVALENTS (Exchange Rate Effective as o f April 1,2007)

Currency Unit Pak Rupees (PKR) US$1 .oo PKR 60.70

Weights and Measures Metr ic System

ABBREVIATION AND ACRONYMS

Annual Development Plan Assistant Education Off icer Asian Development Bank Academic Year Board o f Intermediate and Secondary Education Build-Operate-Transfer Country Assistance Strategy Central Board o f Revenue Cluster Based Teacher Training Country Financial Accountabil ity Assessment Country Gender Assessment Canadian International Development Agency College Management Information System Chart o f Accounts Continuous Professional Development Consumer Price Index Departmental Accounts Committee District Accounts Off ice Development Credit Agreement District Departmental Accounts Committees Department for International Development District Monitoring Officers District Off icer Department o f Education Development Pol icy Credit Directorate o f Staff Development Devolved Social Services District Teacher Educators District Training and Support Center European Commission Executive District Officers Education for All Education Management Information System Foundation Assisted Schools Foreign Direct Investment Fiscal Year Gross Domestic Product General Financial Rules Government o f Pakistan Gesellschaft h e r Technische Zusammenarbeit Higher Education Commission Human Development Index

IDA IMF I T LEAPS LGO M&E MEA MDGs MIS MOE MTBF MTDF NAVTEC NAM NEAS NEC NER NGOs NPV NWFP PAC PEAS PEDPC PEC PEF PEFA PESAC PESRP PFAA PFC PFM PFMA PIFRA PIHS PLGO PMF PMIU PRGF PRMP PRSC PRSP

PSLSMS SBA SBP scs SIP TOP L’NICEF UPE

P-PRSP

FOR OFFICIAL USE ONLY International Development Association International Monetary Fund Information Technology Learning and Educational Achievement in Punjab Schools Local Government Ordinance Monitoring and Evaluation Monitoring and Evaluation Assistant Millennium Development Goals Management Information System Ministry o f Education Medium-Term Budget Framework Medium-Term Development Framework National Vocational and Technical Commission New Accounting Model National Education Assessment System National Education Census Net Enrollment Rate Non-Governmental Organizations Ne t Present Value North West Frontier Province Public Accounts Committee Punjab Education Assessment System Punjab Education Development Policy Credit Punjab Examination Commission Punjab Education Foundation Public Expenditure and Financial Accountability Punjab Education Sector Adjustment Credit Punjab Education Sector Reform Program Provincial Financial Accountability Assessment Provincial Finance Commission Performance Measurement Framework Punjab Financial Management Accountability Assessment Project to Improve Financial Reporting & Auditing Pakistan Integrated Household Survey Punjab Local Government Ordinance Performance Measurement Framework Program Monitoring and Implementation Unit Poverty Reduction Growth Facility Punjab Resource Management Program Poverty Reduction Support Credit Poverty Reduction Strategy Paper Punjab Poverty Reduction Strategy Paper Pakistan Social and Living Standards Measurement Survey Stand-by Arrangement State Bank o f Pakistan School Councils Special Infrastructure Program Terms o f Partnership United Nations International Children’s Fund Universal Primary Enrollment

Vice President: Praful Patel, SARVP

Sector Director: Julian Schweitzer, SASHD Sector Manager: Michel le Riboud, SASHD

Country Director: Yusupha B. Crookes, SACPK

Task Team Leader: Tahseen Sayed, SASHD Co-Task Team Leader: Sofia Shakil, SASHD

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

ISLAMIC &PUBLIC OF PAKISTAN FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT (PEDPC IV)

TABLE OF CONTENTS

CREDIT AND PROGRAM SUMMARY ........................................................................................ v

I . I1 .

111 .

I V . V .

VI .

VI1 .

INTRODUCTION ................................................................................................................ 1

THE NATIONAL CONTEXT ............................................................................................. 3 The National Context . Recent Economic Developments ................................................... 3 Macroeconomic Outlook ...................................................................................................... 5 Pakistan’s Human Development Trends .............................................................................. 6

THE PROVINCIAL CONTEXT ....................................................................................... 8 Punjab’s Economic Outlook ................................................................................................. 8 Punjab’s Education Status. Progress In Recent Years. And Remaining Challenges ............ 11

THE PUNJAB EDUCATION SECTOR REFORM PROGRAM .................................. 21

BANK SUPPORT TO THE GOVERNMENT’S PROGRAM ....................................... 38 Link To Cas .......................................................................................................................... 38 Collaboration With The Imf And Other Development Partners ........................................... 38 Relationship To Other Bank Operations ............................................................................... 39 Lessons Learned ................................................................................................................... 39 Analytical Underpinnings ..................................................................................................... 40

THE PROPOSED FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT (PEDPC IV) ........................................................................................................ 40 Operation Description ........................................................................................................... 40 Pillar I: Enhancing Fiscal Sustainability and Improving the Fiduciary Environment .......... 41 Pillar 11: Increasing Equitable Access and Improving the Quality & Relevance o f Education

........................................................................................................................................... 42 Pillar 111: Improving Sector Governance ............................................................................. 42

OPERATION IMPLEMENTATION ............................................................................... 45 Poverty And Social Impacts ................................................................................................. 45 Environmental Aspects ......................................................................................................... 46 Implementation. Monitoring And Evaluation ....................................................................... 46 Fiduciary Aspects ................................................................................................................. 48 Disbursement And Fiduciary Assurance .............................................................................. 50 r isks And Risk Mitigation ..................................................................................................... 51

... 111

TABLES Table 1: Pakistan: Selected Economic Indicators 2004/05-2009/10 .................................................. 4 Table 2: Provincial Fiscal Accounts, 1999/00 - 2006/07 .................................................................... 9 Table 3: Indicators, Baseline and Targets: Results Framework ...................................................... 37 Table 4: Analytical Underpinnings ................................................................................................... 40 Table 5: Summary o f Prior Actions for PEDPC IV .......................................................................... 43 Table 6: Proposed Triggers for PEDPC V ........................................................................................ 43 Table 7: R isks / Mitigation Strategy ................................................................................................ 5 1

FIGURES Figure 1 : Consolidated Fiscal Def ic i t ............................................................................................... ..5 Figure 2: Increases in Primary N e t Enrollments ............................................................................... 13 Figure 3: Changes in Net Enrollment (Age 10-12) & Matric (Age 13-14) Enrollments .................. 14 Figure 4: Public Sector Enrollment Share by Level ......................................................................... 14

Figure 6: Provincial Share o f Total Private Institutions (2006) ........................................................ 16 Figure 5: Growth in h v a t e Sector Enrollments between 2001 and 2006 ....................................... 16

Figure 7: Grades o f Class V Students (PEC 2006) ........................................................................... 18

BOXES Box 1 : Moving Towards E-Governance: The Punjab CMIS .......................................................... 26 Box 2: Monitoring District Performance ......................................................................................... 35 Box 3: Making Districts Work for the Schools: Moving towards Performance and Quality

Box 4. Good Practice Principles on Conditionality ......................................................................... 44 Monitoring ........................................................................................................................... 3 5

ANNEXES Annex 1 : Letter o f Sector Development Policy Annex 2: Operation Policy Matrix Annex 3: International Monetary Fund Public Information Note Annex 4: Country at a Glance Annex 5: Additional Tables Annex 6: Terms o f Partnership for Punjab Education Sector Reform Program Annex 7: Status o f Bank Group Operations

MAP: IBRD# 35462

The Fourth Punjab Education Development Pol icy Credit has been prepared by an IDA team consisting o f Tahseen Sayed, Task Team Leader (SASHD); Sofia Shakil, Co-Task Team Leader (SASHD); Hadi Abushakra, Chief Counsel, Kishor Uprety, Senior Counsel, (LEGMS); Ismaila B. Ceesay, Senior Financial Management Specialist, Saeeda Sabah Rashid, Financial Management Specialist (SARFM); Hanid Mukhtar, Senior Economist (SASPR); Helen Craig, Senior Education Specialist (SASHD); Nazmul Chaudhury, Education Economist (SASHD); Asif Ali, Senior Procurement Specialist ( S A R P S ) ; Zia Al Jalaly, Senior Social Development Specialist (SASES); S. Ameer Naqvi, Sr. Education Specialist/Consultant (SASHD); Riaz Mahmood, Disbursement Analyst (SARFM); Shaheen Malik, Research Analyst (SASPR); Amna Mir , Program Assistant (SASHD); M. Khalid Khan, Program Assistant (SASHD) Peer Reviewers: Robin S. Horn, Education Sector Manager ( HDNED); Eduardo Velez Bustillo, Sector Manager fT CSHF). and Rnrhnra Rrnnr. T.ead Economist (HDNVP)

iv

CREDIT AND PROGRAM SUMMARY

ISLAMIC REPUBLIC OF PAKISTAN FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT (PEDPC IV)

Borrower

Implementing Agency

Amount

Terms

Tranching

Description

Benefits

Islamic Republic o f Pakistan

Government o f Punjab

SDR 66.1 mi l l ion (US$ 100 mi l l ion equivalent)

Standard IDA terms; 35-year maturity, including a 10-year grace period

Single, annual

The proposed Fourth Punjab Education Development Policy Credit (PEDPC IV) i s the first operation o f a series o f three development pol icy credits designed to support the ongoing Punjab Education Sector Reform Program (PESRP), which has entered a second Phase. Phase I was supported under a series o f three programmatic Development Policy Credits (DPCs) from 2004-2006. The objectives o f the Phase I1 PESRP are to improve performance and quality o f school education to improve student learning outcomes; improve school participation and retention rates; and reduce gender and regional disparities (grades 1 - 10). The reform program i s based on the following three pillars:

(A) Enhance Jiscal sustainability and improve the Jiduciary environment to: (i) ensure that public expenditure continues to be increased for education at both provincial and district levels in accordance with sector needs; (ii) strengthen the districts’ financing capacity and ensure that adequate resources are transferred to districts to meet education needs; (iii) increase transparency o f financial management and procurement processes and practices; and (iv) strengthen provincial and district capacities to monitor financial flows.

(B) Increase equitable access to education and improve quality and relevance of education. T h i s forms the core reform agenda. Access agenda focuses on programs to: (i) increase participation, retention and completion rates, especially for girls; and (ii) encourage the participation o f private sector. The quality agenda seeks to: (i) improve school performance and student learning outcomes; and (ii) improve quality o f learning through better teaching practices, better textbooks and a credible examination system.

(C) Improve public education sector governance and management to: (i) strengthen sector planning and pol icy development capacity o f the provincial education department; (ii) strengthen district education departments’ management and monitoring capacity; (iii) strengthen monitoring and evaluation to gauge education sector performance; and (iv) enhance school based management, and monitoring o f school performance by communities.

The proposed operation will provide continued support to an ongoing reform program which i s being deepened and carried forward by a government that has demonstrated i t s commitment, ownership, and a good track record. This operation has several inter-linked benefits:

V

Risks

It will maintain the reform and implementation momentum in Palustan’s largest province contributing to further improvements in access to and quality o f education. This would assist Pakistan in progressing towards the Mi l lennium Development Goals (MDGs). By continuing the already successful interventions, such as girls’ stipends and free textbooks, it will continue to provide much needed support to poor and rural households. The benefits o f this operation are expected to extend beyond Punjab. The Program has already provided valuable lessons, and paved the way for similar reforms in other provinces o f the country. The instruments introduced under PESRP are being replicated in the Sindh DPC and the NWFP Human Development DPC. The Program i s expected to continue to have a country-wide impact. It will provide support to the province’s fiscal reforms and i t s debt reduction strategy. It will also deepen the Bank’s work with the province o n financial management and procurement reforms. I t will support donor harmonization in the sector. Already, since i t s inception, the program has generated interest and support f rom development partners, based on the reform priorities identified by Government. I t will continue to strengthen the decentralization process through the performance- based conditional grant mechanism. Finally, this operation will support a l l levels o f school education - from pre-primary to higher secondary levels. The experience gained through this operation and the DPC series would provide lessons for initiating sector-wide improvements in other provinces o f the country.

The Program has demonstrated a good track record in both performance and government commitment. This provides an assurance o f reduced risks. However, successful programs also raise the profi le and lead to higher public expectations, and concurrently raise r isks as well.

A major risk i s loss o f credibility and public support if the government cannot keep pace with rising public expectations and i s unable to deliver on the quality side. The program has become a flagship program o f the current government. There could be a r i sk that a new political government may not give it the same attention due to shifting priorities. Change o f status quo through deeper sector reforms could affect several interest groups. There i s always an inherent r i s k that the system may not be able to sustain such reforms due to external pressures. Any weakening o f the macroeconomic framework, due to inflation and external trade deficits, could pose a r i s k t o this or any other budget support operation.

Operation ID P 10 1243 Number

v i

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) PROGRAM DOCUMENT FOR A PROPOSED DEVELOPMENT POLICY CREDIT

TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT

I. INTRODUCTION

1. The proposed Fourth Punjab Education Sector Development Policy Credit (PEDPC IV) for U S $100 million would be the first in a second series of three development policy credits to support the Government of Punjab’s Education Sector Reform Program (PESRP) which has entered its second phase. This proposed Credit would provide continued support to PESRP after the successful completion o f Phase I reforms from 2003-2006. Phase I encompassed fiscal and fiduciary reforms, and sector reforms that focused on increasing access to and quality o f basic education. This was supported by a programmatic series o f three Sector Development Policy Credits (DPCs) f rom FY04-06. This DPC series was successfully completed with the Third Punjab Education Development Policy Credit, approved by the Board in June 2006. The objectives o f Phase I1 PESRP are to improve quality o f school education to improve student learning outcomes, increase participation and retention rates, and reduce gender and regional disparities at primary, elementary and secondary levels.

2. High level government commitment has been an important factor leading to the successful completion of several reforms. Due to this, the program has remained on track. K e y indicators o f government’s continued commitment include: (a) the extension o f the Program beyond the init ially envisioned three year period; (b) the maintenance o f high level oversight through the Provincial Steering Committee; (c) the maintenance o f budgetary commitments for education under the Medium Term Budgetary Framework (MTBF) and the Medium Term Development Framework (MTDF); (d) the deepening o f the performance based partnership arrangements between the province and the districts through more reliable data analysis; and (e) maintaining the agreed sequence for implementing reforms, including quality reforms, especially for textbook development and examinations. * 3. The successful experience of PESRP, with its steady implementation and promising results, has had a significant country-wide impact. At the time o f approval o f the f irst Credi?, this was identified as a potential benefit o f the Program. T h i s benefit has accrued faster and sooner than anticipated. The strong monitoring systems, facilitating data-centered decision making, and the terms o f partnership arrangements for establishing performance based conditional grants between the Province and district governments are being replicated in two other provinces o f the c o ~ n t r y . ~ I t has thus encouraged other provinces, especially Sindh, to design and launch similar sector wide reforms combined with fiscal and fiduciary reforms. The education reform program in the Nor th West Frontier Province (NWFP) also benefited f rom the framework o f PESRP and lessons learnt.

4. Phase I1 PESRP builds on the lessons learned and carries forward the successful ongoing program interventions, while deepening the reform agenda. At the start o f Phase I, the Government developed a medium term framework for education reforms. I t i s maintaining the programs initiated under Phase I, and i s extending coverage from primary to secondary education, complemented by deeper fiscal and fiduciary reforms. I t has requested continued technical and financial support f rom the Bank, f rom FY07 - FY09 under a new DPC series. This Program

’ See Annex 5, Table 7 : Prior Actions completed under the three IDA Credits from 2004-2006. See Punjab Education Adjustment Credit (PESAC), Program Document, January 8,2004 (Report No. 27528-PK). The Terms of Partnership (TOP) arrangements were established for education sector for the first time in the country under Phase I PESRP which established a conditional grant mechanism, and assisted in the development o f an output and outcome based monitoring system between the province and the district.

1

Document describes the progress accomplished so far, identifies the remaining challenges, presents the framework and pillars o f Phase I1 PESRP, and describes the proposed Fourth Credit.

5. The reforms to strengthen the fiscal framework, including the medium term budgetary framework (MTBF), to improve the levels and composition of education sector expenditures, and to introduce transparency and efficiency in the fiduciary environment have demonstrated good outcomes. The framework brought about improvements in the province’s fiscal position and i t s fiduciary and governance environment. However, continued work i s required to maintain steady implementation o f the fiscal and fiduciary framework. Therefore, the government has retained the focus on fiscal and fiduciary reforms which remain a key reform Pil lar under this proposed DPC series. R e f o m s in these areas also specifically focus o n strengthening o f capacities at both provincial and district levels.

6. On the sector side, when the program was initiated, public sector enrollments in Punjab had been stagnating for a decade. Therefore, the sector reforms sought to increase access through a combination o f rapid supply and demand side interventions. As a result o f this thrust, significant improvements in public sector enrollments have taken place, especially at the primary level, with an increase o f almost 2.2 mil l ion more students. Household data also shows clear improvement in net primary enrollment rates f rom 45 percent to 58 percent. However, huge gaps remain and improvement in access thus remains an important objective o f the Program. Over 40 percent o f primary school age children are s t i l l out o f school, while enrollment rates at secondary and higher secondary level remain l o w and have shown marginal improvements.

7. While an important focus under Phase I was to improve access, the Government also took several initiatives to address the quality agenda. The impact o n learning i s not as visible as in the access area due to two inter-linked factors. First, i t has taken time to establish the necessary institutional changes required to move forward o n the quality agenda. These institutional changes for examination system, teacher professional development, and textbook development n o w allow for implementing a more integrated approach to improving student learning. Second, there were n o clear benchmarks for evaluating changes and improvements in student learning both at an aggregate level, as wel l as in relation to specific demand and supply interventions introduced under the P r ~ g r a m . ~ While several interventions were aimed at improving learning outcomes, such as introduction o f higher entry qualifications for teachers, improving textbooks, re-structuring the examination system, the systems required for measuring their impact on learning outcomes were not in place.

8. The proposed PEDPC I V will support the Government to deepen ongoing sector reforms, and initiate sequenced reforms across the entire school sector while maintaining and sustaining the focus on fiscal and fiduciary reforms. The proposed operation will support the three pillars o f the reform program. These are: (a) enhancing fiscal sustainability and improving the fiduciary environment; (b) increasing equitable access to education and improving quality and relevance of education; and (c) improving public education sector governance and management. Under Pil lar I, actions will be taken to: (i) ensure that public expenditure continues to be increased for education at both provincial and district levels in accordance with sector needs; (ii) strengthen the districts’ financing capacity and ensure that adequate resources are transferred to districts to meet education needs; (iii) increase transparency o f financial management and procurement processes and practices; and (iv) strengthen provincial and district capacities to monitor financial flows.

An impact evaluation o f girls’ stipend program (which includes administration o f cognitive tests) i s underway with technical support of the World Bank, and results would be available by June 2007. A World Bank study on student learning achievement in public and private schools in three districts was also conducted from 2002-2005 following a student cohort. Whi le the study presents valuable analysis of student performance, it does not serve as an impact evaluation o f specific PESRP interventions.

2

9. Under Pillar 11, which forms the core reform agenda, sequenced and focused actions will be taken to improve access and quality. Under access, measures will be taken to: (i) increase participation and retention rates; and (ii) encourage the participation o f private sector for contributing towards access to equitable and quality education. On the quality agenda, actions will be taken to: (i) improve school performance and student learning outcomes; and (ii) improve quality o f learning through better teaching practices, improved textbooks and better examination system. The quality objective also includes taking measure to make the content o f education relevant so that i t prepares students for the market and for meeting the needs o f the global society.

10. Pillar I11 will focus on improving sector governance and management to: (i) strengthen the planning and policy development capacity o f the provincial education department; (ii) strengthen capacity o f district education departments for management and monitoring; (iii) strengthen monitoring and evaluation; and (iv) enhance school based management and monitoring o f school performance through communities to gauge sector outcomes.

11. The program i s based on a strong partnership between the province and district governments and other stakeholders. The Terms o f Partnership (TOP)’ agreement mechanism initiated under the f irst DPC series, i s being maintained. Consultations with district leadership, district and local level representatives have helped ensure ownership and participation o f district governments. Consultations have been undertaken with teachers, private school operators, community and other stakeholders. Such dialogues, workshops and focus group discussions, along with analytical work, will continue.

12. The proposed operation i s consistent with the Country Assistance Strategy (CAS) for FYO6-09 which seeks to accelerate progress in human development, focusing on the poor and vulnerable, and i s in line with Bank’s other operations in the human development sector. I t i s also designed to support the Government o f Pakistan’s Poverty Reduction Strategy for improving outcomes in human development, promoting education sector reforms, and strengthening devolution and the role o f district governments in service delivery.

13. The implementation of the reform program will continue to be overseen by the Provincial Education Department through its Program Monitoring and Implementation Unit (PMIU), which has been working closely with district governments. The Provincial PESRP Steering Committee will remain the overall policy guidance forum, under the leadership o f the Chief Secretary, and reporting directly to the Chief Minister.

11. THE NATIONAL CONTEXT

THE NATIONAL CONTEXT - Recent Economic Developments

14. Since the beginning of the new millennium, Pakistan’s economy has staged a remarkable turnaround, laying the ground for sustained growth and poverty reduction. The 1990s were a period o f slow growth, and there was litt le progress in reducing poverty and improving social indicators. Successive governments initiated reforms, but with only modest results as reforms faltered midway due to rising political pressures and constrained external financing. Beginning in 2000, the Government initiated h more wide-ranging and ambitious reform program that was articulated in the Government’s 2003 Poverty Reduction Strategy Paper, “Accelerating Growth and Reducing Poverty, The Road Ahead.” These reforms, along with debt restructuring, and increased remittances and concessional aid flows, resulted in a dramatic turnaround o f the economy. In contrast to several previous JMF programs, both the 2000 Stand-by Arrangement (SBA) and the 2001 three-year arrangement under the Poverty Reduction and Growth Facil ity (PRGF) were successfully completed. Recent years have witnessed considerable improvement in the performance o f the industrial and

See Annex 6: Sample TOP Agreement and Performance Indicators and Targets

3

services sector, leading to a significant acceleration in economic growth, to 7.5 percent in 2003104 and 8.6 percent in 2004105. In 2005106, Pakistan’s economy withstood serious adverse shocks emanating from i t s worst ever earthquake, a sharp increase in o i l prices, and less favorable weather conditions, and registered continued strong growth o f 6.6 percent.6

2004/05 T

2005/06 2006/07 I 2007/08 1 2008/09 1 2009/10 Projections

#le 1: Pakistan: Selected Economic I n

20.3 18.8 13.9 5.0

15.7

National Income and Prices GDP (at factor costs of 1999100) Agriculture Manufacturing Other Sectors

Inflation Savings and Investment Investment Fixed Capital Formation

Private Public

National Savings Public Finance Total Revenue Total Expenditure

Current Expenditure ai Development Expenditure & Net Lending

Consolidated Government Fiscal Balance Net of Earthquake Impact

20.8 19.3 14.2 5.2

16.6

Total Debt Domestic Debt Foreign Debt

Balance of Payments

Exports (% change, current US) Imports (% change, current US) Current Account Balance (% of GDP)

Foreign Exchange Reserves (US million)

Memo Items Earthquake Spending (Rs billion) (% of GDP)

13

(in months of next year’s Imports of GNFS)

11,375 5 of latest

12,854 -- available

Annual percentage change, 8.6 6.7

12.6 8.1

9.3

18.1 16.5 12.1 4.4

16.5

13.7 17.0 13.9 3.1

-3.3

61.4 33.1 28.3

15.9 37.6 -1.6

9,791 3.6

... ...

6,581

6.6 2.5 8.6 7.6

7.9

20.0 18.4 13.6 4.8

15.6

13.9 18.1 14.0 4.2

-4.2 -3.4

56.0 27.1 28.9

13.8 31.4 -4.4

10,760 3.6

65.8 0.9

7,713 GDP at current market prices (Rs Billion)

information.

7.0 4.5

10.5 6.8

7.5 11

7.2 4.4

11.2 6.9

5.5

(percent t 13.1 17.3 12.7 4.6

-4.2 -3.6

50.1 23.1 27.0

11 8.0

11.0 -4.6

11,794 3.6

50.0 0.6

8,893 le World Bank I

;DP) 13.5 17.4 12.7 4.8

-4.0 -3.6

46.0 20.5 25.5

12.0 10.0 -4.2

13,625 3.8

40.0 0.4

10,084 f on the bs

7.1 4.5

11.8 6.5

5.0

21.5 20.0 14.7 5.3

17.6

13.8 17.5 12.6 4.9

-3.7 -3.5

42.9 18.6 24.3

13.0 10.5 -4.0

15,133 3.8

22.0 0.2

7.3 4.3

11.7 6.7

5.0

22.0 20.5 15.1 5.4

18.4

14.2 17.7 12.6 5.1

-3.5 -3.4

39.7 16.6 23.1

14.0 11.0 -3.8

16,977 3.7

13.0 0.1

il The CPI inflation and export growth numbers for 2006107-2009110 have been adjusted by the WE3 staff from the GoP macroframework according to the actual numbers available for the period July to February 2006107.

15. The acceleration in economic growth since 2001/02 has led to higher household incomes and lower poverty. In 2005106, the per capita income increased to $847, up from $742 a year earlier (an increase o f 14 percent in nominal dollars). More importantly however, a l l segments o f the population, in both urban and rural areas, have gained from income growth. Overall poverty declined significantly between 2001102 and 2004105, and Pakistan’s social indicators have started to show some improvements .’

For more details on macroeconomic situation and prospects see the Program Document o f Second Poverty Reduction Support Credit, March 2007 (Report No. 32866). ’ According to the CPI-based price index overall poverty declined from 34.4 percent to 23.9 percent. In urban areas, poverty declined from 22.7 percent to 14.9 percent and in rural areas, from 39.3 percent to 28.1 percent. According to survey-

4

16. The government’s prudent expenditure and debt Figure 1: Consolidated Fiscal Deficit

-2.0 ,

17. Rapid economic growth and an expansionary monetary policy contributed to strong aggregate demand. T h i s caused an upsurge in inflation, which increased to 9.3 percent in 2004/05, but then fel l to 7.9 percent in 2005/06 as authorities took measures to tighten money supply. Despite continued healthy growth in exports during the past two years, the external situation deteriorated, as imports growth exceeded exports by a considerable margin. As the trade gap widened, the current account has gone from a surplus to a deficit, which in 2005106 i s estimated to have reached 4.4 percent o f GDP, despite sizeable increases in workers’ remittances. The worsening current account balance was financed mainly through non-debt inflows as continued strong foreign investors’ interest led to a substantial increase in Foreign Direct Investment (FDI).

management strategies have resulted in sustained fiscal improvement, despite limited progress in improving revenue collections and reducing power sector losses. Due primarily to increased savings on the interest bill, the overall fiscal deficit (excluding grants) declined from 5.4 percent o f GDP in 1999/00 to about 3.3 percent in 2004/05.

MACROECONOMIC OUTLOOK 18. Prospects for continued rapid growth are good, provided that political and macroeconomic stability are maintained. The government i s aiming to increase growth to 7-8 percent over the long run. For this, it plans to continue to implement reforms to reduce the cost o f doing business in Pakistan, attract investment through the privatization program, and reduce infrastructure and human development shortfalls. The State Bank o f Pakistan (SBP) and the Government have expressed their commitment to control inflationary pressures and the growing external imbalances, and are expected to take actions to counter them.

8

a

-6.5 I 2001102 2002103 2003104 2004105 2005106 2006107

based prices, overall poverty declined from 33.3 percent to 28.3 percent. In urban areas, the poverty declined from 22.0 percent to 18.4 percent, and in rural areas, from 37.9 percent to 32.9 percent. T h e CPI-based price index suffers f rom being collected only in urban areas, thereby leaving out rural areas where poverty is the greatest. The survey-based price data suffers from being very limited, collecting only food and transport prices, which may be unrepresentative o f the items on which rural households actually expend.

* In 2005106, the earthquake-related expenditure amounted to 0.9 percent o f GDP.

5

19. Since early 2005, there has been a gradual tightening o f the money supply. Interest rates have inc rea~ed ;~ reserve and liquidity requirements ratios have been raised (by more than 2 percentage points in the current fiscal year); and the discount rate has been increased (by 50 basis points to 9.5). These, coupled with relative stabilization o f o i l prices in the international markets and crossing the hump o f some lumpy imports, led to a marked slow down in imports during the f i rst 7 months o f 2006/07.’0 The import growth i s projected at 11 percent for 2006/07. This, however, did not result in any significant improvement in current account balance as exports, too, decelerated. Pakistani rupee has appreciated by around 12 percent in real terms over the past 18 months, which aided the strong growth in imports (and may have dampened exports), but has also stifled the growth in exports. Nonetheless, the sudden and sharp deceleration in exports f rom the beginning o f this fiscal year may in part be to structural factors that have eroded international competitiveness. Owing to higher non- debt inflows, the foreign exchange reserves increased, albeit only marginally. On the basis o f these developments, i t i s projected that while the current account deficit will remain high during the next three years, increased capital flows will cause a gradual build-up o f foreign exchange reserves, which are projected at 3.6 months o f imports in 2006/07 and rising to 3.8 months for the next three years.

20. Tighter monetary pol icy also l ed to some easing o f inflationary pressures. Consumer price inflation declined somewhat f rom a peak o f 1 1.5 percent in April 2005 to 9 percent in July 2005 and 8.1 percent in January 2007. On the basis o f a sharp deceleration in monthly inflation in January, end- year inflation i s projected to decline to 7.5 percent.

21. Tax revenue collection during the f i rs t ha l f o f 2006/07 was 27 percent higher than the corresponding period in the previous year, in spite o f the sharp deceleration in import-related taxes. Direct taxes were higher by 66 percent, reflecting the increased profitability o f the corporate sector, in particular banking, energy and telecommunications, as wel l as better tax compliance due to the tax administration reforms within the Central Board o f Revenue (CBR). The fiscal deficit is, therefore, projected to decline gradually f rom 4.2 percent o f GDP in 2005/06 to 3.5 percent by 2009/10. These relatively l o w levels o f fiscal deficit will contribute to further improvements in Pakistan’s debt indicators. Debt sustainability analysis has been carried out by the IMF and by the Wor ld Bank, and indicates that the Government’s debt reduction path (which i s prescribed in the Fiscal Responsibility and Debt Limitation Law) i s consistent with a sustainable debt outlook. As discussed in paragraph 141, following the conclusion o f the Poverty Reduction and Growth Facil ity (PRGF) in 2004, Pakistan i s now o n a standard Article IV surveillance schedule. IMF post-program Monitor ing was deemed unnecessary by the IMF’s Board. An IMF Article IV Consultation mission took place in August 2006, and a Staff Report was discussed by the IMF Board in early November 2006.

PAKISTAN’S HUMAN DEVELOPMENT TRENDS

22. During the past five years, national and provincial reform efforts in Pakistan have aimed to increase the net primary enrollment rates, and to bridge the gender gap at elementary level. Results o f Pakistan Social and Living Standards Measurement Survey (PSLSMS) are encouraging and show an improvement in the trends with an increase in net primary enrollment rates to 52 percent in 2004/05 up from 42 percent in 2001 (see Annex 5, Table 11). The results also show improvements in various health indicators such as immunization and infant mortality rates. Pakistan’s ranking in the Human Development Index (HDI) ranking has improved from 142 in 2004 to 134 among the countries o f the world in 2006. Nevertheless, Pakistan’s human development indicators continue to lag behind those o f other countries in South Asia.

23. Pakistan’s social indicators compare poorly with those of other countries with similar levels of per capita income. Only ha l f o f Pakistan’s adult population i s literate. The situation i s

Treasury Bi l l rates increased from 1.7 percent in 2003/04 to over 8 percent in the current year. The growth in imports decelerated from 3 1 percent in 2005/06 to 12 percent during the first seven months o f 2006/07. lo

6

worse for women with only about a third o f adult females literate. Despite rapid progress in increasing primary enrollments across region and gender, only one out o f every two children age 5-9 years i s enrolled in primary school in 2004/05, and less than ha l f o f those who enroll actually complete Grade V. Enrollment at elementary and high school levels i s extremely disproportionate to primary school rates. Gender, inter-provincial, regional and urbadrural discrepancies are glaring in al l education indicators. With sustained focus on the reform agenda, the outlook i s promising, but Pakistan s t i l l has a long way to go before meeting the MDGs relating to achieving universal primary enrollment and gender parity in school education.

24. Reforms to improve Pakistan’s education and human development outcomes are essential for ensuring that benefits o f growth are equally available throughout the country. During the past several years, the Government o f Pakistan has launched key initiatives to improve human development outcomes and to reduce poverty. The federal government has approved a five- year Medium Term Development Framework 2005-10 (MTDF) which was adopted with the 2005/06 budget and which complements the PRSP.

25. Pakistan’s Poverty Reduction Strategy Paper (PRSP) was finalized in 2003 which la id down the future directions o f reforms and programs. The PRSP indicators and targets are aligned with the MDGs and focus on achievement o f universal primary enrollment, reducing gender disparities, reducing chi ld mortality, reducing maternal mortality, combating communicable diseases, and eradicating poverty. PRSP I1 i s being finalized and it seeks to further deepen the strategic direction for attaining these stated goals and targets. Investments in human capital remain a core agenda of PRSP IIl1, which sees the provinces and districts as playing the pivotal role in service delivery.

26. In 2001, the government restructured i t s social service delivery program and approved the Devolution Plan which led to the promulgation o f provincial Local Government Ordinances (LGO) establishing elected local governments in al l four provinces o f the country. T w o rounds o f local government elections have been successfully held. The devolution reform i s now beginning to take root. However, there i s a varying degree o f implementation o f fiscal and administrative devolution among the country’s four provinces. Punjab has been ahead o f the other provinces in both fiscal and administrative devolution. I t also led the way to align i t s human development programs, especially for education, with the devolution reform.

27. In the education sector, a series of initiatives and reforms have been recently taken by the Federal Ministry o f Education (MoE). These have implications for education policies and programs in the provinces. K e y initiatives at the federal level include: (a) update o f the 1998 National Education Policy, which i s near completion’*; (b) completion o f revision and reform o f the national cumculum; (c) approval o f a National Textbook Policy to establish a competitive system for development, printing and publishing o f textbooks; (d) completion o f two rounds o f student testing under National Education Assessment System (NEAS) for Grade TV and o f a pi lot assessment for grade VIII; and (e) completion o f the National Education Census (NEC) which includes data on a l l education institutions (public, private, madrassahs, and polytechnics) f rom pre-primary to university 1 e ~ e l s . l ~ As a part o f fostering inter-provincial coordination, the M o E also holds regular consultations with provincial education officials on ongoing reforms, policies and programs.

28. In recognition of the growing needs o f the economy for a more skilled and educated workforce, government reform efforts are now beginning to address access and quality issues in tertiary education. The Higher Education Commission (HEC) was established in 2003 as a federal

PRSP I1 Summary “Ensuring a Demographic Dividend: Unleashing Human Potential in a Globalized World” was presented at the Pakistan Development Forum in April 2007. A White Paper has been placed on the MoE website to solicit comments and views from stakeholders. The data show a healthy increase in enrollments at 33 million, out o f which 12 mi l l ion are enrolled in private institutions. Overall, gender gap is reducing with male share o f enrollment at 57 percent and female share at 43 percent.

l2

l3

7

autonomous institution to lead reforms at the university level. These reforms are being supported with a sharp increase in tertiary level financing. The Bank’s review o f the HEC’s Medium Term Development Framework demonstrates that the reforms are in the right direction, and would show results if these are prioritized with sequenced implementation. In addition, more recent efforts include the establishment o f a National Vocational and Technical Commission (NAVTEC) tasked with the development o f a strategy for technical training and vocational education programs.

111. THE PROVINCIAL CONTEXT

PUNJAB’S ECONOMIC OUTLOOK

29. For over a decade, Punjab’s public finance had been quite prudently managed. The government’s fiscal strategy14 has been effective in creating a significant fiscal space in the provincial budget to sustain the wide ranging reforms that the provincial government has initiated. These reforms, which a im at improving the management o f and financing for various high-priority public services such as education, irrigation and health, have led to a significant increase in provincial expenditure. Furthermore, in an effort to increase the pace o f economic development, the government has substantially enhanced i t s development outlays. As a result, provincial fiscal deficit has increased. However, the fiscal deficit i s s t i l l relatively small (below 1 percent o f provincial GDP -- see Table 2) to be considered a threat to the fiscal and financial stability o f the province, or to the sustainability o f key reform initiatives undertaken by the government. In addition provincial debt i s less than 6 percent o f provincial GDP and i s expected to decline steadily in future.

l4 For last four years, the government has been pursuing a strategy o f creating additional fiscal space through: (i) increased revenue mobilization; (ii) reducing low-priority expenditures (e.g. subsidies); (iii) reducing debt servicing by swapping expensive debt with concessional loans; and (iv) reducing (in medium-term) the burden o f pensions and provident fund payments by creating and/or capitalizing dedicated Pension and G.P. Funds.

8

Table 2: Provincial Fiscal Accounts, 1999/00 - 2006/07 (Percent 1999/00 Actuals

6.1 4.3 1.2 0.7 0.2

0 0.1

0 0.1

0 0

0.4 0.1

0 0.3 0.1 0.5

6.8 5.5 0.8 0.5 1.8 1.4 0.4

0 0.5 0.2 0.3 0.2 0.2 0.9 0.5

0

otal Revenue (including Grants) Federal tax assignments

Provincial taxes Direct taxes

Provincial revenue

Urban immovable property tax Agriculture income tax Registration fee Land revenue (tax) Taxes on profes, trades and callings Others

Indirect taxes Motor vehicle tax GST on Services Stamp duties Other

Von-Tax Revenue 81 Grants Local Government Revenue

of Provincial GDP) 2000/01 2001102 2002/03 2003104 2004/05 2005106 2006/07 Actuals Actuals Actuals Actuals P.Actual P.Actual Budget

6.1 5.6 6.4 6.7 6.7 7.2 7.6 4.6 4.3

otal Expenditure ,went Expenditure

General Administration Law L order Social services

Education Health Other Social Services

Economic Services Irrigation Other Economic Services

Community services Subsidies Interest payments Grants L Inveshnents Unallocable

1.4 Ievelopment Expenditure 1

iscal Defici t

mrce: Puniab Government's Finance and Civil Acc IS and budget documents.

5.2 1.6 0.8

0 0 0 0 0 0 0 0 0 0 0 0

0.8

8.5 5.3 0.9 0.7 2.2 1.8 0.4 0.1 0.5

0 0

0.3 0

0.3 0.3

0

3.2

30. The provincial revenue has continued to grow at a healthy rate of about 15 percent p.a. over the last five years (FYOl - FY06) as both the own-source revenue and federal transfers continue to show robust increases. Moreover, despite the repeated increase in salary o f government employees during the last five years, the recurrent expenditure o f the province has grown at an annual rate o f only 10 percent. This i s mainly o n account o f fiscal reforms undertaken by the government, as expenditure on untargeted provincial subsidies declined at a rate o f 28 percent p.a. and the provincial strategy o f swapping more expensive federal government debt with less expensive foreign debt has been instrumental in reducing the interest payments o f the government by 6 percent p.a.15

31. The increase in fiscal deficit i s therefore solely on account o f the sharp escalation in development spending, which have increased at a rapid rate o f 31 percent p.a. during the last five years. This i s partly due to conscious efforts on the part o f the government to utilize the additional

Under the provincial fiscal reform program, the untargeted food (wheat) subsidy i s being phased out, whereas under its debt management strategy, the province prematurely retired Rs. 12 billion of expensive federal loans from the proceeds of concessional financial assistance i t received from Asian Development Bank (PRMP) and the World Bank's first education credit (PESAC).

9

fiscal space to catch-up with the large human and infrastructure development needs o f the province, which have accumulated during the last decade due to expenditure compression caused by the adverse fiscal situation. However, a part o f this increase, especially in the FY07 budget, was caused by the province’s inability to implement i t s debt reduction strategy as was envisaged earlier. There are indications that in future pre-mature retirement o f provincial loans would be possible only o n chronological basis (i.e., f i rs t retiring older loans, and not the most expensive ones). Given the l imited benefit f rom additional retirement o f federal debt, the provincial government has opted for the next best use o f these fiscal resources, i.e. to recapitalize the pension fund and to use them for social and infrastructural development o f the province. Inclusion o f Special Infrastructure Program (SIP) into the development budget i s another factor behind this sharp increase in the development program.

32. The SIP, comprising three large road sector projects,I6 explains almost one-half o f the increase in the FY06 development program. Furthermore, the provincial Medium-Term Development Framework (MTDF)17 shows large allocations for these projects in FY08 and FY09. This implies that the rapid increase in development budget may continue in FY08, but this increase will drop in FY09.

33. Nonetheless, the government remains fully aware that these projects are too costly to be fully financed through the provincial budget. I t i s therefore working o n a strategy to implement these projects o n public-private partnership (i.e. BOT) basis, where basic physical infrastructure would be financed through the provincial budget, while the operational investment will be made by private sector operators. T h i s will reduce the budgetary impact o f these projects to about one-half. Moreover, if the fiscal deficit continues to increase, the provincial government i s prepared to take necessary additional steps to ensure fiscal stability. It i s prepared to re-prioritize i t s expenditure and curtail the low-priority spending while making adequate allocations for human development sectors and other high-priority expenditures. In addition, as a contingency plan to reinforce fiscal discipline, approval has already been obtained from the Chief Minister to cap the development budget at the FY07 level in nominal terms (i.e., Rs. 100 billion) for the next three years.

34. On structural reforms, the provincial government i s fairly advanced in the preparation o f the MTBF for FY08-FY 10. Three-year projections for provincial fiscal resources and broad sectoral ceilings for departmentalhectoral expenditures have been prepared. These ceilings have been discussed with the main l ine departments, prior to the finalization o f MTBF.

35. Significant progress has been made on other structural reforms. The legal framework for the establishment o f a Punjab Pension Fund has been forwarded (as a Bill) to the Provincial Assembly for discussion and enactment. The professionally managed Punjab Pension Fund would be established after approval o f i t s A c t by the Provincial Assembly. The government has already placed Rs. 2 b i l l ion into the Pension Fund while another Rs. 10 b i l l ion have been earmarked for the Fund in the FY07 budget, which will be deposited into the Fund after i t s formal establishment.

36. Rapid increase in provincial development expenditure has created some concerns about the province’s debt situation and sustainability o f provincial finances. However, a careful look at the provincial debt indicates that these fears are largely unfounded. N o t only has the provincial debt remained in the acceptable range both as percent o f provincial GDP and provincial revenue, the debt situation has improved significantly during the last five years and i s expected to improve further in future (see Annex 5: Table 1). The improvement in the provincial debt situation i s due to a sound debt policy adopted by the province over the last five years. Swapping more expensive federal government debt with less expensive foreign debt has not only improved the provincial fiscal space but has also led to a marked improvement in the Net Present Value (NPV) o f provincial debt. Whi le the stock o f provincial debt has increased from Rs. 161 bi l l ion in FYOl to Rs. 231 b i l l ion in FY06, as a percent o f

l6

”

These include Lahore Ring Road (with an estimated cost o f Rs. 18 billion), Lahore-Sialkot Motonvay (Rs. 13 billion) and Lahore Mass Transit System (Rs. 168 billion). The MTDF gives three-year sectoral projections for development expenditures only.

10

provincial GDP, it has declined from 7.7 percent to 5.9 percent. The improvement in NPV o f provincial debt i s even more pronounced, which has fallen by more than ha l f during this period (from 4.8 percent o f provincial GDP in FYOl to 1.9 percent in FY06).

PUNJAB’S EDUCATION STATUS, PROGRESS IN RECENT Y E A R S , AND REMAINING CHALLENGES

37. Punjab, like other provinces, has shown improvements in key education indicators over the past few years. The improvements in net primary enrollment in Punjab are similar to those across the country and are further supported by healthy improvements in both public and private sector enrollments during the course o f the f i rs t phase o f PESRP. With a population o f over 80 mill ion, the Punjab province comprises almost 60 percent o f the total population o f Pakistan. Therefore, any changes in Punjab are l ikely to have substantial impact on the national indicators. At the time o f launching o f PESRP, Punjab had been witnessing insignificant improvements in the education sector with net primary enrollments rates stagnating at only 45 percent over a decade long period.

Progress in Recent Years

38. In a period of three years, public sector enrollment increases have been registered for both boys and girls, although at a higher rate for girls as a result o f which Punjab i s seeing a narrowing of the gender gap. Sector governance i s improving through systematic monitoring, independent validations, and improvements in financial management and procurement practices. The Implementation Completion and Results Report (ICR) for PEDPC-III will provide a more detailed assessment. The I C R i s under finalization and will be submitted to the Board prior to the presentation o f this proposed Credit.18 Areas showing progress and key achievements include:”

Total enrollments (Pre-Primary - Grade 10) have increased by 28 percent f rom 8.8 m i l l i on students to 1 1 .OO mi l l ion students (2.2 million more students). There has been steady progress towards gender parity, with girls share o f total public school enrollment (Grades 1 - lo), moving from 43 percent to 45 percent. Girls’ enrollment share in public primary schools has increased from 44 percent to 46 percent, and girls share in total elementary enrollment has increased from 36 percent to 42 percent. Household survey data also show improvements in net enrollment rates (NER). The primary NER in Punjab has increased f rom 45 percent in 2001/02 to 58 percent in 2004/05.20 (See Figure 2). Primary completion rate in government schools has increased from 58 percent to 61 percent.

The following inputs have contributed towards the improvements:

Toilets, boundary walls, and additional classrooms provided to about 30,000 schools. Timely delivery o f free textbooks to 1 1 mi l l ion students in Grades primary- Grade 10 annually. 50,000 additional school teachers, with graduate degrees, hired and posted to schools. Monthly stipends pegged to school attendance provided to over 300,000 girls annually. Provision o f financing to 200 l o w cost private schools using a public-private partnership model to support students f rom lower income quintiles. Community based school councils have been established in 43,000 primary schools. NGOs are providing capacity support to 2,400 School Councils.

l8 See the Implementation Completion and Results Report (ICR) for an “Education Development Policy Credit for the Government o f Punjab Province” (Report No. ICR0000434) The data i s based on latest Punjab school census conducted in October 2006. 2001-02 data based on Pakistan Integrated Household Survey (PIHS); 2004-2005 data based on Pakistan Social and Living Standards Measurement Survey (PSLSMS) 2004-05, Federal Bureau o f Statistics, Government o f Pakistan.

19 *’

11

0

0

0

Sector budget has increased by almost 50 percent in a three year per iod One thousand closed schools have been made functional. N e w arrangements for sector governance have been established through signing o f annual performance based monitoring and financing agreements between the province and the 35 district governments. Teacher absenteeism has reduced through hiring teachers on school-specific contracts.21 A strong monitoring system has been established to ensure transparency, enabling ongoing measurement o f results.

0

0

40. A combination o f the above interventions under the Program have helped in meeting the sector objectives o f Phase I reforms. The positive impact o f stipends on public sector enrollments i s also visible with a demonstrated increase in girls’ enrollment in the target stipend districts.22

A. Remaining Sector Challenges

41. There are, however, remaining challenges that continue to confront the education sector in the province. The three major sets o f challenges include: (a) access - sustaining the growth in enrollments; improving retention and reducing drop outs; responding to supply side constraints for a l l levels o f education in light o f the enrollment growth; and reducing gender and regional disparities; (b) quality: the institutional changes are yet t o be transferred to the school and classroom level, and have yet to translate into improved learning outcomes; there has been an absence o f a comprehensive strategy for improving learning outcomes; and a lack o f systematic measures to evaluate the impact o f interventions on improving student leaming; and (c) governance and management to make districts and schools more effective. The following section describes the three sets o f remaining challenges.

Remaining Challenges in Access

Access at Drimary level

42. A rapid increase in public sector enrollments was witnessed during the f i rst two years o f the program. The trends are s t i l l increasing, albeit at a slower pace. This continues to place pressures on teachers, especially in schools with high and growing enrolments, and stretches the capacity o f an already weak school infrastructure.

21

22

School monitoring reports prepared b y Punjab District Monitoring offices using the performance monitoring reports o f 42,000 schools show teacher absenteeism at 9 percent in November 2006. Chaudhury, N., Parajuli, D., Conditional Cash Transfer and Female Schooling: Impact of the Female School Stipend Program on Public School Enrollments in Punjab, Pakistan. Drafi Version, August 2006. T h i s study evaluates the impact o f the stipend program using provincial school census data for 2003 (before the Program) and 2005. Findings o f this study (although a prelude to deeper household survey research that i s being carried out) already suggest that the average impact has been an increase o f 6 girl students per school in terms o f absolute change, and a respectable increase o f 9 percent in terms o f relative change. An evaluation o f the girls’ stipend program which includes questions on broader impact o f the program i s near completion.

12

Figure 2: Increases in Primary Net Enrollments

65

M ‘-o\sra I a - Mae -a-Femae

I 2w2 2m

Source: PIHS 2001-02 / PSLSMS 2004-0

43. While the program made steady progress in filling the teaching gaps with the recruitment o f almost 50,000 facility-specific contract teachers, there are still a number o f vacancies due to the large backlog. In addition, new vacancies are emerging due to the increasing enrolment load. Further, there i s a prevalent multi-grade teaching environment at the primary level. Majority o f primary schools have about two to three teachers, along the established norm o f one teacher for forty students, regardless o f the number o f classes being taught.

44. The gaps in the physical infrastructure remain huge, with almost all o f the 63,000 schools needing at least one or more critical facility. Thus, despite the emphasis o n providing missing infrastructure, the magnitude o f unmet needs s t i l l poses a challenge for the Government. Whi le almost 30,000 facilities have been provided to schools, individual school needs were not fully met. Thus, thousands o f schools s t i l l have at least one or more type o f facility lacking. Due to this, the missing facilities program s t i l l remains a key requirement (see Annex 5: Table 6 for details o n implementation o f the program for provision o f missing facilities).

Comdet ion and Transition Rates at Primary Level

45. Despite the recent improvements in enrollments, Punjab has a long way to go to improve its primary completion and transition rates. Even with the increase in the absolute number o f children in each grade, drop outs remain high. Out o f the total number o f Katchi (pre-primary) class students, 27 percent did not progress to Grade I between October 2005 and October 2006, with girls’ drop out being the most significant. Even between Grade IV and V during the same period, 18 percent did not make the transition. Time series school census data shows that between October 2003 and October 2006, 15 percent o f those in Grade I have not made it to Grade IV. A combination o f factors has contributed to such l o w retention and transition rates especially f rom pre-primary level to Grade I. There i s evidence23 to show that lack o f a dedicated teacher for pre-primary and Grade I students and inadequate physical environment contribute to high drop outs at this level. These include, among others, location o f schools (especially for girls), teacher presence, multi-grade teaching, physical environment (including inadequate classroom space and furniture and overcrowding), and parental dissatisfaction about relevance and quality o f education offered in public schools.

Access at Elementary and Secondary Education

46. Enrollment levels at elementary, secondary and higher education level show litt le improvement. Whi le there has been respectable improvement in primary net enrollment rates, the net elementary and matriculate enrollment rates have only improved marginally (see Figure 3). The

23 Apart from global evidence documenting the importance o f early childhood education programs, several early childhood program in Pakistan (such as Aga Khan Foundation’s programs in Sindh and Balochistan) have demonstrated that lack o f a dedicated teacher, appropriate teaching materials, and cramped classroom space for pre-primary is a major factor contributing to large drop outs at that stage.

13

absolute public sector enrollment numbers at elementary and secondary levels also show a very l o w share o f total enrollments (Figure No. 4).

24 -

21 -

18 -

15 1

Figure 3: Changes in Net Enrollment (Age 10-12) and Matric (Age 13-14) Enrollments

Changes in Net Middle (Age 10-12) and I Matric (Age 13-14) Enrollments

20

*.................................* -I x I 1 12 -

9 ).’.’_..___-.. -,.-..-..

2001-02 2004-05

- -+ - - Female Middle

. . . .m.. . . Male Middle

_ _ Oerall Middle

- . .x . . - Female Matric

. . .

.+O\~rall Matric

. . Male Matric

Figure 4: Public Sector Enrollment Share by Level

1 Public Sector Enrollment Share by Level

Secondary 8%

47. Analysis o f survival rates o f children up till Grade X based on EMIS data over a ten year period shows that only 22 percent o f the cohort o f children enrolled in Grade I reached Grade X. During the decade o f eighties and until mid-nineties, as a matter o f policy almost every village was provided a girls and boys primary scho01.’~ This significantly contributed to reducing gender disparities at primary level. However, a phased development o f elementary and secondary level facilities could not be planned after the establishment o f the primary schools. This i s o f special relevance for girls as at the elementary school level, attendance o f girls i s also l inked to school availability and distance from home.

48. The Pakistan Country Gender Assessment report demonstrates that attendance of girls at elementary and high school levels i s closely linked to proximity of school in the vicinity. The Report shows that the presence o f a school in the settlement has an important co-relation with attendance o f girls at elementary and high school levels.25 In addition, the findings indicate that

For every population o f at least 500, if a school did not exist within a 1 kilometer radius, and if the community had availability o f 2 kanals o f land to donate, a primary school could be approved. According to PRHS-I1 (2004-05) data, only 46 percent of sampled villages in Sindh and Punjab had a girl’s public primary school inside the village compared to 85 percent for boys. See: Pakistan Country Gender Assessment, World Bank Report 2006 (Report No. 32244-PAK).

24

25

14

increased travel costs are incurred by rural households for sending girls to schools once they reach elementary school age. A similar increase in travel costs could not be noted for boys. This finding corroborates the steady improvement in enrollment o f girls in southern Punjab public schools after the introduction o f the girls’ stipend program (the amount o f stipend was init ially pegged to transportation costs). There are other supply side issues that also restrict participation at the elementary and secondary levels, including shortage o f subject specialist teachers and non-functional facilities such as laboratories and libraries. In addition, demand side constraints were not fully addressed. Investment in these areas has also remained low. A combination o f these factors has led to a sharp drop in the transition f rom primary to elementary and elementary to secondary levels, and the trend continues up to high school and college level.

49. At the higher secondary and college levels, access i s further restricted. According to the recent Punjab College Management Information System (CMIS) data, at present there are a total o f 405 public sector intermediate, degree, and postgraduate colleges catering to approximately 507,000 students in various fields o f study.26 Problems relating to infi-astructure and staffing gaps and limited choice o f subjects have been highlighted as serious access and quality constraints. The private sector i s also engaged in the provision o f college level education in Punjab and i s gradually increasing in size. According to the recent National Education Census (NEC), there are a total o f 93 1 intermediate and degree colleges in Punjab, out o f which 481 uust over half) are in the private sector. However, enrollment in private colleges accounts for only 17 percent o f total enrollment at this level.

Gender and Regional Disparities

50. There has been good progress in moving towards achieving gender parity in enrollments. At the primary level, girls’ enrollment has increased from 44 percent to 46 percent o f total primary enrollment in the public sector between October 2003 and October 2006. At the elementary level, girls now account for 42 percent o f total enrollment up from 36 percent in October 2003, and they make up 45 percent o f the total enrollment at the secondary level. However, the gender gap still exists and i s further exacerbated by regional and rurayurban disparities. The overall primary NER for the province i s 58 percent, female primary NER i s 55 percent - but it i s 68 percent in urban areas compared to 50 percent in rural areas.

51. At the college level, the disparities are reverse in urban areas, and in l ine with worldwide trends o f high female participation. According to the NEC, female enrollment in colleges in urban areas (both public and private) i s much higher than that o f males, but rural girls s t i l l lag behind males in rural areas.

Furthering the Potential o f the Private Sector to Enhance Access

52. The share o f the private sector in both the number o f institutions and in enrollments in Punjab has significantly increased over the past few years (Figure 5). Since the Private School Census conducted in 200027, private enrollment in Pakistan has gone up f rom 3.6 mi l l ion to about 7.1 mi l l ion in 2006. The number o f private institutions in Punjab has more than doubled from about 23,700 to more than 46,000. Private enrollment now accounts for almost 40 percent o f total enrollment, and 42 percent o f a l l education institutions are in the private sector. The prevalence o f private sector i s not only an urban phenomenon, as almost 40 percent o f total private enrollment i s in rural areas, and 47 percent o f a l l private institutions in Punjab are in rural areas. Punjab also accounts for the largest share o f private institutions (Figure 6) in Pakistan in 2006.

26

27

The National Education Census shows somewhat s imi lar number - with 450 public sector intermediate and degree colleges having 520,755 students enrolled. In the private sector, it shows 481 colleges with only 108,650 students. Census o f Private Educational Institutions (2000), Federal Bureau o f Statistics (FBS). Even if the 2000 Survey was under-reported, the increase in private sector enrollments i s remarkable.

15

Growth in Private Sector Enrollments between 2001 and 2006

Provincial Share of Total Private Institutions (2006)

14 % 2%

I Punjab Sindh NWFP Balochistan Oeerall Pakistan 1 I 1 Punjab Sindh NWFP IBalochistan ~ I

:40°0 ’20% :m?. 8000 60% 40’0 20%

0 0 0

I 1 1 1

17 %

Source: NEC

53. A majority o f the private schools are low cost schools, and private education i s becoming increasingly affordable. Recent research shows that a growing number o f children enrolled in private schools are not only f rom middle-class and but also poorer families, including f rom rural areas2’. Even o n the quality side, findings o f student achievement tests administered under a survey o f primary public and private schools in Punjab show greater differences between students o f public and private schools (with private school students performing relatively better, although learning outcome levels are overall low) than between children from r i ch and poor households. This study shows that in al l subjects, the best performing schools were private, and the worst performing schools were government (although the “top” government schools came closest to the “top” private schools in Mathematics, but lagged in Urdu and English), and the variation in private schools was less than the variation in scores o f government schools.30

54. This growth of the private sector has occurred entirely under a laissez faire environment. The public sector has neither discouraged nor supported it. Recently the Federal Government has established a Private Schools Regulation Act which i s in effect in the Islamabad Capital Territ01-y.~~ At the provincial level, an ineffective regulatory framework has been in place for registering private institutions. Only a small fraction o f private schools register due to the stringent criteria for registration (such as requirements for laboratories and libraries at the primary level) and bureaucratic procedures. This, along with fear o f tuition fee control, has deterred many private sector providers f rom r e g i ~ t e r i n g . ~ ~ The recent efforts to support and catalyze the private sector have been within the institutional framework o f the Punjab Education Foundation (PEF).

55. The PEF has been supporting low cost private sector schools in partnership with NGOs and private training organizations. PEF aims to demonstrate different models to support and promote the potential o f the private sector in rural areas and in urban slum pockets. There i s now a growing recognition o f the complementarities between public and private education, and o f developing partnership programs with the private sector. Government has initiated work to move forward with such partnerships in a holistic manner and o n a much larger scale. The recent initiatives are n o w helping Government to enter into dialogue with private stakeholders and to move towards

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NWFP and Balochistan reflect larger increase as the base was very low as captured in the 2000 Survey. Andrabi, T., Das, J., Khawaja, A., A Dime a Day: The Possibilities and Limits of Private Schooling in Pakistan, June 2006. Das, J., Pandey, P., Zajonc, T. Learning Levels and Gaps in Pakistan, June 2006. Based on the Learning and Educational Achievement in Punjab Schools (LEAPS) project in three districts - Rahim Yar Khan, Faisalabad, and Attock. A new federal registration law for private education institutions has recently been approved (Islamabad Capital Territory Private Educational Institutions (Regulation and Promotion) Ordinance), which may set a model for private institutions nationally. Review conducted by the Department of Education, Government o f Punjab.

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developing a comprehensive strategy for working with the private sector in support o f the provinces’ education outcomes.

B. Remaining Challenges in Quality

56. Quality of education remains a huge challenge for Punjab and the country as a whole. Basic and higher education in Pakistan i s failing to equip students with the necessary l i fe sk i l l s and the strong subject knowledge to prepare graduates to meet the needs o f the economy and society. Learning outcomes at the basic education levels, as recent evidence shows, are poor. Several institutional changes were initiated in the f i rs t phase o f PESRP to improve teacher qualifications and professional development, examination system and textbook development. Whi le these were necessary steps, they by themselves do not create sufficient conditions for improving student learning. This i s corroborated by results o f school assessments and examinations.

Learning Outcomes

57. Evidence of quality of student learning in schools i s showing disturbing results. There are three recent sources o f information to gauge learning outcomes o f students - the National Education Assessment System (NEAS) test results, findings o f the Learning and Educational Achievement in Punjab Schools (LEAPS) study in three districts (Rahim Yar Khan, Faisalabad and Attock), and the results o f the universal Grade V examination carried out by the newly created Punjab Examination Commission where over 1.2 mi l l ion students were given uni form exams. Under NEAS, the assessment tests o f Grade IV students in language and mathematics provides the f i rst set o f data on student learning outcomes at the provincial and national levels. I t shows that although Punjab performed slightly better than the national average, i t s t i l l fell below the mean scaled score o f 500 in both subjects (404 in mathematics and 382 in language, out o f a total score o f 1000).33

58. The results from LEAPS show an equally poor performance. In mathematics, the percentage o f Grade I11 students who were able to answer correctly questions corresponding to the Grade I11 mathematics curriculum ranged from 12 to 19 percent for fraction and division questions to 50 percent for simple multiplication questions. In English, while there was n o corresponding curriculum benchmark, the results ranged f rom 20 percent for questions involving filling in missing letters to 93 percent for writing a letter that was said orally. The difference between private and public school students i s stark in both English and Urdu - for example, 35 percent o f public school students could answer correctly a particular question that 48 percent o f the private school students were able to answer correctly. Private school teachers have lower qualifications than public school teachers, yet accountability and better management o f private schools has created an environment where more learning i s apparently taking place. However, for both public and private students, the overall learning levels are below average.

59. A major reform for measurement of quality of learning i s the establishment of an independent Examination Commission through which uniform Grade V examinations were universally conducted in May 2006. This i s the f i r s t time that uniform exam papers were developed, administered, and graded using technical support f rom UNICEF. Preliminary analysis based on results o f these examinations show that while learning levels were low, the examinations were setting standards at a fairly high level based on international c o m p a r i ~ o n ~ ~ . Approximately 1.2 mi l l ion

33 At this stage, NEAS results are not being used for establishing a baseline due to technical improvements required in the test instrument. However, the results o f the next round o f tests will enable subsequent comparisons and will establish a baseline. International experts who were setting the test papers according to the prescribed curriculum guidelines, found that the actual content level o f the Grade V national curriculum in at least two subjects (Mathematics and Science) i s far more advanced when compared to that o f other countries - for example certain competencies were equivalent to those o f

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children appeared in the Grade V examinations, out o f which 3 1 percent were f rom the private sector and 69 percent f rom the public sector. This i s the largest ever exam conducted at Grade V level. Whi le private students performed better than public students, the differences were not as high as emerging from the three districts survey (see paragraph 58). Overall, about 50 percent obtained a C grade in English, Urdu, Islamiat, Social Science, Science and Mathematics. In most subjects, approximately 85 percent o f the students achieved either a B or C grade (Figure 7). Public school students performed marginally better than private school students in Social Science and Mathematics, whereas private school students fared better in English, Urdu, Islamiat and especially in Science.

Figure 7

Grades of Class V Students (PEC 2006)

A B C D E

0 English 0 Urdu w Islamiat 8 Social Science 0 Science 0 Mathematics

Source: PMIU Analysis, Department of Education, Government o f Punjab

60. This new examination process i s helping to establish school-wise and district-wise performance benchmarks, which will make it easier to identify and fill gaps in teaching and learning by district and by school. I t would also enable the Government to design appropriate teacher training and to better target school level interventions. The Government would need to ensure that the results o f examinations are provided to parents and students in a timely manner in order to encourage improvements in performance. The next examination round will be useful in analyzing the trends, but it will not be sufficient to evaluate the impact on quality as enrollment increases will bring in new students and the results could be affected by newcomers. A more rigorous impact evaluation, following a cohort o f students over time, could add significantly towards evaluating improvements in learning.

Systems to Evaluate Impact o f Reforms and Improvements in Student Learning

61. At present, systematic impact evaluations are not in place to evaluate the impact o f the program and i ts specific interventions on quality of learning. As discussed above, several institutional changes and interventions are under implementation. These include increasing teachers’ entry qualifications, examination reforms, textbook development reforms, and teacher professional development program. Whi le a l l these interventions have been phased in with the objective o f improving learning outcomes, there are n o systems in place to evaluate their impact. Efforts to improve sector governance through reducing teacher absenteeism, improving completion rates, and reducing drop-outs are l ikely to lead to improved learning. However this would also need to be demonstrated through specific surveys done through independent third party impact evaluations. Together with putting in place a cohesive strategy for improving learning outcomes, this i s a major area being addressed in Phase 11.

Grade VI1 in some OECD countries. T h i s may be a case for setting oneself up for failure by setting the bar quite a bit higher than what i s age-appropriate for students.

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Teacher Oualitv

62. Teaching practices remain outdated and are largely based on a culture of rote learning gearing students towards examination. The profession o f teaching has become one o f the least desirable career aspirations for young graduates, not least because o f the l o w levels o f remuneration but also due to the lack o f other incentives. Reforms in the teaching sector require a multi-pronged approach, given the intricate links among teacher motivation and incentives, career structures and overall school and classroom environment supported by ongoing support and availability o f resource material. Teachers are seldom provided academic guidance; use o f supplementary materials i s limited; and training has not necessarily led to improved class room practices. A number o f efforts have been made on teacher quality, including improving the entry qualification for teachers, incorporating merit into recruitment policies, and recruiting additional teachers based on a needs analysis. Some progress has also been made on improving classroom environment facilities, providing missing infrastructure, conducting teacher trainings, and including school-based support for teachers in the teacher training program. M u c h o f the reliance to date on improving teacher performance has been on teacher training. The province s t i l l has a long way to go to provide competency and s l u l l up-gradation support complemented by ongoing support mechanisms to motivate teachers to improve classroom teaching practices. A further challenge, especially at the primary level, relates to the l imited time that teachers can actually spend with students, given the prevailing multi-grade environment. Weak management o f primary schools, in the absence o f a designated head teacher, makes it diff icult for the teachers to manage their time across several classes.

Textbooks & Learning Material

63. A major part o f reform in the first phase was to open up textbook authorship, publishing and printing under a phased approach?’ Printing o f textbooks for the Primer and two grades was opened up to competition, which has improved the print and physical quality o f these books and has lowered the cost. However the quality o f the content o f textbooks has not been improved as textbooks had not come up for renewal during the past three years. The Federal Ministry o f Education has recently revised the curriculum as a part o f a national curriculum reform program. N e w textbooks coming up for renewal will be prepared under the new curriculum, and book authorship will take place under an open competitive manner, leading to improvement o f the content quality o f textbooks.

64. At the classroom level, there i s a scarcity o f up-to-date learning material to supplement textbooks. Past experience with use o f supplementary materials has shown that training teachers to integrate materials such as charts, reading materials, and other learning aides into their lessons i s not effective as classroom based practice i s often very different f rom the environment in training programs. Even analysis using NEAS results shows that use o f teaching resources did not significantly increase students’ achievement^^^. More on-site classroom based support i s required to bring a cultural shift in teaching practices, including effective use o f support materials.

C. Remaining Challenges in Sector Management and Governance

65. While improvements in access and quality are pursued, governance and management o f education require similar attention. Reorienting provincial education management, making districts and schools function more effectively, and making teachers more accountable are the three key sets o f challenges to address in order to make education service delivery effective.

66. At the provincial level, the responsibilities and functions of the provincial education department are being realigned, but require further streamlining to support a greater role for

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36 The publishing and printing o f textbooks has been under the control o f the Punjab Textbook Board. National Assessment Findings 2006 - Grade I K Ministry o f Education, January 2007.

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the district education structure. After the devolution reforms, service delivery responsibility moved to district governments with the provincial education department responsible for providing pol icy direction and overall monitoring o f outcomes. Even five years after the initiation o f these reforms, the provinces are yet to move fully to their envisioned roles. Whi le Punjab has made progress in strengthening provincial pol icy development and monitoring functions, this has yet to be fully institutionalized within the Department.

67. Data and information i s collated, processed, and analyzed at the provincial level. This internal monitoring system i s supplemented by third party validations. Whi le there has been good progress in putting such a system in place, these systems need to be fbrther integrated into the Education Department’s Planning Wing and linked with the district education departments. Building upon the successes in monitoring, stronger evaluation capacity i s required at the provincial level so that the analysis i s more rigorous providing ongoing direction for improving service delivery.

68. Service delivery improvements require stronger capacity of the district education systems. The district education management has direct service delivery responsibility. The district education departments require considerable capacity support to enable them to better support schools and teachers. At present, they lack resources for regular school visits, let alone provide guidance o n academic and administrative issues. The district education departments are being supported by a district monitoring set up and managed through the District Monitoring Officer (DMO) who reports to the District Coordination Officer and the Provincial Education Department (see also paragraph 129). However, linkages between the district education department and the DMO remain weak. Systems for monitoring and inspection3’ have been put in place during the past three years by the provincial leadership in order to ensure third party (i.e., outside o f the Education Department) feedback on implementation o f the program. This was a necessary intervention and signaled the government’s serious commitment for ensuring efficient delivery, especially at the onset o f the program. However, i t i s now essential to strengthen the monitoring and supervision capacity o f district education departments in order to sustain the monitoring systems established under the program.

69. Below the district level, insufficient and ineffective school supervision and lack of effective school-based decision making continue to hinder education governance and delivery. The lack o f a school-centered focus and weak supervision and accountability mechanisms have led to high levels o f teacher absenteeism and a generally poor and unattractive learning environment at the classroom level. While primary schools lack head teachers, elementary and secondary schools do not possess sufficient administrative and budgetary authority over decisions that directly affect the school. Over the years this has led to weak school management, which has been further exacerbated by lack o f comprehensive school-based budgets. The government has attempted to address this weakness through programs to engage communities in school management and monitoring.

70. Community driven school management remains weak, in the absence of a long term social mobilization program supported b y training. School Councils (SCs) have been notif ied and administrative data shows that more than 80 percent o f them have functioning bank accounts, yet they have not been provided adequate social mobilization support to make them effective in school-level decision making. A pi lot SC capacity building program covering 2400 schools in six districts was launched in partnership with two NGOs. The pilot’s implementation i s n o w underway after long delays. These include issues with the membership o f SCs (under the pilot, many o f the SCs had to be re-constituted); thin participation o f female community members; very weak capacity o f SCs to undertake routine management tasks; and l o w levels o f motivation and mobilization leading to l imited contact between SC and the school, and

This pi lot has demonstrated key weaknesses with SCs.

37 These include the District Monitoring Officer (DMO) in each district, supported by a team of mobile Monitoring and Evaluation Assistants (MEAs). The MEAs function as monitors/reporters and visit each school in the district to oversee implementation progress in all aspects of the Program. More recently the MEAs report on a composite monitoring index to assess progress at the school level.

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the SC and the wider community. The Government i s committed to incorporate these lessons as wel l as the findings o f a forthcoming impact evaluation o f the SC pi lot to develop appropriate strategies for enhancing school management and for strengthening the role o f SCs.

IV. THE PUNJAB EDUCATION S E C T O R REFORM PROGRAM

71. The Program initiated in 2003/04 has maintained a steady course. However, as noted in Section 111, the agenda i s by n o means complete. Therefore, building upon the experiences and lessons, and in consultation with key stakeholders3*, the Government has extended the program beyond the earlier envisioned three year period. The Phase I1 framework has been developed in response to the continuing challenges confronting the education sector. I t i s seen as a dynamic agenda that will continue to evolve over the coming years based o n progress and implementation experiences.

72. The program i s structured around the following three pillars: (a) Enhancing fiscal sustainability and improving the fiduciary environment; (b) increasing equitable access to education and improving quality and relevance of education; and (c) improving public education sector governance and management. The three pillars, their main objectives, actions taken,39 and planned medium-term actions are described in detail below:

Pillar I: Enhancing Fiscal Sustainability and Improving the Fiduciary Environment.

73. The key objectives o f this pil lar are to: (i) ensure that public expenditure continues to be increased for education at both provincial and district levels to meet sector needs; (ii) strengthen the districts’ financing capacity and ensure that adequate resources are transferred to districts to meet education needs; (iii) increase transparency o f financial management and procurement processes and practices; and (iv) strengthen provincial and district capacities to monitor financial flows.

Fiscal Framework and Sector FinancinP at the Provincial and District Levels

74. The MTBF, initiated three years ago, continues to support large increases in provincial expenditures o n education (and other pro-poor services). A draft MTBF for 2008-10 has been formulated and aims to ensure sustainability o f provincial finances and o f high-priority programs and expenditures o f the provincial government, including PESRP. The draft MTBF projects a 12.8 percent per annum increase in provincial revenue and a 15.5 percent increase in provincial expenditure. Due to i t s prudent debt management strategy, debt servicing expenditure i s expected to grow by only 6 percent per annum, whereas high priority expenditure i s projected to increase, with education sector expenditure projected to increase at 16.6 percent per annum, projected for education sector expenditure.

75. The framework also provides additional funding for district education programs on the basis o f need, and if the districts allocate more for the education sector f rom their own overall district budgets and if they meet performance targets set out in the TOP agreements.

Expenditure Trends at the Provincial Level

76. The available expenditure data show a satisfactory trend. Whi le the revised estimates show some shortfall in utilization o f provincial development budget, the overall recurrent expenditures o f the sector were in accordance with the budget target (see Annex 5, Table 2). In some areas, the expenditures exceeded the budget allocations (see Annex 5, Table 3). Comparison o f FY07 allocations for education sector with FY05 expenditures has been diff icult due to recentralization o f

Community consultations were carried out by two NGOs in Punjab (BUNYAD and SAHE) during July 2006. These were based on a series o f over forty five focus group discussions in six districts o f Punjab. Actions in italics are prior actions for proposed PEDPC IV.

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college education to the provincial level. However, accounting for this factor (by netting out allocations for colleges), it i s apparent that overall recurrent allocations for education sector (i.e., school and special education) has been increased by 71 percent in the FY07 budget (see Annex 5, Table 4), with strong increases reflected in the salary and non-salary budgets.

ExDenditure Trends at District Level

77. On the basis o f available information, it i s apparent that compared with FY05, the overall FY06 education sector expenditures were higher by 21 percent. The salary expenditure increased by 18 percent, reflecting mainly the 15 percent salary increase, whereas non-salary expenditure was higher by 44 percent and grants for SCs by over 50 percent. The development expenditure however was lower (by 11 percent), implying less than anticipated expenditures on missing school facilities.

Actions Taken

78. Government’s continued commitment i s evidenced by the following actions: (i) MTDF has been prepared aligned with sectoral requirements; (ii) the draft MTBF has been prepared for 2008- 2010; (iii) the education budget for FY07 demonstrates a 15 percent increase; (iv) the framework for creating a dedicated provincial Pension Fund has been approved by the Provincial legislature; (v) fiscal sustainability o f the program has been maintained by creating fiscal space through revenue generation and prudent expenditure management; and (vi) the level and composition o f education sector expenditures i s in line with sector strategy. Fiscal decentralization continues to be supported through regular transfer o f single line budget to district governments’ Account IV. Over and above this transfer, conditional grants for education are provided under the ToPs. ToPs for FY07 funding have been signed with all 35 district governments, with agreed performance indicators and targets, with conditional grants released on the basis of a need and performance formula. Implementation o f district capacity building programs has commenced with full financing provided through the provincial budget.

Medium Term Actions

79. The Government i s committed to: (i) update the MTBF annually; (ii) increase FY08 provincial expenditures for education by 15 percent according to the MTBF; (iii) increase capitalizing o f Pension Fund; and (iv) maintain the fiscal sustainability o f the program through improving debt management, enhancing own revenue, and better prioritization and management o f expenditure. The Government will also continue to strengthen fiscal decentralization and decision making by: (i) continuing to provide incentives for performance and FY08 TOPS will have 50 percent performance weightage, with more effective usage o f the composite monitoring index; (ii) ensuring that al l districts increase their own level o f non-salary budgets for education; and (iii) implementing district capacity building programs for a l l districts. The TOPS will be revised to reflect the agreed program focus. In addition, performance indicators would include improvements in student learning outcomes.

Fiduciarv Reforms

80. On the fiduciary side, the objectives are to increase transparency o f financial management and procurement processes and practices. This includes measures to strengthen financial management and procurement capacity at both the provincial and district levels. These are also supported through the ADB-supported Provincial Resource Management Program (PRMP).

Financial Management

8 1. Significant progress has been made in the area o f financial management, with timely and more reliable financial data being made available o n the basis o f regular reporting and analysis o f education

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expenditures by the PMIU. Proper accounting procedures to track education program expenditures have been developed and are under implementation.

Actions Taken

82. The following actions have been taken: (i) regular expenditure reporting i s done by P M I U on expenditures, outputs and outcomes; (ii) regular (once monthly) Departmental Account Committee (DAC) meetings are being held to review and settle ‘advance’ audit paragraphs in the Provincial Account No. I, which have led to progressive reduction (at least 10 percent) in outstanding paragraphs; (iii) provincial and district budgets have been prepared under the new Chart o f Accounts; (iv) district capacity building programs have been financed and are under implementation; and (v) Multi-donor assessment o f the P F M environment using the PEFA P F M PMF4’ framework has been conducted using the transition version o f the PEFA framework.

Medium Term Actions

83. The following medium term reform measures constitute part o f the Phase I1 framework:

(a) Comprehensive Budget Execution Reports for the Education Sector prepared, f rom SAP/R3, and Summary Statements made available on the Department’s website within 3 week o f end o f each month, latest by March 2008: Currently the PMIU i s compiling reports o n the basis o f information made available by the districts. After full connectivity o f the PIFRA system in al l 35 districts, currently envisaged during the second quarter o f FY08, these data will be accessible in real time by the PMIU and it i s anticipated that the existing lag o f 6 weeks after the end o f the month will reduce by at least half. Moreover, the reports will be generated from the SAP/R3 and dissemination i s planned through the department’s website.

(b) Review and settle at least 20 percent o f cumulative backlog o f audit paragraphs in the Districts’ Account No. 4 o f the Education Sector through regular D D A C meetings by March 2008 and this performance criterion will be included in the Terms o f Partnership (TOP) with District Governments for FY 2007-08: Baseline for outstanding audit paragraphs for a l l districts as at January 1, 2007 stands at 21,072. Remarkable progress has been demonstrated in the clearance o f audit paragraphs at the provincial level and through this milestone, the District governments are encouraged to replicate that success. Accordingly, achievement o f this target will be incorporated into the TOPS between provincial and district governments.

(c) Design a revised PFM Reform Strategy based on the multi-donor PEFA assessment and PFM diagnostics report on weak performance areas: Report for the multi-donor PEFA assessment i s being issued subsequent to a stakeholder’s workshop that was held on April 7, 2007. The assessment was camed out in coordination with the Government o f Punjab, and it i s anticipated that, as with the previous study carried out in 2005, the findings will lead to the formulation o f a comprehensive P F M reform strategy that will form a part o f the Punjab Government’s White Paper for FY 2007-08.

(d) Updating o f General Financial Rules (GFRs): The guiding principles o f committing expenditures, making payments and accounting for these are contained in the General Financial and Treasury Rules o f the government. The GFRs are, in a majority o f cases, obsolete and would require amendment through the appropriate codification and consolidation o f new rules that were introduced through administrative circulars and official policies. With the transition to the new system o f accounting under the principles o f the N e w Accounting Model, and with the province-wide adoption o f the new Chart o f Accounts, some fundamental changes to some o f the existing rules and procedures

PEFA PFM PMF: Public Expenditure and Financial Accountability (PEFA); Public Financial Management (PFM); Performance Measurement Framework (PMF).

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have emerged. For consistency and for assuring proper financial management processes and procedures guidance, a reform action that entails the updating and dissemination o f the Rules, and training o f staff, will constitute one o f the key milestones.

(e) Appointment o f Computer Literate Staff in Districts: The province i s gearing itself to achieving full IT connectivity under the Project to Improve Financial Reporting and Auditing (PIFRA) regime during calendar year 2007 (not later than September 2007). In the light o f this, and based on the very weak IT capacity o f existing staff, the Finance Department would sanction posts, recruit and post adequately qualified IT persons into the government service structure by July 2007.

(0 Review and settle at least 40 percent of cumulative backlog of audit paragraphs on the Provincial Account No. 1 of the Education sector through regular (at least monthly) DAC/SDAC meetings by December 2008: The process o f clearance o f audit paragraphs i s l ikely to be institutionalized with the continuous support o f the audit formations. This process i s important for enhancing the transparency, accountability and credibility o f expenditures in the Education Sector.

Procurement Reforms

84. During the last three years, the Government has engaged in procurement reforms that commenced with specific actions under the f irst Credit (such as removal o f the Composite Schedule o f Rates) that eventually broadened to province wide reform actions, such as the approval o f a provincial procurement reform strategy by the third Credit. This strategy, approved by the Chief Minister, n o w provides the agenda for procurement reforms and, if implemented correctly will have far reaching consequences for the transparent and efficient use o f public funds. The following areas in the procurement reform strategy will be implemented:

Creation o f a central body to develop and guide the implementation o f a new procurement framework which would include rules, regulations, procedures and standard bidding documents. Identification o f key stakeholders and including them in the consultative process to ensure support o f c iv i l services, private sector and c iv i l society organizations. Development o f a procurement monitoring system to collect, analyze and disseminate procurement related data within government and to the public, which will include web based procurement notices, and notices o f award o f a l l GoPunjab contracts. Development o f a complaint handling mechanism. Implementation o f training and capacity building programs for individuals involved in procurement based on international best practice. Creation o f benchmarks and conducting o f a baseline study on current status o f procurement to establish key performance indicators.

Actions Taken

85. K e y actions taken in line with the procurement strategy include: (i) A draft law for the establishment of a Provincial Procurement Regulatory Authority has been approved by the Chief Minister and placed before the Governor for issuance as an Ordinance; (ii) rules for the procurement o f goods, works and services that meet international best practice, including establishment o f a second tier appeal mechanism, have been prepared so that they may be notified, under the sponsorship o f the autonomous public procurement authority, when it i s created; and (iii) second independent ex-post procurement review o f education sector procurement i s under implementation.

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Medium Term Actions

86. 0

0

0

0

0

0

The following medium term actions will be taken:

Preparation and adoption o f Standard Bidding Documents for Goods, Works and Services: In order to implement the provisions o f the new rules and implementing regulations in a uni form and standardized manner, bidding documents for goods, works and services will be developed. Commencement o f work on l aw to enable e-Procurement. As procurement reform progresses, the natural next step would be to e-enable the province’s procurement activities, allowing for greater transparency and efficiency. However, an enabling environment will have to be created by putting the required legal structure in place. Establishing a monitoring and reporting mechanism: To provide relevant and appropriate statistics on public procurement in Punjab, results o f awards o f contracts over an agreed threshold will be posted on the official website to ensure transparency in procurement at the local level. Revision o f existing regulations and manuals for implementation o f Public Procurement Rules. Capacity building and training. Fol lowing the adoption o f monitoring mechanisms, achievable annual targets will be set for the improvement o f procurement capacity with the a im that within two years f rom the introduction o f the rules, procurement specialists down to the district levels will have been trained. Regular conduct o f ex-post procurement review for education procurement.

Pillar 11: Increase Equitable Access to Education and Improve Quality and Relevance of Education

87. K e y objectives o f this pillar are to improve performance and quality o f school education to improve learning outcomes; to improve school participation and retention rates; and to reduce gender and regional disparities in schooling. The Government i s continuing the program interventions initiated three years ago, with a focus on the full school cycle to: (i) improve l o w participation rates and poor learning outcomes; and (ii) develop deeper and more scaled partnerships with the private sector.

ImDrove Access

88. The Program focus i s on: (i) reducing primary drop out rates and the number o f out o f school children for improving primary completion rates; (ii) increasing the transition f rom elementary to secondary to high school level; and (iii) encouraging the participation o f the private sector.

Actions Taken

School Education

89. T o reduce the large number of drop outs between pre-primary and Grade I, special intervention for pre-primary schools have been developed. A new age-appropriate textbook and learning material has been developed and will be pi lot tested in Katchi (pre-primary) classes in selected schools. This i s accompanied by orientation and training o f teachers. The Government i s engaged in discussions with technical experts, including international NGOs with expertise in the pre- primary sectors in Pakistan, and i s reviewing the appropriateness o f the new pre-primary textbook before rol l ing out the pilot. Another effort to improve primary completion rates i s by addressing the prevailing multi-grade environment caused by two-teacher schools in the majority o f primary schools. In this connection, a review o f the existing pol icy i s underway.

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90. The incentive programs to encourage households to send their children to schools, and to encourage retention, are being continued. These include delivery o f free textbooks from pre- primary to grade ten to al l students, and continuation o f stipends to girls enrolled in Grade V I to X in government schools in fifteen l o w literacy districts.

91. A more comprehensive strategy for infrastructure improvement has been developed and approved, whereby each school i s being provided full infrastructure needs (toilets, sanitation, water, boundary walls, additional classrooms, etc.). Criteria for up-gradation has also been finalized, based on need and demand, i.e. where there are sufficient enrollments and community demand. Under the new criteria, in the f i rs t phase, 500 primary schools are being upgraded to elementary level, and another 500 from elementary to secondary level. The missing facilities program i s continuing along the established need-based criteria, while an additional scheme for provision o f additional classrooms, and where needed, to address the growing enrollment loads i s also being finalized.

College Education

92. The college sector has historically been the “missing link” in the education chain in Pakistan, with the provincial education departments responsible for school education, and the federal Higher Education Commission (HEC) addressing university education. As a f i rs t step, the Government has developed a dynamic database on public sector colleges (see B o x 1 below), and has undertaken consultations with stakeholders (including college principals, teachers, students and parents) who have highlighted the core issues affecting college education. A taskforce comprising o f academic and management experts has been established and i s guiding the development o f a college reform strategy.

Box 1: Moving Towards E-Governance: The Punjab CMIS One of the key achievements already made i s the establishment of the College Management Information System (CMIS). Th is CMIS i s a comprehensive tool for planning human resource and physical resources of the college sector and i s the first of its kind in any education department of Pakistan. The software captures the full information on all colleges -the physical and human resources. It allows the College Wing of the Education Department to readily identify gaps in teaching by college, by subject, and enables decision makers to make rational, need-based decisions on transfers and postings. The system i s being used in the Colleges Wing, and has already introduced a shift in the business process related to management of human resources in the college sector. Once the CMIS i s fully integrated, all college staff will be given access to help them identify and plan their transfer and posting requests, making this system a first towards “E-governance” in the sector. Th is system i s already serving as a model for the development of the comprehensive School MIS, as well as for other departments of the Puniab Government.

93. A three-pronged strategy i s under preparation to bring improvements in the college sector. The f irst element i s phased improvement in the infrastructure o f colleges. In i t ia l ly in the f i r s t year, four colleges per district (one male and female each o f the best and lowest ranking colleges) will be renovated and provided the critical facilities such as laboratories, furniture, toilets and other facilities. This will be extended to additional colleges in the subsequent years. The second area seeks to improve academic quality including teaching. Staffing needs will be prioritized according to the analysis conducted o n shortfall o f teachers in critical subjects. Subjects that are market-oriented (such as information technology, commerce, spoken English) will also be introduced at the college level. Transfer requests o f college teachers have been opened up to place teachers in their place o f choice to encourage them to actually show up for their duties. The third aspect o f the college reforms i s on improving the governance and management o f colleges by preparing them for phased autonomy. This i s to be done init ially by reforming the business processes, and strengthening college leadership.

Actions taken for enhancing role o f private sector in increasing access

94. There i s now a growing appreciation of the critical role played by the private sector in expanding access and in contributing to school participation rates in the province. The Government i s financing the private sector through the Punjab Education Foundation (PEF), which has launched programs to support l o w cost private schools. I t s flagship program i s the Foundation Assisted Schools (FAS) which provides enrollment-based subsidy to l o w cost schools. Training o f private school teachers under the Cluster Based Training program has led to improved student

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performance in the assessments conducted by PEF. A pi lot education voucher program has also been launched by PEF to target families living in poor urban slums. B o t h these programs are providing models for support to the l o w cost private sector. The Government has provided fi-ee textbooks to over 63,000 students studying in about 200 PEF-assisted schools. Government financing o f PEF has been maintained and Rs. 400 mi l l ion has been allocated and disbursed in FY07. An additional amount o f Rs. 500 mi l l ion has also been disbursed. There i s now a clear recognition o f the need to work more intensely and deeply with private schools. To further this, the Government has approved a policy and implementation modality to scale up Jinancial support to private schools. T o enable implementation o f this support, financing for PEF i s being significantly enhanced in the FY08 budget. Details o f the implementation modalities are under discussion between the Government and PEF.

95. T o adequately create an enabling environment for the private sector to further expand, especially in rural areas, the Government has undertaken a review o f the existing mix o f the private sector, and policy framework and investment climate for the private sector. This preliminary review includes analysis o f barriers for the private sector, such as registration procedures, and how the environment can be made more enabling for the private sector to perform. This in i t ia l effort will be taken hr ther in the shape o f a complete study to enable the province to implement necessary reforms and for realizing the full potential o f the private sector. These steps would help Punjab to move beyond piecemeal support (e.g. handing over o f schools to NGOdprivate sector) to a broader strategy including financing the provision o f education through the private sector where i t i s not cost-efficient for the public sector. The Bank will assist the Government by conducting analytical work in this area. The Government will also initiate a review o f PEF programs, especially the Foundation Assisted Schools and the Cluster Based Training programs. It has requested the Bank’s support for conducting an evaluation o f PEF programs.

Medium Term Actions for Improving Access

96. Over the medium-term, the Government i s putting in place specific strategies to improve primary participation and completion rates. I t has a two-pronged approach to improve primary participation rates. Some o f the strategies to improve completion rates would not only improve access, but also indirectly quality. As a large number o f students drop out between pre-primary (katchi class) and Grade I, and then again between Grades IV and V (see paragraph 45), special programs to target these grades will be implemented in order to reduce the drop out and improve the transition and completion rates. These include provision o f dedicated and trained teachers in pre- primary and appropriate teaching and learning material, in addition to the continuation o f supply side programs (such as infi-astructure improvement). After a review o f the current norm for student-teacher ratio, additional teachers will be provided at the primary level to move away fi-om the existing multi- grade environment, ensure greater time on task, and increase interaction between teachers and students. A critical action will be the appointment o f head teachers in primary schools in a phased manner o n the basis o f enrollment and teacher strength.

97. Targeted programs will be implemented to bring in the out-of-school children. These include interventions for rural areas in southern districts to address l o w girls’ enrollments, including giving subsidy to private schools and stipends to children to attend public or private schools. Improvements in school infrastructure and supply o f teachers will be continued, as these have shown to have had a positive effect on the government school system and also have led to enrollment increase^.^'

While a full program evaluation will provide more rigorous analysis on the correlation between various aspects o f the program (such as infrastructure, stipends, etc.) and enrollment increases, community feedback i s indicating that the infrastructure improvement component has had a positive impact on enrollments. However, a prevalent finding was that infrastructure improvements were “piecemeal” and did not focus on ensuring that a particular school was provided with all required facilities.

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98. Elementary and secondary schools will be expanded in a phased manner. The medium term actions include both supply side inputs and demand-side interventions to increase overall participation rates fi-om the elementary to secondary level. There remains a large gap in elementary schools that will be fi l led by up-gradation o f primary schools to elementary schools, and fi-om elementary to secondaryhigh schools, based o n clearly developed criteria, which includes lack o f public or private schools in the geographic area. Teaching gaps will also be fi l led at the elementary and secondary level, especially to fill vacancies o f subject specialists. Incentives for further enhancing girls' access will be identified and piloted, especially those that address the mobi l i ty and safe transportation concerns o f older girls and teachers. This could include a possible pi lot female transportation scheme in rural areas. The Government will continue to expand i t s support to the l o w cost private sector especially in rural areas, possibly through targeted support for girls attending private elementary and secondary schools.

99. College sector reforms are also planned to be phased in over a medium term period to improve market employability of the graduates by linking content o f college education with the demands of the market. College reforms intend to gradually lead to phased autonomy (based o n an eligibil i ty criteria) to improve the management o f college education. The medium-term strategy for college sector reforms i s expected to include the following broad areas: (a) improving financial management and governance environment o f colleges; (b) improving quality and relevance o f the courses and terminal degrees; (c) fbrther catalyzing the role o f the private sector; and (d) increasing resource allocation to meet the backlog o f past years o f neglect. The Wor ld Bank will undertake a college sector study to build upon the init ial analysis undertaken by the Government and to help provide input for the strategy and appropriate programs for college reforms including both public and private sector.

100. The government envisions a greater role for the private sector in increasing participation rates. After approval o f the policy to extend incentives to the private sector, further modalities for scaled up implementation are being developed. This i s being done in consultation with PEF and other private sector partners. Increased financial support to l o w cost schools, along the lines o f the PEF FAS model, and vouchers to households will also be considered as part o f the medium-term strategy. These interventions would a im to create a level playing field by generating a healthy competition between public and private schools, thereby enabling poorer households to send their children to good schools. The capacity o f PEF to scale up such programs will also be strengthened.

ImDrovinp Oualitv

101. Improving student learning outcomes i s the main objective o f the quality agenda. There are several interlinked interventions in the area o f quality which need to be holistically addressed to bring visible improvements in student learning. The interlinked quality dimensions include textbook production, development o f supplementary learning materials, examinations, assessments, and linking these with the teacher professional development program. A school and student centered focus will be ' at the core o f the quality agenda, without which the system wide interventions will remain at the higher system level, and will have litt le effect at the classroom and student level.

102. As noted earlier in Section I11 B, several institutional changes to improve quality are being coordinated to ensure that the quality reforms translate into improved classroom practices and student learning. The linkages among these institutions will be strengthened under Phase I1 supported by this DPC series at two levels: (a) provincial level by coordinating the processes and outputs o f the various institutions (such as Directorate o f Staff Development [DSD], Punjab Examination Commission [PEC], Textbook Board, Punjab Education Assessment System [PEAS]) so that teacher training and support i s linked to improvements in textbooks and examinations; (b) at the district level by

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strengthening education management through appropriate staffing and training so that district officials are enabled to provide qualitative support to schools and teachers. W h i l e these constitute important elements o f the emerging framework for improving quality o f learning, these separate elements will require convergence.

103. The province has started developing a coherent strategy for integrating and coordinating the teacher, textbook, and examination reforms in order to impact student learning outcomes. This strategy i s based on tried and tested frameworks that incorporate global knowledge and local practice, and i s being framed for the Punjab context, keeping in view the institutional arrangements and processes in place. This strategy includes involving parents and teachers at the school level to stimulate efforts o f a l l stakeholders to improve student learning.

Actions Taken

Teacher professional development

104. The Government has undertaken consultations among a group of core stakeholders to further elaborate on and agree on the details of the Professional Development Program. Consultations have also been held with the Examinations Commission, assessment teams, professional associations, and private sector involved with teachers. As part o f this effort, work has commenced to determine linking the incentive structures to performance; the introduction o f induction training for new teachers; and linking promotion with performance and training.

105. The following actions have been taken in the area of teacher professional development: (a) Directorate o f Staff Development’s (DSD) Continuous Professional Development (CPD) framework for primary school teachers has been approved; (b) D S D has completed clustering o f 12 districts and has trained 65 Lead Teacher Educators (LTEs), and 585 District Teacher Educators; (c) first phase o f CPD has been implemented with training imparted to 60,000 teachers in twelve districts; and (d) District Training and Support Centers (DTSC) have been established in al l districts; and (e) DTEs have been appointed and placed in 12 districts, and this i s a core aspect o f ongoing support to sustain the benefits o f training. D S D has conducted several stakeholder conferences in districts. It has initiated work on a radio program for teaching o f English as a second language to primary school children through interactive radio program (being negotiated with Radio Pakistan). A baseline study for assessing teacher training has been initiated with GTZ support to assist the D S D to better plan teacher training, and a third party review o f the teacher training i s under preparation with UNESCO’s support.

106. T o make further improvements in the professional development o f teachers in a comprehensive manner, a review of the teachers’ career and service structures i s being initiated as part of a larger review of the education management and administrative system (see paragraph 125). This review will asses the feasibility o f establishing education and teaching cadres, and provided specific recommendations for teachers’ overall professional development. This review will also take into account the structures and career paths for contract teachers.

Improve Student Learning Outcomes

Examination

107. The Government has undertaken Class V examinations in M a y 2006 through the Punjab Examination Commission (PEC). This i s the f i rs t time that school-by-school results are available in a consolidated database, which allow for comparisons and analysis across schools, tehsils, districts, by gender, and other parameters such as student teacher-ratio. The PEC database i s being used by the Education Department to link examination results with other school information. T o ensure the

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independence and credibility o f this new examination system, the Government has approved the Draft Act for establishing PEC as an autonomous statutory body. While these are important steps towards establishing quality in the school examination system, the Government has also initiated a review o f Examination Boards at the secondary and higher secondary level to understand the shortcomings in the current system and to develop a phased reform o f the existing Boards.

Assessments

108. Under N E A S assessments have been conducted in Urdu, Math, Science and Social Studies for Grade IV and pi lot testing in Urdu and Math for Grade VI11 during M a y 2006 (see paragraphs 27 & 57). This process will continue in the subsequent years as well. The Punjab Education Assessment System (PEAS) has been established and will continue as part o f the NEAS, and the Government i s financing PEAS in i t s regular budget. Once N E A S instruments are further refined, these would be administered on a much larger sample across the districts.

Textbook Development

109. Reforms in this area covers three aspects: (a) restructuring o f the Textbook Board to realign i ts functions in accordance with i t s new role and new business processes; (b) printing and publishing o f textbooks through an open and competitive; and (c) opening up o f textbook development (including authorship) to authors external to the Textbook Board. Under the f i rs t year o f Phase I1 supported by DPC IV, textbooks for 4 classes are being published and printed through open competitive process. The Government has also completed the business process review o f the Punjab Textbook Board, and based o n the findings o f this review, al l textbooks coming up for renewal will be opened to competition with the Textbook Board functioning as a quality overseer and clearing house. With the revised curriculum that has been developed by the Ministry o f Education (see paragraph 63), books in several subjects will be coming up for renewal along the lines o f the new prescribed curricula guidelines.

Medium-Term Actions for Improving Quality

110. The quality of the overall education system i s only as good as the quality o f each school. While detailed school level data on enrolments, teachers, and school inputs i s available, the information and data on quality o f the school in relation to student performance i s just beginning to become available through the Examination Commission. School-specific performance baselines will be established using Grade V and Grade VI11 examination results. Special programs will be implemented through the district governments to provide technical, teaching and materials support to lagging schools. Schools will begin to be ranked at tehsil level and information would be widely disseminated to encourage competition. This would be the f i rs t time that information on school quality and performance, o f both public and private schools, would be available across the entire province.

11 1. The quality o f each school i s largely dependent on the quality o f teachers and what they are able to do in the classroom to facilitate learning. Teacher performance i s influenced by many factors including: (i) motivation (including compensation, career path, professional recognition); (ii) incentives for improving performance; (iii) access to and use o f resource materials; (iv) management support; (v) a manageable student teacher ratio; (vi) the classroom environment; (vii) teacher training, knowledge o f student learning outcomes, subject mastery; and (viii) schooVclassroom based instructional support, to strengthen classroom sk i l l s and confidence. Under the CPD framework, DTEs will provide ongoing instructional support to ensure that training i s being put into use. These inter-related elements are part o f the CPD framework. These also form the core aspects o f the review o f teacher professional development with the overall education management review. Putting in place a l l o f these elements, the Government will implement a holistic approach to professional development, unlike the past where teachers’ development was largely confined to training programs. T h i s will

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include introducing ongoing teacher certification tests to evaluate sk i l l s and competencies, leading to the establishment o f a teacher certification body. Teacher development programs will be modified to respond to teachers’ s lu l ls and competency needs. The CPD for primary school teachers would be fully implemented, with training o f additional 150,000 teachers and through on-site support to teachers, including in the use o f supplementary materials which will be made available to a l l primary schools. A CPD fkamework for elementary and secondary education will be developed in consultation with stakeholders.

112. To improve quality at entry level, the policy of recruiting graduate teachers will continue. Additional contract teacher recruitment will take place to: (i) meet the increasing enrollment load; (ii) address the shortage o f subject teachers, especially in secondary and higher secondary schools; (iii) cater to the additional requirements that will emerge as a result o f up-gradation f rom primary to elementary, and elementary to high; and (iv) fill vacancies that occur as a result o f promotions and retirement. The Government strategy i s to meet the additional demands by: (i) promoting to higher levels primary and elementary school teachers who have improved their qualifications; (ii) recruitment o f 15,000 teachers to fill existing vacancies; and (iii) creation of additional 25,000 new teaching positions. Almost 2,000 vacant positions o f head-teachers o f high schools and Subject Specialists are also being f i l led through the Punjab Public Service Commission.

113. The Government will also develop a policy to appoint designated head teachers at primary school level. This will init ially be done to appoint head teachers in schools where enrollment and teacher strengthen warrant it. Studies have shown that a committed head-teacher contributes to the success o f a school. In primary schools, there are n o designated positions o f head- teachers therefore any effort to build capacity at primary level cannot be fully successful without properly appointed heads. One o f the most important aspects o f teachers’ professional development i s continuing in-school support to teachers. Headteachers posted against designated positions can be trained to guide other teachers in the school, especially in an environment where multi-grade teaching requires management, and can enable increased face-to-face time between teachers and students through better time management. Presence o f such positions can also be a part o f career structure for primary school teachers. For elementary and secondary schools, a major intervention will be specialized training programs covering both competencies as wel l as managerial s lu l ls . This would be complemented with in-school support through the DTEs.

114. Major actions to improve quality o f school examination will include: (a) making the Punj ab Examination Commission (PEC) a permanent independent examination commission through statutory regulation, and providing it the required technical staff; (b) developing a l l systems, processes and procedures o f the examination system for Grade V and Grade VI11 or any other levels o f examinations under the PEC umbrella; (c) creating examination databases l inked to the main data base o f the DOE; (d) analysis o f examination results and their dissemination to schools, parents and students; (e) using results to give targeted support to districts and schools; (0 awareness campaign about the new uniform system o f examination system for the province; and (g) international linkages with other examination commissions.

1 15. For improving quality and credibility of secondary and higher-secondary examinations, phased reform of the Board of Intermediate and Secondary Education (BISE) will be implemented. These reforms are aligned with the national policy o f reducing the numbers o f multiple BISES o f varying quality. Ultimately the province will move towards a single central Board responsible for examination paper setting and marking, while the remaining Boards will be responsible for conduct o f examinations.

116. A systematic way to undertake assessments has started under NEAS. This i s a nascent system with quality issues that need to be addressed. However, it has enabled provinces to begin gauging student learning. Under the NEAS, a Provincial Education Assessment System (PEAS) has

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been established and this will be strengthened over the course o f Phase I1 to enable Punjab to systematically monitor the performance o f i t s education system. The next round o f N E A S tests are being administered with improved instrument^^^. The provincial PEAS will also administer the tests to a larger sample. The results will be merged with the education databases to analyze changes in learning outcomes.

117. As part of its medium-term program for improving the quality and content of textbooks, the Government has developed a strategy for opening up publishing and printing of all textbooks from Grades I-XI1 to competition. This reform started under Phase I with the opening o f printing and publishing o f books o f two grades to competition, will gradually be extended to al l books. The focus so far had been on improving the physical quality o f textbooks, and on-time availability o f free textbooks to al l children in the province. Bo th areas have shown good results. Textbook reforms will also focus o n improving the content o f the textbooks along with developing supporting materials for teachers. N e w textbooks coming up for renewal under the new curriculum will be developed through an open and competitive process. These actions are expected to bring in the much needed quality in the content o f new textbooks. Additionally, supplementary reading materials and teacher resource materials will also be provided to schools in a phased manner, along with the necessary training and follow up to enable teachers to use this material effectively.

118. Restructuring of the Textbook Board will be implemented under the new business processes. The restructured Textbook Board would focus o n the procurement processes, including identification o f the objective o f the new book according to guidelines, advertising for authorship, evaluating proposals and contracting out, evaluation o f test run o f l imited edition, and publishing the final copy. The actual book development would be contracted out (including authorship, illustration, design, layout and printing) to the private sector. This new business process will allow a leaner Board to oversee the development o f more creative, higher quality, relevant and up-to-date textbooks.

119. M o r e systematic impact evaluations will be undertaken to measure changes and improvement in student learning. While the examination system wil l provide information up to elementary level, the Government i s also committed to establish baselines to measure impact o f specific program interventions on student learning. For Grade X (matriculation) and Grade XI1 (intermediate) Board Examinations are conducted and are being monitored to assess the trends over time.

Pillar III: Improving Public Education Sector Governance and Management

120. Under this Pillar, the focus will be to: (i) improve the sector planning and policy development capacity o f the provincial education department and to realign i t s functions; (ii) strengthen capacity o f district education department; (iii) strengthen monitoring and evaluation to gauge the sector performance, and the impact o f program interventions on learning outcomes; and (iv) further enhance monitoring o f school performance by communities through School Councils.

Actions Taken to improve the capacities of the provincial and district education departments

121. Provincial Level: The Education Department has started to streamline the work through increased use o f computer technology to facilitate the integration o f the PMIU-developed management information systems into the department’s planning functions. The Planning Wing has begun to use the different databases and sources o f information available, including the PEC examination database, the National Education Census, and other datasets to undertake analysis and planning. The College Wing has been strengthened with the development and implementation o f a C M I S (Box 1).

42 The third round o f N E A S commenced in April 2007 with large scale testing for Grade VI11 in two subjects (Language and Maths), and p i l o t testing for Science and Social Studies.

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122. District Level: As a f i rs t step under the district capacity building program, the Government has started the process o f providing the necessary logistical and computer support to district education offices, and engaging professional training institutes to implement the phased capacity building. Once this capacity building i s fully underway, notification for the reorganization along functional lines that includes full j o b descriptions will be done. Under the functional reorganization o f the district education system, three new functional posts have been established. These are District Officer (DO) Finance & Planning; DO Monitoring & Human Resources; and DO Student Assessment and Teacher Training. The positions o f ED0 at the district level and Deputy DE0 at the tehsil levels remain. The Assistant Education Officer (AEO) Male and Female positions also remain at the markaz level. Orientation sessions for the district staff have been held to clarify their responsibilities, accountabilities, and decision-making authorities. The provincial Education Department i s also holding consultative dialogues with the newly organized district education cadre, including EDOs, on the specific areas that are in the purview o f the district management so they can be dealt with at the ~

district level and not referred to the provincial set up, leading to more efficient decision making and timely action.

123. A capacity building program for district education system has been approved and implementation has commenced. K e y components o f this program include logistical support (provision o f vehicles for mobility); technical support (computer and related IT support); and managerial support (including specialized training). Implementation o f the capacity building program i s being accompanied by re-orientation o f the staff, and in tandem with the review o f education management. The government has set up a Change Management team to review public sector management across the board. The Education Department i s engaged with this team to develop management and administrative reforms in the education sector in line with the emerging needs.

Medium Term Actions to improve provincial and district capacities

124. Whi le restructuring o f the Planning Wing o f the provincial education department has commenced, further restructuring will be aligned with the framework o f reforms. The Punjab education system i s a large system with over 65,000 institutions with over 500,000 staff. The Government recognizes that the system’s management and administration needs to be responsive to the growing needs and requirements placed on the system by the reform agenda. I t envisions a more efficient provincial Education Department with primary responsibility for planning, pol icy and monitoring and evaluation. The provincial Education Department will support districts in carrying out their functions along the new restructured lines.

125. The government i s also considering establishing an education management cadre, and will undertake extensive consultations with the stakeholders to develop consensus and to prepare a detailed need analysis plan for such management restructuring. This will include a review o f the existing arrangements for education management, including the system for inducting and selecting education managers, systems for HR structures, incentives, monitoring, accountability and training. Critical aspects to be reviewed including the establishment o f professional managerial and administrative cadres for Education sector including selection o f managers through a competency based system. This would be a significant shift f rom the current arrangement o f seniority based promotions o f teachers as managers. This review i s part o f the broader Change Management exercise, and will be implemented over the medium-term. Special care will be given from the onset to ensure that there i s a simultaneous review o f incentives and career paths for teachers so that the establishment o f a management cadre i s not at the expense o f the teaching cadre.

126. The phased capacity building program for the reorganized district education system will be fully implemented in al l districts. This will include provision o f necessary technical support to enable district staff to undertake more regular school supervision and to assess school performance based o n the developed monitoring tools.

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127. Special attention will be given to issues relating to female staff. Currently, ha l f o f the female DDEO posts in the province are vacant for a variety o f reasons attributed to lack o f mobility, security and transportation issues, lack o f management experience and expertise, among others. The Government will assess the reasons for restricted women’s participation in district education management through in-depth studies and consultations with female staff to help identify strategies for improving the conditions to enable the filling o f such vacant positions. These actions also support the Government strategy for addressing female mobi l i ty constraints.

Monitoring

128. Strong monitoring systems and data analyses have been instrumental in refining the programs and in shaping policies. While provincial level monitoring and information management systems have been developed and put into place, there i s an urgent need to strengthen monitoring systems and capacities at the district level. The monitoring system has included systematic third party monitoring and validation, which have assisted in assessing the implementation o f various program inputs.

Actions Taken to improve Monitoring

129. The district education teams have been supported by a monitoring system placed at the district level. This system consists o f a District Monitoring Officer (DMO), supported by a team o f mobile f ie ld monitors that visit schools to monitor implementation progress. Monitoring information provided by the field supervisors i s incorporated in the Composite Monitoring Index described below. At the provincial level, the M I S i s being strengthened to include private school data f rom the NEC in order to integrate full education sector information into one system. The results o f init ially Grade V and later Grade VI11 standardized examinations conducted by the Punjab Examination Commission have been merged with the M I S data to enable ready analysis o f district and school performance with other variables.

130. The Government has approved a composite peg5ormance monitoring index (see B o x 2) to measure and monitor district performance. It i s based o n twelve indicators derived from the main program interventions. The composite index i s based o n school/location-specific data based on the indicators l inked to the partnership agreements with districts. This index i s a dynamic performance monitoring instrument, and as the program evolves, i t will be strengthened to include other indicators, including for example examination results, as wel l as completion and transition rates. The f i rs t baselines o f performance were established in March 2006. A second set o f performance ranking has been completed in February 2007 and i s based on monitoring reports o f over 43,000 schools. This index i s being used at the provincial level to monitor performance on a monthly basis, It also provides ranlung o f districts in various indicators such as supervision, enrolment improvements, quality o f c iv i l works and reduction in teacher absenteeism. The province has begun to reward high performing districts with incentives and support weaker districts through additional technical support. Senior staff o f a l l districts have been provided orientation in the utility o f this monitoring index (see Box 3). The Chief Minister has also approved a special incentive program to reward district managers o f good performing districts.

131. At the district level, a l l M I S Cells and monitoring offices are being provided the necessary logistical and physical hardware support to build their monitoring capacity. All M I S cells have been linked online with the databases maintained with the provincial Education Department.

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Box 2: Monitoring District Performance The Composite Performance Monitoring Index

The Education Department has developed a composite index to assess districts’ performance against a set of indicators. There are twelve indicators on which the performance i s being assessed. Each o f these has been assigned a weight relative to the importance of that activity in the overall program and the amount of control a district actually has over performance in that indicator. Th is i s the first ever attempt to gauge districts’ performance, using ongoing monitoring systems. Monthly monitoring reports are being generated, and feedback to districts i s being provided. Using such information, a district government can identify areas where it needs to put more effort. The Government sees the Index as an evolving tool to monitor progress. Future indicators would include examination results, transition and completion rates. The indicators include: Indicator Weight Assigned -Increase in enrollment 8 -Students presence in school (attendance gap) 8 -Functionalizing of School Councils 8 -Missing facilities (pace of work) -Missing facilities (quality of work) -Free textbook distribution 9 -Stipend distribution 7 -Re-opening of non-functional schools 3 -Illegal feehevies being charged 5 -School inspections being done by district staff 5 -Teacher absenteeism 12 -School cleanliness 3 TOTAL 100

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Medium Term Actions for Monitoring

132. Technical improvements in the M I S will be undertaken to enable systematic capturing o f primary school data on completion and retention rates, including age and cohort specific data, as part o f improved techniques to measure outcomes. The Government wil l make more intensive efforts to widely disseminate information and analysis o n the program and outcomes. It will develop and implement strategies to gather more qualitative information f rom the primary stakeholders and communities o n their satisfaction levels with education service delivery (such as through citizen reporting kiosks and citizen report cards). The Third Party Validation (TPV) process will be maintained and improved.

Box 3: Mak ing Districts W o r k for the Schools: Moving towards Performance and Quality Monitoring

The government recognizes that providing districts training and logistics support alone will not be effective unless i t i s accompanied by the establishment of a systematic communication and reporting system at the district level. One of the strengths of PESRP at the provincial level has been the development of a strong MIS. The district education offices (specifically the District Officer [DO] Monitoring) are being fully linked to this database system. The DO Monitoring and their support staff in all districts are being provided training on MIS so that they are able to use this data and information to assess performance and issues in their respective districts. Their roles and responsibilities are being clarified vis a vis those of DMOs. Th is will enable putting in place a more systematic monitoring system, including a system to monitor and manage teacher absenteeism. Th is performance monitoring system will integrate the different emerging datasets, such as examination results, and human resource data, to enable the DO Monitoring to undertake comprehensive quality monitoring of schools. Such a system o f quality monitoring will ensure linkages among different components of the quality improvement efforts. Teacher training, for example, will be linked to output of examination results. Quality indicators have already been introduced in the TOPS to measure district performance (along with the composite monitoring index).

133. Whi le the monitoring through the DMOs and the Chief Minister’s inspection teams will continue as an external check, district education departments’ own systems and capacities will be improved and strengthened. Supervisory functions will need to be better managed, l inked closely to the new DO monitoring under the reorganized district education set up. This would also include a systematic way o f monitoring teacher absenteeism, linking the efforts o f the Chief Minister’s inspection teams and those o f the District Monitoring Officers with the district education department’s monitoring set up. The Composite Monitoring Index will be used by district education departments to

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assess school performance to provide necessary technical, teaching and materials support for lagging schools.

134. ImDact Evaluations: The administrative data (including f rom the school MIS, examinations, and composite monitoring) i s being used for conducting several detailed analyses by Government. The Bank has also analyzed the data to determine the impact o f the stipends program. In addition, a household survey-based evaluation o f the stipend program i s near completion. The survey has included questions to assess the impact o f other program interventions therefore the findings o f this evaluation will provide useful information on the overall impact o f the three-year program. In addition to the stipend evaluation which i s underway, impact evaluations o f SC capacity development program will commence in 2007. The Government i s also committed to evaluate the impact o f specific programs (such as examination and textbook reform, recruitment o f higher qualified teachers) on student learning outcomes. The DPC series will support these evaluations. Evaluation o f the public-private partnership models being implemented by PEF will be conducted with support f rom the Bank. The Government will also build i t s internal capacity to manage such evaluations.

Actions Taken to improve school management and to enhance monitoring of school performance by communities

135. A significant step has been the allocation o f recurrent budget for schools and the release o f this budget in SC accounts. Performance o f districts in this area i s also included in the TOPS and the composite monitoring index. In order to further encourage districts to make funds available in their budgets for SCs, the Government i s considering various incentives, including matching grants, to enhance funding for schools. The Government gave authority to SCs to undertake development work. Evidence o f such work undertaken though SCs has been positive.43 Apart f rom budgetary support to a l l SCs, an SC pi lot i s also under implementation, albeit after long delays. The pi lot i s being implemented in partnership with two Rural Support Programs in six districts to build the capacity o f 2,400 SCs. The Department has begun intensive monitoring o f this initiative to begin drawing lessons on how SCs are functioning. It i s using these lessons as wel l as reports f rom field v is i ts to refine i t s medium term strategy for social mobilization o f SCs in partnership with NGOs across Punjab’s schools. This strategy i s based on a set o f prerequisites for successful capacity building, and include: (a) capacity within the government and non government sector to undertake social mobilization; (b) ownership o f the program by local government and the education department; (c) an appreciation and understanding o f a process that i s slow and requires a change in the mindset o f a l l stakeholders; and (d) the capacity o f district governments to work with SCs. T o initiate the development o f such a strategy, the Government i s examining the modalities for phasing a capacity building program for a l l School Councils in the province.

Medium Term Actions

136. The Government will finalize i t s strategy for phased social mobilization o f SCs based o n the above elements. One o f the critical areas where a greater role o f SCs i s envisioned, and where SCs need the most capacity building, i s in identification, implementation, and supervision o f school c i v i l works, regardless o f who the implementing agency o f c iv i l works is. This i s also a strong recommendation that has emerged in the community consultations conducted by two NGOs in July 2006. Formal assignment o f responsibility to the SCs for overseeing teacher attendance will also help to build greater accountability o f the teacher to the community. T o take this beyond the routine training and capacity support, the Government will study options for strengthening SCs so that they are strongly mobilized as active community bodies capable o f managing school improvement functions. I t i s committed to build in further impact evaluation once SC mobilization programs are scaled up.

Report on performance o f School Councils’ in civil works program in Narowal District, 2006. 43

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137. The Government will provide school-based budgets to schools to be managed through School Councils. These budgets wil l ensure that they cater t o a l l school level needs, including materials for children, teacher support, and minor repairs. Incrementally, school-based budgets could also include development budgets and teacher salaries. This would init ially be provided to elementary schools in selected districts. The provision o f school-based budgets would enable schools and SCs to have the flexibil i ty and autonomy to make decisions that impact the school, including those that affect classroom quality.

138. Another aspect o f creating community ownership i s through better awareness and information dissemination. Whi le a widespread awareness campaign has been implemented using mass media to raise awareness about the Program, the campaign wil l be widened and deepened to reach key stakeholders at the local level. This will involve using various techniques that will engage teachers, parents, students, local education officials, and elected bodies and representatives, in partnership with local NGOs. T o ensure community input and continuous feedback, citizen reporting kiosks will also be established, init ially on a pi lot basis. Findings o f community consultations revealed that although there i s knowledge o f the overall program, information on various program components does not permeate down to the level below the district and tehsil tier - i.e., to the union council, and village level.

139. three year Program:

The following Results Framework table presents the baseline indicators and targets for the

Table 3: Indicators, Baseline and Targel Indicators

Education Allocations -Development Allocations -Recurrent Allocations District budgets show increase in education sector Primary completion rate in Government schools Public Enrollment Grade Katchi to X Female primary participation rates in Government schools as percent of total enrollment

Primary NER (M; F) / Primary GER (M; F) - % Elementary NER (M; F) / Elementary GER (M; F) - % Secondary NER (M; F) / Secondary GER (M; F) - % Rural Female Elementary I Secondary NER - % Out of school children at primary age Primary completion rate Increase in government financial support through PEF for private sector

Students enrolled in private schools, receiving government support (textbooks/fee subsidylstipends) District support and cluster centers functioning for teachers Percentage of teachers provided follow up and on-site support

Number of textbooks printed and published through open competitive process Textbooks coming for renewal under the new cumculum authored through open competition Parents/students provided examination results Low performing schools provided special support

Percent improvement in student examination results

Percent improvement in Punjab's assessment scores Improvement in matriculate pass percentage

Percent studentdparents reporting improved quality o f schools

Results Framework Baseline 2006

Rs. 64.7 billion Rs. I2 billion Rs.52 billion

61 percent 11.0m. Primary: 46% Elementary: 4 1 % Secondary: 46%

58 (60; 55) / 95 (100; 89) 20 (21; 19) / 49 (52; 45) 11 (12; 11) /45 (50; 39) 1417 40% 70% Rs. 500 m.

100,000

12 New activity

Textbooks for 4 classes New activity

New activity New activity

Baseline to be added after 2007 April exams

Maths - 404; Lang. - 382 62%

New activity

Target (2009)u 34% increase

75% districts 66 percent 3% annual increase Primary: 48% Elementary: 45% Secondary: 49%

66 (68; 64) I 100+ (both) 30 (35; 25) / 65 (70; 60) 15 (15; 14) / 60 (65; 55) 20 / 10 30% 80% Rs. 1.5 billion

3 50,000

35 85%

For all classes All

Al l

Target to be added after April 2007 exams

10% improvement 70%

At least 50%

~

44 These are targets for a three year period. Annual indicators and output targets are also agreed between the province and each district government as a part o f the Terms o f Partnership (TOP) agreements (See Annex 6 for sample TOP).

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Indicators Number of districts provided capacity building support District education staff selected and posted for new functional positions Al l transfers and postings in colleges done using CMIS HR database Reduction in teacher absenteeism

Improvement in student attendance

Monthly district ranking reports based on composite index shared with district leadership

Improvement in district performance in composite index after every 6 months School Councils functional Number o f SCs provided social mobilization support Number of middle and secondary schools provided school-based budgets Improvement in community satisfaction

Utilization of school-based budgets

# of districts engaging NGOs for SC mobilization

Baseline 2006 New activity New activity New activity Baseline from Composite Index Baseline from Composite Index To be established (qualitative study)

New activity 85% schools 2,400 in 6 districts New activity New activity

New activity

New activity

Target (2009)45 35 Al l 100% 50% reduction

50% improvement

Al l 35 districts, 12 reportdyear

30% districts every six months 100% 25% SCs in at least 12 districts At least 50% Surveys show at least 66% satisfaction

Al l schools provided budgets utilizing At least 12 districts

V. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM

LINK TO CAS

140. The proposed operation i s l inked to the Pakistan CAS approved by the Board in June 200646, and i s strongly aligned with i t s priorities which seek to accelerate progress in human development, focusing o n the poor and vulnerable. The three inter-linked and mutually reinforcing pillars o f the CAS correspond to the strategic priorities o f the PRSP: (i) sustaining growth and improving competitiveness; (ii) improving government effectiveness and service delivery; and (iii) improving l ives and protecting the vulnerable. Bank’s support to PESRP continues to be in line with these pillars, and this proposed operation i s central to improving delivery o f education services which i s a key objective o f the third pi l lar o f CAS. PESRP i s aligned to the achievement o f national goals highlighted in the CAS, including increased learning achievement o f primary students, reduction o f gender gaps, increase in literacy rate, and improvement o f post-primary access and quality.

COLLABORATION WITH THE IMF AND OTHER DEVELOPMENT PARTNERS

141. The Bank and the International Monetary Fund (IMF) hold ongoing consultations on Pakistan’s macroeconomic issues. After successful completion o f the last PRGF arrangement, Pakistan authorities have not sought a successor arrangement. Pakistan i s now on a yearly Article IV Consultations cycle. The last IMF Article N consultation mission was undertaken in August 2006. The final IMF review o f the PRGF arrangement in December 2004 was successfully completed, and the Pakistan Government has not since sought a successor arrangement. The IMF i s maintaining a regular dialogue with the Government o f Pakistan o n economic and financial developments and policies in the context o f the Fund’s normal consultations with member countries. The Bank continues to work closely with the IMF.

142. The Bank has active collaboration with donors at the national level through the Poverty Reduction Support Credit (PRSC) as well as through joint analytical work. At the provincial level, the ADB-supported PRMP i s continuing until FY08. This proposed credit i s in l ine with the fiduciary and fiscal reforms underway through ADB support. The ADB i s also supporting the

45 These are targets for a three year period. Annual indicators and output targets are also agreed between the province and each district government as a part o f the Terms o f Partnership (TOP) agreements (See Annex 6 for sample TOP). Pakistan Country Assistance Strategy FY06-09 (Report No. 3571 8-PAK). 46

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Devolved Social Services (DSS) Program, but the focus o f that i s o n health, as education i s being addressed through the IDA DPCs. UNICEF has been a partner in supporting analytical work and providing technical assistance to the Punjab Government in the area o f examinations to support the reforms under the PESRP framework. CIDA, through the Canada Debt Swap, i s supporting capacity building initiatives in education, including teacher professional development and district capacity building. GTZ i s also providing support for teacher professional development and textbook development reforms. Collaboration with DFID i s anticipated, including jo in t work in the area o f assessments and impact evaluations. Recent dialogue with DFID has been held on DFID’s proposed budget support to Punjab which would also cover the HD sectors. DFID i s l ikely to align i t s education sector support with the policy matrix under the DPC series.

143. These development partner programs are aligned to the government reform program, and are complementing the Bank’s support for the sector. The Government has managed technical assistance from development partners to support technical gaps in i t s programs on a need-basis. This has assisted in aligning donor programs to the Government program and has contributed to strengthening o f PESRP.

RELATIONSHIP TO OTHER BANK OPERATIONS

144. The proposed Credit i s closely linked to other development policy as well as investment operations in Pakistan. Valuable lessons have been learnt after completion o f the f irst education DPC series in the Punjab. These are helping in form the education and human development DPCs in Sindh and NWFP. These DPC operations reinforce benefits o f pursuing education sector reforms within a broader framework that encompasses fiscal, fiduciary and governance reforms. Further, there are close linkages with the DPLs for irrigation reforms in Punjab, especially as they both share the fiduciary and fiscal reform agenda. This operation i s also l inked to other efforts to improve the fiduciary environment, such as the Project to Improve Financial Reporting & Auditing (PIFRA). Finally i t complements the work at the federal level under the PRSC series.

LESSONS LEARNED

145. f rom the experience o f other operations in Pakistan. The key lessons include:

This operation benefits from the lessons learnt f rom the previous Punjab DPC series as wel l as

Strong leadership and political championship are critical for the success o f a reform program that involves such a large number o f institutions and stakeholders. A sector programmatic lending instrument based on a series o f annual single tranche disbursements i s effective when it also encompasses broader fiscal and fiduciary reforms. Policy based operations require intensive on-going policy dialogue and implementation reviews. Ownership and commitment beyond the sector l ine department helps to sustain the reforms. Alignment among the different stakeholders (at the provincial level) and between province and districts i s key for developing ownership and successful implementation. Availabil ity o f data based on a dynamic information management system i s essential for planning, implementation, and more importantly for refining the program. Analytical work, both past and ongoing, i s required to deepen policies and programs. Certain reforms require many institutional changes. These changes require building o f ownership o f a l l stakeholders involved, which can take more time than anticipated. Reforms that fundamentally change the status quo require appropriate phasing and sequencing. Team and leadership continuity i s a fundamental requirement to keep the program o n track.

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ANALYTICAL UNDERPINNINGS

146. As with past DPC operations in Punjab, this Credit continues to benefit f rom on-going analytical work. The Bank has also supported community consultations in several districts to assess communities’ perceptions about education service delivery and to gauge their views.

147. input for the Phase I1 reforms being supported under this proposed fourth credit.

The following table presents the direct interface o f several analytical reports which provided

Pakistan: Higher Education Policy Note An assessment of the Medium-Term Development Framework (June 28,2006)

Conditional Cash Transfer and Female Schooling: Impact of the Female School Stipend Program on Public School Enrollments in Punjab, Pakistan (2006) Learning and Educational Achievement in Punjab Schools (LEAPS) (2006)

Country Gender Assessment -Bridging the Gender Gap: Opportunities and Challenges (May 2005)

Devolution in Pakistan (September 2004)

Pakistan Public Expenditure Management Strategic Issues and Reform Agenda (January 2004) Review of Grade V and VI11 Examinations (February 2006), UNICEF Teacher Training Review for DSD (2006) GTZ Community Consultations in Punjab (2006)

Table 4: Analytical Underpinnings halytical Reports - Recommendations Urgent strategy i s required to bring colleges to a decent level of performance and to address the “missing link” in the education chain.

The results of this evaluation, using time series administrative school census data, suggest that the stipend program i s contributing to increasing female enrollment in public schools in Punjab.

Th is research project addresses the rising role and contribution of the private sector and points towards the need for public support for private education. I t shows evidence of better quality of learning in private schools. Recommends targeted interventions to rural girls in secondary schools including stipends; addressing female mobility issues, and impact evaluations of pilot interventions.

Increase fiscal autonomy and use of conditional transfers; Build capacity of local government officials. Benefit from the successful experiences of school committees

Increase public expenditures on education, and support fiduciary reforms.

Need for bringing uniformity in the examinations and improving the quality to test students against the competencies.

Suggests strategies for rolling out teacher training under DSD’s Continuous Professional Development Framework.

Two Punjab-based NGOs camed out community consultations in six districts across Punjab. Major findings included positive impact of missing infrastructure and free textbook provision on communities’ perceptions about improvements in education; need for strengthening School Councils; need for extending special incentivedsupport for girls to support transportation, and expand stipends to other groups.

Pillar 2

Pillar 2 and Prior Action 5

Pillar 2

Pillars 1 and 3 and Prior Action 2

Pillar 1 and Prior Action 1, 2 , 3 & 4

Pillar 2 and Prior Action 8

Pillar 2 and Prior Action 6

Pillars 2 and 3

VI. THE PROPOSED FOURTH PUNJAB EDUCATION DEVELOPMENT POLICY CREDIT (PEDPC IV)

OPERATION DESCRIPTION

148. The proposed operation will support the Punjab Education Sector Reform Program which i s now in i t s second phase. The objective o f the operation i s to provide continued financing for the Government’s medium-term sector reforms. It will assist the province in increasing access to and

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improving quality o f school education. I t will contribute to Pakistan’s goal o f moving closer to meeting the MDGs related to achievement o f universal primary enrollment, improvements in primary completion rates, and improvements in gender parity. This proposed credit will also contribute to improving student learning outcomes by focusing on quality o f teaching and school performance, and assisting the Government to put in place a comprehensive strategy for improving quality. It will assist the Government in establishing systems to undertake evaluations for measuring the impact o f the program interventions o n learning outcomes. It will also support the government’s medium-term program to carry forward fiscal and fiduciary reforms. The proposed Fourth Credit will support the agreed critical reforms and key pr ior actions. The choice o f prior actions i s closely aligned to the Government’s reform program. The pr ior actions will enable the reform program to stay on track, and for critical policies to be approved and implemented. The pr ior actions and their rationale and importance for the overall program i s presented below.

Pillar I: Enhancing Fiscal Sustainability and Improving the Fiduciary Environment

Fiscal Framework and Sector Financing

149. Prior Action One: Education budget for FY06-07 shows at least a 15 percent increase, with levels and composition aligned with sector strategy. Maintaining the right budget levels and the composition o f the budget i s an important action to ensure the balance between development expenditures and recurrent (both salary and non salary) expenditures. Punjab has maintained the priority for key interventions such as stipends, textbooks, funding for private schools, and for providing necessary salary budget for new teaching positions.

150. Prior Act ion Two: At least thirty Terms of Partnership (TOPS) agreements signed between the Province and the District Governments for FYO 7, with agreed annual performance indicators and targets, with conditional grants released to districts on the basis of need and performance. The instrument o f TOPS has been effective in strengthening district-provincial relationships, and in serving as a tangible monitoring instrument. With the deepening o f the performance weightage in the grants, it i s motivating districts to improve their performance against the agreed performance indicators. All 35 districts have signed the partnership agreements.

Fiduciary Environment

151. Prior Act ion Three: At least once monthly DAC/SDAC meetings held to review and settle advance audit paragraphs (backlog and arising) on Provincial Account No. 1 of the education sector, and progressive reduction (at least 10 percent) in outstanding audit paragraphs. The government’s program has strong actions on overall financial management reforms. This action seeks specific improvements in quality o f expenditures and expenditure management in the sector, init ially measured through timely resolution o f audit paragraphs, and later leading to a reduction in arising paragraphs.

152. Prior Act ion Four: Draft Law for the establishment of Provincial Procurement Regulatory Authority approved by the Chief Minister, and placed before the Governor for issuance as an Ordinance. This action carries forward the provincial procurement reform strategy which was approved by the Chief Minister under the Third Credit. I t enables faster progress on the reforms and paves the way for downstream actions like preparation o f necessary regulations, procedures and standard bidding documents. It will bring efficiency and transparency in procurement practices for a l l sectors including education.

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Pillar 11: Increasing Equitable Access and Improving the Quality & Relevance of Education

153. Prior Action Five: Approval of policy and implementation modality to scale up financial support and incentives to private schools. Under the previous credits, the government took concrete actions to strengthen the institutional framework, the Punjab Education Foundation, for supporting the private sector, and commenced public financing o f PEF supported programs. T h i s prior action will enable government to significantly scale up financial assistance and incentives to the private schools. I t also i s a key policy step for enabling government to move towards taking a full sector approach.

154. Prior Action Six: District Training Educators (DTEs) placed in 12 districts (through notijkation), to start on site support for teachers through the cluster based approach. New positions o f DTEs were created under the teachers’ Continuous Professional Development (CPD) Framework. Phased implementation o f the CPD has commenced, and these positions are central to the provision o f on-site support to teachers to enable them to improve their class room practices and content knowledge thereby leading to improved student learning.

155. Prior Action Seven: Textbooks for four classes printed and published through an open and competitive process. This reform i s removing the monopoly o f the Textbook Board and i s enabling the government to establish new business processes in the Board. This will also lead to improving the content o f new textbooks by opening authorship and book development to competition.

156. Prior Action Eight: Draft Act for the establishment of an autonomous Punjab Education Commission (PEC) approved by the Chief Minister and placed before the provincial cabinet for approval. The PEC i s the first such school level commission established in the country to enable the schools and stakeholders to evaluate student and school performance. Results o f the examination would be available at the district and school level thereby fostering healthy competition among schools and among districts. PEC would achieve i t s objective only if it remains a credible and independent organization therefore provision o f independence and autonomy i s central to this reform.

Reform Pillar 111: Improving Sector Governance

157. Prior Action Nine: District education teams’ capacity building program approved for all districts) by the provincial government, and implementation commenced. This i s a long pending issue as after devolution, the districts s t i l l lacked the necessary technical and managerial capacities. Strong district teams would assist in improving school and teacher performance thereby contributing to the objectives o f the Program.

158. Prior Action Ten: Composite Performance Monitoring Index, including for teacher absenteeism, approved and used for quarterly ranking of districts. A multi-indicator monitoring index has been developed to bring together data from various monitoring sources. This i s an important feature o f the program, initially used for monitoring district performance and i s now being used for assessing school by school performance against a range o f indicators, which would later include school performance in examinations. I t i s an important tool to measure changes and to assess performance o f both pubic and private schools.

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Reform Pillar 1: Enhancing Fiscal Sua Fiscal Framework and Sector Financing

Summary of Prior Actions for PEDPC I V inability and Improving the Fiduciary Environment

Approve education budget for 2006-07 shows at least a 15 percent increase, with levels

Fiduciary Reforms

Reform Pillar 11: Increase Equitable, Expand Access

Improve Quality

Reform Pillar 111: Improving Public E Education Sector Management and Governance

aid composition aligned with sector strategy At least 30 TOPS signed with districts for FY07, with agreed annual performance indicators and targets with conditional grants provided on the basis of a need and performance formula

At least once Monthly DAC/SDAC meetings held to review and settle ‘advance’ audit paragraphs backlog and arising) raised on the Provincial Account No. 1 of the Education Sector and demonstrate progressive reduction (at least 10 percent) in outstanding paragraphs Draft law for the establishment of Provincial Procurement Regulatory Authority approved by Chief Minister and placed before the Governor for its issuance as an Ordinance

cess to Education and Improve Quality and Relevance o f Education Approval of policy and implementation modality to scale up government financial support to private schools

District Training Educators placed in 12 districts through notification, and on site support for teachers started through cluster based approach Textbooks for four classes printed and published through open competitive process Draft Act for the establishment of an autonomous PEC approved by the Chief Minister and placed before the provincial Cabinet for approval.

ication Sector Governance and Management District education teams’ capacity building programs approved by the provincial government and implementation commenced Composite performance monitoring index, including for teacher absenteeism, approved with quarterly ranking of districts against performance indicators

160. The following are the proposed triggers for PEDPC V which i s expected to be presented for - - _ _ Board approval in FY08.

Reform Pillar 1: Enhancing Fiscal Sur Fiscal Framework and Sector Financing

Fiduciary Reforms

Reform Pillar 11: Increase Equitable Expand Access

Table 6: Proposed Triggers for PEDPC V . Proposed Triggers for PEDPC V

Approved education budget for 2007-08 shows at least 15 percent increase. At least 30 TOPS signed for FY08, with agreed annual performance indicators and targets including examination result. Conditional grants provided on the basis of a need and performance formula of conditional grants increased to 50 percent.

Review and Settle at least 20 percent of cumulative backlog of ‘advance’ audit paragraphs on the Provincial Account No. 1 - (Baseline: 32481 paras. as at April 15, 2006) of the Education Sector through regular (at least monthly) DAC/SDAC meetings by December 2007 Notify new Public Procurement Rules for goods, works and services, including an independent second tier appeals process

hability and Improving the Fiduciary Environment

:cess to Education and Improve Quality and Relevance of Education Delivery of enhanced financial support to private sector based on established criteria and Government financing enhanced to PEF

Improve Quality Approve policy to appoint head teachers in selected primary schools, based on enrollment and teacher strength A l l new textbooks coming up for renewal under new curriculum authored and developed through open competitive process, and in line with new business processes of a restructured Textbook Board School specific performance baselines established using Grade V and VI11 uniform examination conducted by PEC and school ranking at tehsil level made available to schools

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Proposed Triggers for PEDPC V Reform Pillar 111: Improving Public Education Sector Governance and Management Education Sector Management and Governance

I Finalization of revised HR policy, including career path and incentives for education . . managers and teachers Based on school ranking results, approval of policy to provide additional quality support to poor performing schools for improving student learning outcomes Partnership agreements signed with NGOs for social mobilization of School Councils and capacity building in additional districts that have provided budgets to SCs

161. Bank’s good practice guidelines for development policy operations. The box o n Good Practice Principles on Conditionality i s presented below.

The proposed Credit and i t s pr ior actions have been prepared within the fiamework o f the

Box 4. Good Practice Principles on Conditionality Principle 1: Reinforce Ownership The proposed operation supports the Government’s reform program which i s aligned with the Medium Term Development Framework, the Medium Term Budgetary Framework, and the provincial PRSP. It has wide ownership among key stakeholders at all levels of government and political leadership, and has been designed on the basis of consultations with primary stakeholders (communities) and involvement of district governments. There i s a track record of high level ownership and commitment that has been demonstrated throughout the f i rst three year program, and i s continuing. Bank support to the Government program takes into consideration the political economy of reform, as reflected in the sequencing of reforms (e.g., gradual and phased opening up textbook development to competition, and gradually extending support to the private sector).

Given the wide scope of the reform program, there are many areas that require analytical work. The Bank has worked closely with the Government (e.g., in textbook reforms, assessing impact of demand-side interventions such as stipends, putting in place a holistic teacher professional development framework) to support such work to help in policy development. More work i s planned under the proposed DPC series to support the phase I1 reforms (including on the private sector, college sector, review of education management systems, and evaluating student learning outcomes).

Principle 2: Agree up front with the government and otherfinancialpartners on a coordinated accountability framework The Policy Matrix of Reforms, based on Government’s overall program, provides the framework for coordinating support of all development partners. Specifically, support from CIDA and GTZ i s being provided for the government’s teacher professional development program, and UNICEF has targeted i t s assistance to the examination system. DFID, UK, i s also expected to support the same reform framework. The results framework i s derived from the Government Program, and i t would continue to coordinate donor support around the same set o f results.

Principle 3: Customize the accountability framework and modalities of Bank support to country circumstances The DPC supports the province’s sector, fiscal and fiduciary reform program. The DPC series have in the past benefited from Bank’s overall fiduciary work at the country level, and these areas continue to form key pillars under this second DPC series. These are also linked to Pakistan’s overall fiduciary reforms.

Principle 4: Choose only actions critical for achieving results as conditions for disbursement The program framework i s ambitious as the Government’s reform program i s fast-moving and undertaking reforms across the full sector. The criticality of the ten prior actions for meeting Program Objectives i s explained in paragraphs 149-158. The eleven proposed triggers for PEDPC V are all derived from the deepening reform program and are required for meeting the program outcomes.

Principle 5: Conduct transparent progress reviews conducive to predictable and performance-basedjhancial support Apart from formal missions, the program i s regularly reviewed by the Task Team through continuous dialogue with policy makers (department level, finance and planning, and senior administrative and political leadership), and through field visits. All these form a critical feature of Bank’s engagement. These are supported by Government’s own regular perfomnce and progress monitoring using strong monitoring instruments covering both inputs and outputs. This intense monitoring i s further strengthened by periodic third party evaluation exercises. These arrangements have contributed towards sustaining an open and transparent relationship thereby enabling both Government and Bank to address issues on an ongoing basis.

162. The proposed operation will continue support to an ongoing reform program which i s being deepened and carried forward by a government that has demonstrated its commitment, ownership, and a good track record. This operation has several inter-linked benefits:

a. It will maintain the reform and implementation momentum in Pakistan’s largest province and will assist the province to further improve i t s education indicators. Improvements in access and quality o f education will have a significant effect on the country’s overall indicators, and would assist Pakistan in progressing towards the MDGs. By continuing

44

and deepening the already successful programs, such as girls’ stipends and free textbooks, i t will continue to provide much needed support to poor and rural households.

b. Support for Phase I PESRP under the previous three credits has already yielded benefits to the province and to the country. The benefits o f this operation are also expected to extend beyond Punjab. PESRP has paved the way for similar reforms in other provinces o f the country. The successful experience with sector reforms, anchored in fiscal and fiduciary reforms has had an encouraging spill-over effect in the Sindh province and assisted the province in developing a similar framework. The instruments introduced under PESRP, such as the TOPS, are being replicated in the Sindh DPC and the NWFP HD DPC. As the program matures, further refinements would be brought in these. Experience and lessons learnt f rom this Program are expected to continue to have a country-wide impact.

c. It wil l provide support to the province’s fiscal reforms and i ts debt reduction strategy, and will assist in meeting the objectives o f the overall provincial reform program. It will also provide the basis for continuing the Bank’s ongoing dialogue o n the MTBF, especially in relation to education sector expenditures, and will deepen the Bank’s dialogue on financial management and procurement reforms.

d. It wil l deepen and continue to encourage donor harmonization in support o f PESRP. The program has already generated support f rom development partners, based on the priorities identified by the Government.

e. It will support the performance based conditional grants mechanism, and i t s refinements during the course o f implementation, thereby strengthening the decentralization process and resultant improvements in service delivery. This operation will initiate support to a full sector program covering a l l levels o f school education - from pre-primary to secondary education. The experience gained through this operation could provide valuable lessons for providing sector wide support in a phased manner in other provinces.

f.

VII. OPERATION IMPLEMENTATION

POVERTY AND SOCIAL IMPACTS

163. Policies and interventions to be supported by this proposed operation are pro-poor and promote gender equity. The program aims to create equitable access to education by providing incentives in those districts which have lower literacy rates, and aims to reduce gender disparities by focusing on elementary and secondary school girls. Findings o f community consultations conducted in six districts in the central and southern part o f Punjab show that the program i s considered to be pro-poor, and that incentives such as stipends are helping girls’ education. These are supported by the preliminary results o f the evaluation o f stipends. The program i s supporting communities in rural areas and in urban slums by providing direct financial support t o low-cost private sector institutions, and i s encouraging private sector to provide quality education in remote and rural areas at n o cost to the families. The program engages NGOs and other local partners to help make interventions more relevant and better reach the underserved communities. T o further support girls and female teachers, additional programs are being considered to address female transportation and security issues. It carries forward the PRSP objective o f improving human capital outcomes and in ensuring that benefits o f growth reach the rural poor. The operation i s l ikely to have significant impact on promoting gender equity and targeting the poor.

164. The program has been designed and continues to be shaped on the basis of extensive consultations with stakeholders and beneficiaries, including ongoing dialogue with local government officials, district education teams, and NGOs. The emphasis on SCs aims to enhance community and parental involvement in education, particularly to improve teacher and school management and enhance enrollments. NGO participation i s a major delivery mechanism for capacity building and social mobilization aspect o f the SC program. The program continues to benefit f rom on-

45

going engagement and consultations between the province and the district government officials, including education managers and teachers.

ENVIRONMENTAL ASPECTS 165. The program i s environmentally benign, and will not have significant effects on the environment, natural resources, or forests. In particular, the policies supported under the program will not lead to higher levels o f physical investment, and the TOPS include environmental guidelines. Should a need for new schools arise, land will be identified by the community and acquired through voluntary donation with adequate environment and social due diligence. The program envisages physical improvements through rehabilitation and provision o f additional or missing facilities but these will also be aligned with environmental safeguard standards. Environmental screening has been conducted and the environmental impact assessment i s included in the Policy Matr ix indicating the potential environmental impact.

166. A key environmental concern i s the need to ensure the provision o f safe drinking water at schools, and the provision and maintenance o f adequate sanitation. The program ensures that water supplied to schools will be tested annually, and that water supply schemes are located at a sufficient distance from toilets and septic tanks to prevent contamination o f drinking water. A revised pol icy for implementation o f c iv i l works to ensure better quality standards, including provision o f safe water and sanitation has been prepared.

IMPLEMENTATION, MONITORING AND EVALUATION

Implementation

167. The program i s being managed and implemented through the Provincial Education Department, and the District Education Departments. The Department’s School Wing i s responsible for specific aspects o f the program, while the PMIU i s responsible for overall program management and monitoring, and managing the delivery o f textbooks and stipends in collaboration with district governments. The district government’s are directly responsible for implementation and for ensuring progress towards the achievement o f Program targets, in accordance with the annual TOPS signed between the province and each district government. The Provincial PESRP Steering Committee, chaired by the Chief Secretary, has provided a critical leadership role for the Program. This forum provides the necessary policy approvals and guides the Program. These arrangements at provincial and district levels have performed reasonably well, and will be maintained in the coming years.

Monitoring

168. The PESRP monitoring system i s considered a flagship in Pakistan and has provided impetus not only to education sector programs in other provinces but to other sectors in Punjab as well. Strong monitoring arrangements and systems have been established at the provincial and district levels. The main elements o f the system are presented below.

169. School Management Information System (SMIS): At the provincial level, the PMIU o f the Department o f Education maintains a dynamic School Education Monitoring Information System (SMIS), under which bi-annual school censuses are conducted. In parallel to the October 2006 School Census, a comprehensive census o f existing human resource base was also conducted. The Government now has a comprehensive School MIS. The software enables ready access to and analysis o f data. The data has been placed in the Schools Wing o f the Department for regular use in planning, including human resource planning. This census data has also been transferred to the districts and will be regularly updated.

46

170. College Management Information System (C'IS): A CMIS has been developed and i s fully functioning and i s being used in the Colleges Wing o f the Department. The C M I S i s a comprehensive tool for planning human and physical resources o f the college sector and i s the f i r s t o f i t s kind in Pakistan. I t i s being used for posting and transfer decisions thereby making the process much more transparent. In a short period, i t has introduced a shift in the business process related to management o f human resources in the college sector. Refinements will be introduced based o n usage.

17 1. Program Monitoring System: In addition to these management information systems, ongoing monitoring i s conducted through a system which tracks sector expenditures, implementation progress o f specific inputs such as stipends and textbooks, and includes on-site school visits. The system allows the government to track every school and every stipend recipient.

172. District Level Monitoring: At the district level, two monitoring streams are under implementation. These are the office o f District Monitoring Officer (DMO) which includes the district EMIS functions, and the School Monitoring Wing which i s supported by the Monitoring and Evaluation Assistants (MEAs). The system i s designed to ensure that every school i s visited at least once a month by an MEA who completes a data entry sheet for each school. T h i s inspection tool i s designed not only to capture and update basic information for each school o n a monthly basis, but also to provide information for the composite performance monitoring index (see paragraph 174 below). The other monitoring stream at the district level i s that o f the ED0 Education, supported by DOs and AEOs. Given the capacity constraints o f the ED0 Education, the DMO monitoring system has been filling the gaps to intensively monitor program progress. However, with the capacity building o f district education system now under implementation, along with the reorganization o f this set up along functional lines (with specific responsibility assigned for monitoring under a DO Monitoring), the ED0 Education set up will gradually be strengthened to take on the regular monitoring currently being undertaken by the DMOs.

173. at the provincial and district levels. These provide quarterly reports on sector expenditures.

Expenditure Monitoring: The systems started three years ago are n o w wel l established both

174. Composite Performance Monitoring Index: The databases o f a l l these systems have been linked under Composite Performance Monitoring Index allowing for regular and rigorous analysis. The system i s now graduating f rom input monitoring towards performance monitoring, and eventually aiming to achieve outcome monitoring. This composite evaluation allows performance ranking (upto school level) against 12 indicators which quantify the performance and efficiency o f the schooling system in each district. The current l i s t o f indicators i s primarily composed o f input and process indicators. Due to absence o f reliable and standardized data, key quality indicators l ike drop-out rates and learning outcomes are not yet part o f the index. Performance in standardized examinations will be included after the next round o f examinations (see Box 2 for details). This will enable schools to assess their performance, and their position in relation to other schools. The information for the composite index i s collected through the monthly school monitoring v is i ts by the MEAs and where relevant, corroborated with existing databases. This enables monthly analysis o f district performance, and will serve as a tool for district governments to identify areas where they need to improve. I t i s already enabling the province to reward good performing districts and to provide support to poor performing districts to improve their performance.

175. Third Party Validations (TPVs): TPVs were instituted under the Program and have n o w been institutionalized. Based on the good experience with these external validations o f reform inputs, other sectors in the province and education programs in other provinces have also instituted similar mechanisms. The second round o f TPVs i s near completion to assess progress in the delivery o f textbooks and stipends. A TPV o n the procurement o f c iv i l works and furniture i s also underway. A TPV on the school census data will be regularly held f rom 2007 onwards. The quality o f TPVs will also be strengthened in the future by using non-traditional approaches o f engaging local NGOs to

47

assess various aspects o f reform implementation in partnership with district governments o n an ongoing basis.

176. Linkages with Federal Surveys and Censuses: Surveys carried out by the Federal Government, such as the PSLSMS and censuses such as the National Education Census (NEC) provide useful data, and are being incorporated in provincial data sets to enable more comprehensive analysis o f trends in key outcomes. The N E C data o n private schools i s being merged with the provincial M I S data sets to enable more comprehensive sector analyses.

177. Evaluations: At the time o f PESRP’s initiation, clear benchmarks for evaluating improvements in student learning were not available, and the systems required for measuring the impact on learning outcomes were not in place. Thus, evaluation i s an area requiring considerable strengthening, and will be undertaken in a more systematic manner with Bank’s assistance. An impact evaluation o f the girls’ stipend program i s underway, with the Bank’s assistance. This i s also expected to provide useful evaluation o f other program inputs such as textbooks. An evaluation o f the SC pi lot will commence in 2007 to determine the impact o n school and student performance in schools where NGOs were recruited to provide management and capacity support to SCs. In view o f the extensive inputs going in for quality improvements, impact evaluations will be undertaken to assess their impact o n student learning outcomes. These will be complemented by the analysis available through N E A S and PEC. The programs supported by the Punjab Education Foundation will also be evaluated so that further scaling up can be undertaken based o n results.

178. Improvements in Monitoring Systems: The monitoring system will continue to be strengthened. First, technical improvements in the M I S will enable a more systematic way o f capturing primary school data on completion and retention rates, including critical agekohort specific data, as part o f improved techniques to measure outcomes. The M I S will be strengthened to include private school data in order to integrate full education sector information into one system and update it regularly. The composite performance monitoring index will eventually be strengthened to include quality o f learning indicators to enable the province and districts to assess the performance o f schools. The composite index would enable the province to introduce and implement performance-based awards for good performing schools, teachers, and districts.

179. Website and Program Dissemination: The website for PESRP4’ has been put online. The website includes information o n various components o f the program and data on key indicators and the full school and college sector. Subsequently, i t will also provide member access to different levels o f education staff (managers, teachers) to allow “e-governance” to be introduced in the education sector. This includes information on vacant positions to facilitate transfer/postings, information to district government leadership o n where their district ranks against different indicators. It will later also include a userkitizen complaint mechanism, which i s an important step towards creating a culture o f citizen reporting.

FIDUCIARY ASPECTS

Financial Accountability Environment

180. CFAA Findings: The CFAA conducted in December 2003 revealed several weaknesses in data reliability, particularly below the federal level. It concluded, however, that the fiduciary r i s k to Bank funds and other donor funds managed through mainstream government systems in Pakistan i s minimal. It highlighted improvements in expenditure reporting and monitoring and concluded that development pol icy loans disbursed and managed through reliance o n government-own financial management systems have shown satisfactory outcomes. The assessment did, however, point towards

47 www.pesmedu.uk

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the requirement for a greater effort at building institutional and human resource capacity to support the transition to f i l l reliance on government systems, controls, and financial reporting. A number o f actions and initiatives are already being implemented to further strengthen the accountability process, and Punjab has taken the lead in this area. The key actions taken include the following: (i) the provincial government has commenced i t s own self-monitoring exercise in the area o f PFM reform progress and demonstrated a progressive commitment in this direction by including in i t s 2006/07 White Paper submitted to the Provincial Assembly, the specific P F M actions already taken as wel l as those being taken against the weak PFM performance indicators identified in the 2005 PFMA assessment; and (ii) the province has committed i t s e l f to completing the implementation o f the PIFRA related reforms in the budgeting, accounting, and financial reporting areas by September 2007 as compared to the original target date o f June 2009. These reforms are programmed to cover not only the provincial government but also al l 35 district governments o f the province. PIFRA i s the thrust o f the core PFM reform platform in the province as wel l as, overall, in Pakistan.

181. Punjab PFMA: The Finance Department carried out i t s own self-assessment report against the baseline indicator ratings in the P F M A o f April 2005 and reported the progress in the White Paper o f FY07. Since the 2005 P F M A assessment was carried out on the basis o f the pre-June 2005 final PEFA P F M Performance Measurement Indicators as approved by the PEFA members, the province has again requested a jo int donor team to update the Province’s P F M A in the light o f the approved PEFA framework o f June 2005. The jo in t donor (WB, ADB, DfID, and EC) assessment has started, and a draft PEFA report has been delivered to the provincial steering committee for review. At the same time, a detailed diagnostics o f the symptoms o f the weak performance areas as identified in the draft PEFA report i s being carried out. The preliminary output o f the PEFA assessment highlights that there have been improvements in the PFM performance o f the province in the budgeting, financial accounting, reporting and auditing areas but key weaknesses remain in the areas o f reliability and timeliness o f financial reports as wel l as the legislative oversight particularly at the levels o f the district governments. The next step will be for the Punjab Government to steer the preparation o f i t s own PFM reform strategy and, in concert with the donor partners, implement those strategies for further enhancement o f the PFM reform progress in the province. With the province taking the ownership o f i t s own reform agenda, the PFM environment in the province i s increasingly becoming stronger and the overall fiduciary risk shows clearer signs o f mitigation.

182. The Provincial Finance Department has responded to the need to improve financial management at the district level and in al l provincial departments by recruitment o f qualified finance and accounting staff, many o f whom are to be located in the districts. Progress in effective implementation has been marred with administrative bottlenecks which s t i l l need to be managed. Recruitment o f internal audit staff at the district level needs to be accomplished o n a fast track. The Education Department has also developed internal audit and control functions through the PMIU which, in addition to program monitoring and evaluation, i s overseeing the implementation o f need- based capacity programs at the district level. The PMIU continues to monitor the financial management o f the education sector o n a monthly basis.

183. Foreign Exchange Control Environment: An IMF Safeguards Assessment o f the State Bank o f Palustan (SBP) was conducted in 2001. I t highlighted significant vulnerabilities at the SBP particularly as relating to i t s financial statements and disclosure policies which fel l short o f acceptable Central Bank standards. However, since a program o f reform has been agreed with the IMF and i s being implemented, the r isks associated with foreign exchange management control have been mitigated. The State Bank o f Pakistan has transitioned to producing financial statements which accord with international accounting standards and formats. An independent review o f the SBP’s internal audit function, as recommended by the Safeguards Assessment, has been completed and recommendations implemented. The SBP has also established a formal process o f reconciling data reported to the Fund as wel l as implemented guidelines to prohibit operations that pledge or encumber reserves, or place restrictions on, or otherwise impair the availability o f foreign exchange reserves

49

outside an authorized framework. The SBP’s Ac t has been accordingly amended to strengthen and guarantee i t s independence and autonomy in the management o f reserves as required under the Safeguards Assessment.

Procurement Reforms

184. be completed within the next two years:

The Chief Minister has approved a procurement strategy that addresses the following areas to

Creation o f a central body to develop and guide the implementation an operation o f a new procurement framework which should include rules, regulations, procedures and standard bidding documents. Identification o f key stakeholders and including them in the consultative process to ensure strong buy-in from c i v i l services, private sector and c iv i l society organizations. Develop a procurement monitoring system to collect, analyze and disseminate procurement related data within government and to the public, which will include web based procurement notices, and notices o f award o f a l l GoPunjab contracts. Development o f a complaint handling mechanism. Prepare training and capacity building programs for individuals involved in procurement based on international best practice. Create benchmarks and conduct a baseline study on current status o f procurement and to establish key performance indicators.

0

0

0

Future Actions/Risks

Overall Fiduciary Environment

185. PIFRA remains the core reform platform in the area o f P F M in the province. The province’s commitment to reform i s already in place as exemplified by the necessary actions taken, particularly pertaining to the high-level implementation support for this country-wide PFM project. With the implementation o f the reform measures in the financial management and procurement areas already o n course in the province, and arising f rom the mitigated r isks associated with the manner in which the SBP manages the country’s foreign exchange reserves, the overall fiduciary risk associated with this new program series i s ‘modest.’ However, with the P F M reforms having been satisfactorily implemented within the education sector over the last program series, the sector-related residual r i sks continue to be ‘low. ’

DISBURSEMENT AND FIDUCIARY ASSURANCE

186. Borrower and Credit Agreement. This proposed Credit, l ike the ones in the f i rs t series, would be made to the Islamic Republic o f Pakistan, represented by the Federal Ministry o f Finance. The Credit proceeds would be transferred by the Federal Government to the Government o f Punjab under the terms and conditions consistent with the Government o f Pakistan’s on-lending policy.

187. Funds flow arrangements for the Credit are as follows: The Government o f Pakistan shall identify a Foreign Exchange Deposit Account with the State Bank o f Pakistan (SBP) into which the proceeds o f the Credit will be disbursed o n a single tranche basis upon Credit effectiveness. The Rupees equivalent o f the funds in the Account will, within two working days, be transferred into the Consolidated Fund o f the Government o f Punjab (Account No. 1 - Non-food) held with the SBP.

188. Disbursements. Disbursements f rom the Consolidated Account No. 1 (Non-food) by the Government o f Punjab will not be tied to any specific purchase and n o special procurement requirement will be needed. The proceeds o f the Credit will not be applied to finance Excluded

50

Expenditures as defined in the Schedule o f the Financing Agreement. If any portion o f the Credit i s used to finance excluded expenditures as defined in the Schedule o f the Financing Agreement, IDA will require the Government to promptly, upon notice f rom IDA, refund an amount equal to the amount o f the said payment to IDA. Amounts refunded to IDA upon such request shall be cancelled f rom the Credit.

Table 7: Risks / Risks

A major risk is the loss o f credibility and public support if the government cannot keep pace with expectations and fails to perform on quality side.

There are moderate r isks related to macroeconomic management. Although the policy stance o f the government has remained appropriate, inflationary pressures, and external trade deficit indicate significant excess liquidity in the economy, and call for resolute actions to contain money supply and improve export competitiveness. The program has been started by one political government and has become i t s flagship program. A different political government may not give it the same attention due to i t s association with another government or due to shifting polit ical priorities. Change o f status quo through deeper sector reforms could affect several interest groups. There i s always an inherent risk o f backtracking if the system is not able to sustain reforms due to external pressures.

Weak district capacity continues to be a risk. The range o f ongoing and new interventions are l ikely to hrther burden the capacity at district level and below.

189. Accounting and Assurance Requirements for the Credit. There will be n o special fiduciary arrangements for this Credit as the overall fiduciary r i s k i s modest. However, within 45 days o f disbursement o f the Credit by IDA, the Finance Secretary o f the Province will provide a written confirmation to IDA certifying the receipt o f the Rupees equivalent o f the Credit into the Consolidated Fund Account o f the Government o f Punjab, the number o f the account, the date o f the receipt, and the exchange rate applied to translate the Credit currency into Rupees.

Mitigation Stratepy Mitigation Strategy

The government remains strongly committed and i t s track record has shown its ability to maintain momentum. Institutional changes for quality improvements were initiated in Phase I. These are expected to influence classroom learning.

Government i s committed to take necessary steps to ensure macroeconomic stability. T h e SBP has already taken steps to tighten money supply.

T h i s risk i s present for a l l large, high profile programs. The risk mitigating measure is that public pressure w i l l ensure that subsequent governments continue to maintain the program

W h i l e backtracking has not happened during the past three years, the possibility cannot be ruled out. However, several key policies have already been taken and implemented for important reforms and i t i s anticipated that it would not be easy to ro l l back.

Capacity support to districts a major part o f the Phase I1 program. A comprehensive program has been approved by the provincial government and implementation i s commencing.

R I S K S AND R I S K MITIGATION

190. The Reform Program and the proposed operation face several key risks. The following table provides a description o f these risks, and mitigation measures. The Program supported by this proposed credit has demonstrated a good track record in both performance and government commitment. This reduces the risks. However, successful programs also raise the profile, raise much higher public expectations, and concurrently raise r isks as well.

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Risks

Institutionalization o f reforms and/or change o f direction remains a risk especially if political priorities change.

Mitigation Strategy

The mitigating measure against this risk i s public pressure to maintain the reform direction and to mainstream i t within the system.

Overall Risk Rating: Moderate

Sudden changes in provincial reform leadership and program management could disrupt overall implementation.

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Leadership and management continuity has been important in sustaining the program. The risk remains. T h e key mitigating measure i s that the program and its interventions are taking root in the system. T h i s would ensure that the current and successive governments continue to provide quality leadership and

ANNEXES

Annex 1: Letter of Sector Development Policy

(to be inserted)

ANNEX-I ..

No. 8(2)1OA-IUO4 ECONOMIC A F F A W DNISIO3

\l'l H I I \H\

SUBJECT:

Dear &. )r 6 /(6-

LEllER OF SECTOR DEVELOP MEW POLICY

/ I am pleased to enclose Sector Development Policy letter dated

31" March, 2007 from the Government of Punjab, addressed to Economic Affairs Division regarding Fourth Punjab Education Development Policy Credit (PEDPC IV). The policy development letter delineates the broad and comprehensive reform agenda, through which the Government of Punjab proposes to strengthen and consolidate its Education Sector Reforms Program. The. Punjab Education Sector Reform Program (PESRP) is a multi-year program (2006-07 to 2008-09) ot IDA assistance which will further deepen the existing reform agenda for achiwing high premium.

7 he Government of Pakistan supports this continued initiative and reccjmrnends the proposal for a second series of three annual credits of PESRP (2007-09) for consideration of the International Development Association.

b With regards,

4 Y o i m sincerely,

Mr. Paul Wolfowitz, President, The World Bank, Washington 0.C - 20433, 'J S A.

(M. Akram Mall 4i

No. P30 b c HIP9 bld 3/2+/tq b GOVERNMENT OF THE PUNJAB

PLANNING & DEVELOPMENT DEPARTMENT

Dated Lahore Mcuih 3/ 2007.

blr. M. Akram Malik, Secretary, Economic Affairs Division, Government of Pakistan, Islamabad

SUBJECT: LE?TER OF SECTOR DWLOPMENT POLICY

As you know, Government of the Punjab embarked upon a comprehensive reform

agenda in the education sector in 2003. The distinguishing feature of the initiative was doing

away with the piecemeal project mode approach, and adoption of a holistic and comprehensive

sector wide approach which aimed at improving access to, governance and quality of education.

The Punjab Education Sector Reforms Programme (PESRP) has since then completed i t s Phase-I

(2003-06) quite successfully in which access gap was bridged to a great extent. Keeping in view

the positive outcome o f the Programme, the Government has converted PESRP in to a multi-year

programme whose Phase II (2006-07 to 2008-09) has since been. initiated. Punjab Education

Sector Reforms Program (PESRP) continues to enjoy the commitment of Government of the

Punjab at: the highest institutional and political level. Needless to say that the successes under

PESRP Phase-I were critically underwritten by such institutional and political support. The

Reform Program Steering Committee has been instrumental in guiding PESRP, and continues to

guide the reform program. We have been successful in sequencing the reforms and their

lmplementation in accordance with the laid out objectives. I am confident that institutional

mechanism put in place in Phase i of PESRP to make i t a success shall stay the course through

the ?'Id Phase of PESRP (2006-07 to 2008-09).

-. I

commitment or thit Governmen[ for educacion sector reforms in the province of the Punjab, and

appreciate our performance as demcinstrated during the past three years. In recognition of the

\ieady progress uiicicr t h e Program. tlir U'orld Bank has also agreed to continue i t s support for

Development partners continue to recognize and acknowledge the continued

i’hdSe ii uiidsr a second senes o f three aiinual IDA credits. We welcome t h i s move as the World.

Bank’s SU~FOIT has assisted us in developing deeper reforms to improve the performance of

education ir, the province.

3. In ihis letter, I would like to highlight for you the major achievements of PESRP,

m d prebent the focus o f PESRP Phase I 1 followed by a summary of actions already undertaken

during Year I o f the second phase.

4. The achievements o f PESRP may be viewed both in terms of si&cant

improvements in quantitative indicators and, more importantly, several sigruficant policy and

institutional changes in order to br ing about improvement in quality of education. These

Adherence to our commitment towards medium-term budgetary framework

targets as per which education sector financing has been progressively enhanced.

Education budget for the current fiscal year i s 43% higher than the one for FY

2004-05,

Introduction o f need and performance based conditional grants for districts under

the framework of Terms of Partnership agreements. This modality was

systematically introduced for the f i rst time under PESRP in 2003. It has been

steadily implemented and strengthened during Phase I.

Increase in public sector enrollment from Class Katchi t i l l Matr ic h o r n 8.8 million

in 2003-04 to more than 11 million in 2006-07.

Movement towards the goal of achieving gender parity in enrollment. Girls now

account for 45.2% of total enrollment in government schools (up from 43.1% at

the s ta r t o f PESRP in 2003). It i s expected that Punjab would achieve the

demographic gender parity of 49% girls’ enrolment by 2012.

Ektablishment of an elaborate monitoring regime to improve governance and

efficiency including introduction of a culture of regular th i rd party validation.

Bringing in m e r i t and transparency in teacher recruitment through

impiemrntation o f a w \ v recruitment policy under which over 50,000 teachers

stand recruited and posted t o schools on the basis o f school-specific needs. This

has also helped us in opening schools which were closed due to lack of teachers.

Inrroduction of reforms in the procurement and financial management areas t o

improve quality and transparency of the fiduciary environment, which would also

irnprvve expenditures in the education sector. These are resulting in a progressive

reduction in the backlog o f outstanding audit observations, and significant

improvement in expenditure tracking of the education sector. Procurement has

now become more transparent with the removal of requirement of pre-

registration of contractors, development of streamlined standard procurement

guidelines for stores purchases, and the approval o f a procurement strategy.

Laying the foundations for long t e r m quality improvements with:

v i i )

v i i i )

a) introduction of textbook reforms by gradually opening up o f textbook

development, printing and publication to competition:

b j adoption of a holistic approach towards teachers' professional

development including a continuous development framework:

improving school level examinations by implementing a uniform &

forward looking examination system for Class 5 and Class 8 under the

Punjab Examination Commission.

c )

viii) Implementation of a pilot for capacity building o f 2400 School Councils in s i x

districts in partnership with Rural Support Programmes. In addition to that the

district governments have been encouraged to provide funds to School Councils

for meeting schools' running costs and canylng out minor c iv i l works. An

enabling environment has been created for the School Councils 'by enhancing

the i r threshold of aiuiual expenditure upto Rs. 400,000, and declaring their

expenditure out of' the purview of Punjab Financial Rules.

Kestructuring of the Punjab Education Foundation to plan and implement

initiatives to SUPPOK low cost private schools.

Despite the initial Y U C C ~ S S ~ S in the Phase-I in terms o f enrolment increases,

de\ elopmsnt and implementation of institutional processes and significantly

higher level of finmcin:, for the sector, the Government o f the Punjab is

cognizant o f t h e l'act that there remain huge real challenges in education sector to

LY !

S)

be addressed in Phase-I1 of the reform programs. Such challenges particularly

revolve around quality of learning (the eventual outcome of any successful

sectoral reform program in education) and include but are n o t l imi ted to the

capacity gaps at the district level, leadership absence at t he school level and

motivation and performance o f teachers - the ult imate deliverers of the type and

kind and the level of qual i ty of education. This i s manifested in l o w quality of

student learning. Additionally, there i s s t i l l a large unfinished agenda o n the

access side. Participation rates are low, with ru ra l areas lagging behind in

particular. In government schools, almost a quarter of the ch i ldren that enter

school (Katchi) drop out before Class I, and primary complet ion rates are on ly

about 60%. Overall, about 40% of Punjab's primary school-aged children are out

of school. Support for teachers for making classrooms m o r e effective remains

weak, district education capacity requires strengthening and School Councils are

s t i l l not fully mobil ized to play an active role in improving the school

environment.

5 . Bui ld ing upon the in i t ia l achievements and successes, and cognizant o f the

remaining challenges, the Punjab Government i s embarking upon PESRP Phase I1 with a

commitment to continue and further deepen the existing reforms that are fetchmg h i g h

premium. The PESRP Phase I1 priorit ies are rooted in th iee pillars:

(a)

(bj

(c)

Enhancing fiscal sustainability and improv ing f iduciary environment;

Increasing equitable access to education and improving. quality and relevance of education; Improv ing public education sector governance and management.

6.

1

These priorit ies include:

F u n h e r sustaining and improving the fiscal sustainability of the education

re forms. Due to prudential fiscal management a t the prov inc ia l level over last

dccaue or so, Punjab Gcnernnic'nt. despite some rise in provlncial fiscal deficit, i s

o n f ' i c l r r i t that thr huge reform agenda of t h e Government is fiscally sustainable in

11.

111.

viea. nt the visible increases in provincial revenue @I 15% per annum over las t five

>.cars and Federal Covemrnmt's consistent record o f more than meeting o f revenue

targers and thus enabling provincial governments to get increasing share out o f the

federal consolidated fund. I t may be pointed out that fiscal deficit i s below 1% of

GDP and there has been an overall decline in provincial debt as a percentage of

provincial GDP from 7.Wo to 5.4%. The debt to GDP ratio i s expected to decline

further in future. To build sectoral confidence in sustained fiscal outlays, Punjab

Government has already instituted Medium Term Budgetary Framework and

Medium Term Developinent Framework. Draft MTBF 2007-08 / 2009-10 has been

formulated to ensure sustainability of core reform programs of the Government,

and will be approved before the start of the new fiscal year.

Continuing with the reforms in the fiduciary aspects (Le., frnancial

management and procurement). In order to improve fiduciary environment o f the

province, Punjab Government i s firmly committed to an agenda o f fiscal and

procurement reforms. To enable transparency and efficiency, a Procurement Law to

establish an autonomous procurement regulatory authority with the mandate to

review existing procurement processes 'is wel l o n its way of promulgation. Coupled

w i th Provincial Government's reforms on fiduciary side, Federal Govemment-

sponsored Project for Improved Financial Reporting and Auditing (PIFFU) will

enable the provincial and district managers to monitor and adjust budgetary

expenditures on real time basis. A t the education sector level, t imely expenditure

monitoring and reporting i s now a regular feature of the program. T h e Education

Department i s also committed to improving expenditure management and is

regularly convening meetings to review and resolve outstanding audit paragraphs. .-

Responding to the remaining unfinished agenda on the access side. Although

~ v e have seen a respectable increase in public sector enrollments, we are aware of

t h e r i i d e n c e tha t children continue to drop out of sci~ools. This i s particularly

disrurbing, but i iut surprising. between Class Katchi and Class I, where the

i o i d i r i o n s lor young children are so discouraging that t h e public system fails to

r m i i l children i n S C ~ O O I S 'I'here i s further hemorrhaging throughout the primary

cycle, ~nustly af'rer Class IV, so primary completion rates are less than optimal. Our

own data shows that almost 309'0 of children that enter primary school do not

complete it. Supply side issues will continue to be addressed (particularly through

need based teachers recruitment and funher provisioning of infrastructure facilities

LO schools), and will be supplemented by demand based interventions like provision

of free textbooks and possibly more incentives for girls and rural areas. The access

agenda i s even more challenging at the elementary and secondary levels with low

levels of supply compounded by constraints l ike large distances, inadequate

transponation facilities and insufficient teaching staf f , etc. All of these will

continue to be addressed.

W-hilc che focus o f the Phase-I of PESRP was primari ly on elementary education,

Phase I1 is covering the entire school sector, up to Grade X. W e are confident that

t h i s w i l l help in progressively improving participation rates from primary, to

elementary t o secondary education levels,

An important cornerst~ne of the access agenda i s harnessing the potential of an

already vibrant private sector. In recognition of the commendable role that the

private sector has played in providing schooling opportunity, with a 40% share of

total enrollments, the Punjab Government i s committed t o facilitate t h i s sector to

cover the access gap. The Provincial Government i s already supporting the low Cost

private sector through the Punjab Education Foundation (PEF) by picking UP

student fee and ensuring minimum acceptable learning standards. We not O ~ Y

i i i tei id to continue that ~~pp01-t but we have taken the policy decision to provide

sustained support to private schools. W e are significantly enhancing budgetary

allocation to scale up f inanc ia l assistance for l ow cost private schools, which will

also include quality assurance parameters. The government i s fully committed to

provide this support through the PEF.

\?.bile strivuig to move Funjab towards completion of the schooling cycle, we are

nut Ios i~ ip sight of college education where expansion o f students' subjects choice,

cmsaring college teachers' availability and improvement o f overall physical, human,

~ n r i iiidiiageridl d i r n e n s i ~ i ~ i s af public sector colleges i s on the cards. Init ial

Y

Aagnostics for improving the quality of college sector have been completed, and a

comprehensive Colleges Management Information System that includes full human

resource data i s now functional. These types o f improvements are enabling u s to

i inprove the governance, management and quality of college sector. We believe

that, t h i s i s essential for providing an opportunity for Punjab's high school graduates

to pursue options for their future careers.

We have put in place stronger institutions for improving and measuring

quality of education. Teachers' are being provided training and ongoing support

under the Continuous Professional Development (CPD) Framework; the Punjab

textbook Board i s undergoing a reform of i t s business processes; a new institution,

the Punjab Examination Commission, has been established to conduct uniform

examinations for Grade V and Grade VI11 students; and the Provincial Education

Assessment system i s h l l y functional. We have also begun work o n additional

initiatives to improve t he learning environment in schools including focusing on

pre-primary classes; provision of head teachers to primary schools; providing

teachers' guides and supplementary materials to students; and school based budgets

to primary elementary schools. W e are now committed to br ing together al l t h e

elements that affecr quality to ensure that these translate into an improved learning

environment where the student i s given adequate attention, provided better

textbooks and materials and where the teachers are trained and supported in using

their acquired sk i l l s . We hope that the revamped school examination system wil l

help us establish baselines on learning and also help gauge changes in students'

learning levels. The information will be shared with schools, parencs and

communities to encourage a sense o f competition and motivation for improvement.

'The analysis generated chough the examination results w i l l also enable us to

identify low performing schools so that special supporr can be provided to help

them improve :heir peribtmance. Al l o f these elements for improving quality are

now being examined to fonn a framework and coherent strategy for quality

improvement. LVc. are , iwa r i ' t l i a t this is the most challenging and difficult task of

~ r i ' . educat ion system. I\. t! ;\re committed to learn from both global and regional g 7

: <perir i iccs as w e begin ta systematically coordinate al l inputs in order to improve

the iearning environment at the classroom level, and ultimately student learning

outcomes.

V. Improving monitoring and management for better service delivery. The

vibrant and automated school monitoring system established at the provincial level

by the Program Monitoring and Implementation Unit (PMIU) has now been

transferred to t h e district level. A comprehensive field monitoring mechanism has

been put in place at the district level whereby every government school o f the

province i s inspected atleast once a month. The monitoring results are digitized and

fed into a Composite Monitoring Index whereby performance of each school may

be aggregated to assess performance of tehsils and districts. This instrument is now

being used to reward better performing districts. On the management side, the

Punjab Government is undertaking a change management exercise for all sectors,

and we recognize that the education sector i s ready and willing to undergo a

comprehensive shift in how the sector should be managed. In order to bring

efficiency and quality into education service delivery, we plan to strengthen the

management by moving cowards creation o f an education management cadre along

professional service lines, inchding introducing reviewing the career structures for

teachers. Punjab Government has already approved an elaborate capacity building

project for district educational managers, which aims to address their managerial,

technicai and logistical deficiencies. Already, dam systems and databases

established by the Program Monitoring and Implementation Unit are being

transferred to t h e district level, and a system for t h e HR management of schools i s

being finalized and placed with the Education Department to allow for better

planning and management of human resources in the sector.

V l 4n important part of governance and monitoring is increasing the

i nvo lvement of communities in school management. We are committed to

:rrengthen t h e capdcn\, of School Councils by adopting a long term social

I i iobil iLation approach t;l give communities a more meaningful stake in schools.

v i

" h i s process wi l l require deep engagement w i th NGOs, whose parameters are being

tinalized. A pilot prograinme to provide support to School Councils i s already under

implementation In collaboration w i th the Rural Support Programs.

Monitoring & Evaluation forms an important part of our programme. We

have instituted regular independent thrd party validations to assess the quality and

delivery o f various inputs under the program such as free textbooks, stipends, and

provision of school Facilities. We are also committed to rigorously evaluating the

impact o f the program and i t s specific interventions o n the quality of education and

on student lcarning.

c I . Several important actions taken on the above stated priorities are as follows:

i ) The cducation budget for FY 2006-07 has been increased by over 21% over the

previous year. The budget i s fully aligned with the programme objectives and i s

assisting both the provincial and district governments in achieving the objectives.

'I'erms of Partnership Agreements have been signed with all 35 d i s t r i c ~ with agreed

performance indicators and targets, and the conditional grants have been transferred

to the districts on the basis of need-cum-performance formula.

Monthly District Accounts Committee meetings are being regularly held to review

and settle audit paragraphs (both backlog and arising), wh ich has led to at least over

1dVo reduction in outstanding paras.

:\ law for the establishment of a Provincial Procurement Regulatory Authority i s in

thc process of approval by the Cabinet, and shall be placed before t h e provincial

legislature for enactment in near future. This wil l go a long way in bringing us closer

tc~ward:~ adopting international best practices in our procurement ru les and

rr gu la~ i c) ns.

C'. e ha\.,tl t aken a policy- decision for scaling up financial support and provision of

special incentives to private schools. Modalities of i t s implementation are being

t i i d l z e l i in consultation with relevant partners including the Punjab Education

ii)

iii)

iv j

V )

i,'trundJtion (PEF;i. T h i s demonstrates that t h e Government i s fully committed to

providc 2s much support as possible to a l l segments of the population.

On sitc support for teachers has been initiated by placing District Teacher Educators

(1)'I'Es) in twelve distr icts o f the province. This will help sustain the gains of teachers'

training that was imparted to over 60,000 teachers in the last year. DTEs in the

remaining 23 districts shall be recruited and trained in the next financial year.

'['extbook reforms are continuing with textbooks of four classes being printed and

published through open competitive process this year. Furthermore, new textbook

wil l be developed and authored under new business processes t o ensure both quality

and competition.

The Punjab Examination Commission (PEC) i s being granted autonomy, and the draft

PEC Act would soon be approved by the Cabinet for placement before the provincial

legislature. The Cornmission i s being provided with full staffing support SO that it can

perform i t s functions as per i t s mandate. Preparations for the next round of annual

school examinations staring in May 2007 are well advanced.

h capacity building project for district education teams has been approved and its

implementation shall soon be commenced in partnership with professional training

institutes. W e recognize chat professionally trained education managers are essential

for managing and monitoring education service delivery,

A composite performance monitoring index to evaluate district performance has

already been approved and i s under implementation. The index brings together

relevant indicators, including for teacher absenteeism, and from next year will also

include the resul ts of the examinations. For the f i r s t time, w e are able to readily

assess performance of each district and tahsil. We are committed to help the lagging

geographic areas, and lagging schools with additional support.

Beta version o f a highly interactive, third generation website of PESW has been

launched (www.pesrp.edu.pk) that allows the visitors to drill in to PMIU's databases

:2003 to 2006), and seek results of complex queries. The website provides full

iriturmation on a l l aspects of t.he education sector

vi)

v i i j

viii)

Lu)

x)

?Ci)

\ In addition to the key policy actions stated above, we plan t o undertake several

i;iip~rt:ii-,i siuJic's lor evaluating various program interventions, building bridges with t e c h c a l

edl.icatioil s L w i i i i di:d developing our educational assessment system on international standards.

b e v i w cvi'r? buch activi ty to be an integral part of the overal l education sector reform

prugrani

4 I;inally, I assure you of the Government of Punjab's continuing commitment at

t h e lughe3t h e 1 We have 3 well-aligned team in the province w h i c h shares a common vision

tor the future of Punjab - a literate, well-skilled, and dynamic society contr ibut ing towards the

Lirger goal of making Pahstan an example o f progress and prosperity in the region.

ACTING CHAIRMAN, 'AJ P,&D BOARD

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Annex 3: International Monetary Fund Public Information Note IMF Executive Board Concludes 2006 Article I V Consultation with

Pakistan

Public Information Notice (PIN) No. 06/139 December 7,2006

Public Information Notices (PINs) form part o f the IMF's efforts to promote transparency o f the IMF's views and analysis o f economic developments and policies. With the consent o f the country (orcountries) concerned, PINs are issued after Executive Board discussions o f Article IV consultations with member countries, o f i t s surveillance o f developments at the regional level, o f post-program monitoring, and o f ex post assessments o f member countries with longer-term program engagements. PINs are also issued after Executive Board discussions o f general policy matters, unless otherwise decided by the Executive Board in a particular case. The Staff Report for the 2006 Article IV Consultation with Pakistan i s also available

On November 22, 2006, the Executive Board o f the International Monetary Fund (IMF) concluded the Article IV consultation with Pakistan.'

Background

Pakistan's recent economic performance has been impressive. Growth has accelerated, improvements in public spending and wide-ranging structural reforms have reduced the debt burden and increased efficiency, and pro-poor policies have helped lower poverty rates. The devastating earthquake o f October 2005 lef t a heavy to l l in terms o f human lives and physical and social infrastructure, but had relatively minor effects on macroeconomic indicators (except for an increase in government spending) owing mainly to the small share o f the affected areas in the overall economy.

Economic developments during the fiscal year ending in June 2006 were favorable, with buoyant real GDP growth and inflation declining to 7.6 percent. The external current account deficit, however, increased to US$5 b i l l ion (3.9 percent o f GDP), f rom US$1.5 b i l l ion (1.4 percent o f GDP) a year earlier. Record-high net capital flows (mainly f rom foreign direct investment-including privatization) more than covered the larger deficit and allowed for a build up o f nearly US$1 b i l l ion in official international reserves. The interbank market exchange rate was broadly unchanged f rom end- June 2005.

The fiscal deficit exceeded the original budget target for 2005/06 owing to earthquake-related spending. Excluding the latter, revenues and expenditures rose by roughly the same amounts compared to the outturn in the previous fiscal year. The government debt-to-GDP ratio fell to 56percent by the end o f June, below the 60 percent ceiling stipulated in the 2005 Fiscal Responsibility Law. The budget for 2006/07 targets a deficit o f 4.2 percent o f GDP (excluding grants), unchanged from the estimated outturn for 2005/06.

The growth o f broad money and bank credit to the private sector decelerated in 2005/06, but private sector credit continued to expand at a relatively strong pace. Bank lending rates became increasingly positive in real terms as inflation declined; the real return on bank deposits remained negative. The State Bank o f Pakistan's (SBP) claims o n the government rose by more than total government borrowing f rom the banking system, as the SBP absorbed treasury bills that commercial banks did not ro l l over upon redemption. In July 2006, the SBP tightened monetary conditions by raising reserve and liquidity requirements o n bank deposits and the discount rate.

Foreign investors' interest in Pakistan increased significantly in 2005/06. Foreign direct investment inflows, excluding privatization, rose by 70 percent, and foreign demand for Pakistani bonds was strong. Government divestiture f rom electricity and telecommunications entities generated large foreign exchange inflows and revitalized the privatization process.

Progress o n structural reforms, other than privatization, was mixed. Reforms to broaden the income tax base and streamline rates continued, and the legal framework for investor protection was strengthened. However, implementation o f the schedule o f higher regional electricity tariffs, a key step for continued reform o f the power sector, remains pending, and progress on trade liberalization slowed.

Executive Board Assessment

Executive Directors commended Pakistan's impressive macroeconomic performance since 2001. They welcomed in particular the acceleration in output growth, the steady decline in debt ratios, and the fall in poverty rates. Directors noted that Pakistan's strong track record on the macroeconomic and structural reform fronts had made the country increasingly attractive to foreign investors, as shown by the record-high inflows o f foreign direct investment (FDI) during 2005/06 and the favorable terms obtained o n recent sovereign bond placements in the international capital markets.

Directors noted that during 2005/06 the Pakistani economy had withstood wel l the impact o f large negative shocks, including the tragic earthquake o f October 2005, a sharp rise in international o i l prices, and unfavorable weather conditions. Although these shocks had limited the scope for fiscal maneuver, growth had remained buoyant, inflation had declined slightly and the import coverage o f reserves had remained stable.

Directors nonetheless noted the r isks to the outlook, including the continued strength o f domestic demand, and i t s adverse effects on the trade and current account deficits as wel l as on the pace o f disinflation during 2005/06. They noted also the authorities' view that macroeconomic imbalances would decline without the need for further changes in the stance o f policies envisaged for the current fiscal year, and welcomed the government's commitment to tighten monetary policy, if warranted. However, most Directors felt that macroeconomic policies during 2006/07 should be more effectively geared at reducing domestic demand and strengthening the balance o f payments position. T o this effect, many considered that a further tightening o f monetary policy (including by allowing higher cutoff rates at treasury bill auctions) should not be delayed to help strengthen the external position and allow the government to meet i t s inflation target. Most Directors considered that to be effective, monetary pol icy should be supported by exchange rate flexibil i ty and a fiscal pol icy that keeps this year's budget deficit (excluding grants and earthquake-related expenditures) at least at the level o f 2005/06.

Directors stressed that, beyond 2006/07, Pakistan's macroeconomic policies should a im at ensuring that the external current account deficit-to-GDP ratio remains on a declining path with a steady build up o f reserves. In this regard, they encouraged the authorities to adopt a pol icy stance that maintains real interest rates at positive levels accompanied by a close monitoring o f credit growth, and a fiscal consolidation program that lowers the overall fiscal deficit t o a sustainable level over the medium term.

Directors viewed the favorable prospects for sizable FDI inflows as important for future gains in productivity and investment, but also as presenting challenges for macroeconomic pol icy in the years ahead. They highlighted that continued reliance on FDI inflows o f uncertain size and timing would require a large degree o f f lexibil i ty in economic policymaking. In this connection, Directors stressed the need to improve the government's capacity to generate timely pol icy responses to shortfalls o f

external financing arising f rom negative balance o f payments shocks. Directors were o f the view that those shocks should generally require monetary policy and exchange rate responses, but also envisaged a role for fiscal tightening in cases where the shocks are large, or more permanent in nature. Directors cautioned that the option o f resorting to the use o f international reserves to cover shortfalls o f external financing (especially those stemming f rom delays in FDI-related flows) ought to be used sparingly.

Directors viewed structural reforms conducive to higher saving and investment, an improved business climate, and well-targeted poverty-related spending as critical for sustaining growth and poverty reduction over the medium term. They encouraged the authorities to quickly complete the reform o f the regulatory and tar i f f framework for the power sector, and step up efforts to broaden the tax base and further curtail tax exemptions. Directors also saw scope for improving the government's debt management strategy, including by increasing the issuance o f long-term marketable securities and reducing i t s reliance on treasury bills and the National Savings Schemes (NSS) to finance the fiscal deficit. Directors welcomed the initiatives underway to modernize the NSS and reform the system o f broker-financing o f stock trading, but noted that these should be followed quickly with measures that enable the integration o f the NSS with local financial markets.

Directors welcomed the authorities' commitment to maintaining a liberal trade regime and their determination to contribute to the success o f the Doha round o f trade talks. They called o n the authorities to resist pressures to reinstate ad-hoc tar i f f and non-tariff measures and broaden export subsidy schemes.

Directors encouraged the authorities to further improve the quality and timeliness o f data, including by reporting fiscal data on an economic classification. They also urged the authorities to expedite the process o f subscribing to the Special Data Dissemination Standard.

Annex 4: Country at a Glance

Pakistan at a glance POVERTY and SOCIAL

Pakistan 2006 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas methcd, US$ billions)

Average annual growth, 2000.06

Population (%) Labor force (%)

Most recent estimate (latest year available, 200046) Poverty I% of population below national poverty line) Urban population (% of total population) Life expectancyat birth (years) infant mortality (per 1,OOOlive births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) Literacy (% ofpcpulation age 15+) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATiOS and LONG-TERM TRENDS

1986

GDP (US$ billions) 31.9 Gross capital formationlGDP 18.6 Exports Of goods and services/GDP 11.9 Gross domestic savlngs/GDP 8.0 Gross national savingslGDP 19.7

Current account balancdGDP Interest payments/GDP Total debtIGDP Total debt service/exports Present value of debVGDP Present value of debVexports

-2.4 1.8

48.9 25.0

1986-96 1996-06 (average annual growth) GDP 5.0 4.2 GDP per capita 2.4 1.7 Exports of gwds and services 8.0 8.3

159.0 770

122.1

2.4 3.8

35 65 80 36 91 47 82 95 69

1996

63.3 19.0 16.9 14.5 18.2

-7.3 1.9

47.1 26.3

2005

7.3 4.7 9.6

South Asia

1,470 684

1,005

1.7 2.1

29 E3 66 45 84 60

110 116 105

2005

110.9 16.1 15.5 14.3 20.6

-0.8 0.7

30.4 10.9 25.4

125.9

2006

6.2 4.1

12.9

LOW- income

2,353 580

1,364

1.9 2.3

31 59 80 39 75 62

104 110 99

2006

128.9 20.0 15.5 11.1 17.3

-3.7

200640

8.7 4.5

17.0

2005

6.7 11.4 12.6 8.0

13.1 1.7 9.3

40.5

2006

2.5 5.9 8.6 8.8

8.1 4.6 9.9

23.9

Life expectancy

Access to improved water source

P akistan - - Low-Income group

Economic ratios'

Trade - I i

Capital

-Pakistan ~ Low-income group

STRUCTURE of the ECONOMY

(% of GDP) Agnculture 276 255 222 205 Industry 234 242 265 267

Manufactunng 163 160 178 183 Services 490 504 51 3 529

1986 lSs6 1 Growth of capital and GDP (Oh)

Household final consumpbon expenditure 792 729 780 61 4

-GCF *GDP Genera gov't final consumption expenditure 128 126 7 7 7 6 Imports of goods and services 227 214 193 244

(average annual growih) Agriculture Industry

Services

Household final consumption expenditure General gov't final consumption expenditure Gross capital formation Imports of goods and services

fVbflUfaCtUrinQ

1986-96 1996-06

4.3 2.5 5.8 5.5 5.2 6.8 5.1 4.6

4.7 4.4 3.0 0.5 4.3 1.6 4.3 3.3

I Growth of expo& and imports (Ye)

1-20 -10 'iw Note 2006 data are preliminary &mates Group data are to 2005

* The diamonds show four key indicators in the country (in bold) compared with its income-group average if data are missing, the diamond wlli be incomplete

Pakistan

PRICES and GOVERNMENT FINANCE

Domestic prices (% change) Consumer prices Implicit GDP deflator

Government flnance (% of GDP, includes current grants) Current revenue Current budget balance Overall surpluddeficit

TRADE

(US$ millions) Total exports (fob)

cotton Rice Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (2000=100) Import price index (2000=100) Terms of trade (2000=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, local/US$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Official grants Official creditors Private creditors Foreign direct investment (net inflows) Porffolio equity (net inflows)

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

Composition of net resource flows

1986

3.3

17.5 -0.9 -8.1

1986

2,945 513 342

2,055 6,002

1,039

1986

3,796 7,230

-3,434

-640 3,302

-772

1,200 -428

1,638 16.1

1986

14,954 605

1,560

1,626 88 26

315 398 55

106 3

756 249 50

199 63

136

1996

10.8 8.4

18.0 -2.8 -7.8

1996

8,311 507 504

4,989 12,015 1,519 2,010

119 113 106

1996

9,977 15,227 -5,250

-1,953 2,610

4,593

4,163 431

2,839 33.5

1996

29,829 3,007 3,480

3,287 436

63

200 1,115

556 922 285

558 651 265 386 234 152

2005

9.3 8.7

14.1 -0.3 -3.4

2005

14,482 111 933

8,268 18,996

706 4.534

124 131 94

2005

17,801 25,608 -7,807

-2,386 9,344

-849

239 610

11,516 59.4

2005

33,675 2,238 6,865

2,443 404 167

91 1 590 933

2,183 451

1,550 845 427 419 145 274

2006

7.9 10.3

14.5 0.4

4 . 2

2006

16,764 124

1 ,O l I 9,881

23,967 783

128 142 90

2006

20,254 33,098

-12,844

-2,676 10,707

-4,813

5,943 -1,130

12,468 59.9

2006

Inflation (%) I

01 02 03 04 05 06

-GDP deflator +CPI

' Export and import levels (US$ mill.)

30,000 T I

O M

25,000

20,000

15.000

10,000

5.000

00 01 02 03 04 05 06

Exports Imports

Current account balance to GDP (%)

1.5 1

jComposition of 2005 debt (US$ mill.)

I G: 1,23L: 2.238

A - IBRD B ~ IDA D - Other multilateral F - Pnvate C . IMF

E - Bilateral

G - Short-term

Development Economics 4/4/07

Annex 5: Additional TabledGraphs

Table 1:

Table 2:

Table 3:

Table 4:

Table 5:

Table 6:

Table 7:

Tables 8-9:

Table 10:

Table 11 :

Punjab -- Public Sector Debt Sustainability Framework, 2006-2026 .........................

Punjab - Provincial Government’s Education Sector Recurrent Expenditure/Allocation by Function. ..........................................................................

Punjab - Provincial Government’s Education Sector Expenditure/Allocation ..........

Punjab - Provincial and District Allocations for, and Expenditure o n Education 2003/04-2006/07 .........................................................................................................

Baseline, Targets and Achievements o f PESRP Phase I (2004-2006) ........................

Implementation o f Missing Facilities Program ...........................................................

Reform Actions Supported Under PESAC, PEDPC-I1 and PEDPC I11 and Ini t ia l Impact .........................................................................................................................

Enrollment Changes Graphs

Girls’ Enrollment in Stipend Districts

Pakistan: Education Indicators

Graphs 1- 3: Institutions and Enrollments

Table 2

Punjab - Provincial Government’s Education Sector Recurrent ExpenditureIAllocation by Function

2005106

Budget Revised 0.0 14.7 0.0 29.3 0.0 0.0

878.6 745.0 3.0 87.0 5.9 5.9

56.1 145.3 0.0 239.3

24.2 21.4 22.3 22.9 21.6 24.7 19.3 19.6

3,470.0 3,270.1 134.6 59.3 57.2 60.1 12.1 12.1

4,704.9

Punjab Education Assessment System (PEAS) Chief Minister’s Monitoring Force Inspection (Colleges ) Miscellaneous Grants In Sewice Teachers Training A r t s Colleges Professional Colleges Elementary Teachers Training College Direction (Elementary Education) Direction (Secondary Education) Direction (Colleges) Education Management Information System PMIU Directorate of Special Education Libraries Science Education Project

TOTAL EDUCATION

(Rs millior 2006107

Budget 8.5

41.1 75.5

2,633.5 467.7

5,475.6 68.1

355.9 21.7 20.1 23.7

5.3 4,240.4

158.3 58.2 12.6

13,666.1

TOTAL EDUCATION

Table 3

12,291.1 6,136.6 22,978.9

Punjab - Provincial Government’s Education Sector Expenditure/Allocation

Budget 12.1 5.9

56.1 3,557.4

134.6 57.2

881.6 4,704.9

7,586 5,000

~

Secondary Education General Universities & Colleges /1 Professional Universities & Colleges Administration Schools for Handicapped Archives, Libraries & Museums Others Total Recurrent

Revised Budget 12.1 12.6 5.9 5,475.6

384.6 424.0 3,402.8 4,436.2

59.3 158.3 60.1 58.2

832.1 3,101.2

4,756.9 13,666.1

1,380 9,313 0 5,000

Total Development 12 o/w PESRP 12

(Rs millior 2005/06 I 2006/07

YO Increase in FY07

40.3%

253.5% 437.3%

92082.2% -53.2% 48.8%

1.1% -12.3%

-4.3% -73.0%

-42.3%

_ _

29.7% 166.9%

-3.2% 4.2%

187.3%

YO Increase in FY07

4.2% 92082.2%

10.2% 30.4%

166.9% -3.2%

272.1% 187.3%

575.0% -_

274.5%

Table 4 Punjab - Provincial and District Allocations for, and Expenditure on Education 2003/04-2006/07

2003/04 Budgetl Revised

'ROVINCIAL Current Administration

Direction Elementary Education Direction Secondary Education Direction Colleges Literacy & Non-Formal Education olw Lump sum Provision for PESRP

EMIS PMIU o f PESRP

General Universities and Colleges Professional Universities & Colleges Secondary Education Primary Education Schools for Handicapped Archives, Libraries & Museums Others Grants to Sports Organizations Others Grants )evelopment 12

Percentage Increase 2004/05 2005/06 2006/07 FY07 Vs FY06

Budgetl Revised Budgetl Revised Budget /1 BE Vs BE1 BE Vs RE

IISTRICT Current Salary Non-Salary Development

274.5 187.3 28.4

1.1 -12.3

-4.3 _ _ _ _

-73.0 29.7

92082.2 -53.2

4.2 _ _ 166.9

-3.2 202.9 _ _ 437.3 575.0

4.1 4.6 4.6 4.7

-15.5

;RAND TOTAL

34,960.2 33,918.2 31,473.8

2,444.4 1,042.0

34,796.2 39,858.2 40,281.7 46,185.2 47,479.2 34,065.8 38,448.2 38,871.7 44,775.2 46,467.2

- 37,202.9 37,552.0 40,259.8 44,285.0 -- 1,245.3 1,319.7 4,515.5 2,182.2

730.4 1,410.0 1,410.0 1,410.0 1,011.9

9,171.5 3.195.5 2,275.9

22.9 17.3 19.2 0.0

2,200.0 16.4 0.0

19.2 40.3

0.0 0.0

31.7 43.5

745.3 18.2 21.4

5.976.0

8,795.4 2,246.3

116.0 18.6 15.2 16.9 0.3 0.0

21.4 43.7 20.7 67.0

0.7 872.2 56.6 42.6

1,031.4 18.2 21 .o

6,549.1

12,325.2 4,095.2 3,156.0

24.0 18.5 21.0 0.0 0.0

22.4 3,070.0

5.9 50.7 0.0 0.0

38.2 47.3

796.9 0.0 0.0

8,230.0

8,951.2 4,297.2 2,886.4

26.7 18.6 20.8 0.0 0.0

19.3 2,801.0

5.9 56.3

1.5 0.7

296.2 47.0

921.5 0.0

81.7 4,654.0

13,604.9 4,704.9 3,557.4

24.2 22.3 21.6

0.0 0.0

19.3 3,470.0

5.9 56.1 12.1 0.0

134.6 57.2

878.6 0.0 3.0

8,900.0

6,136.6 4,756.9 3,358.8

21.4 22.9 24.7

0.0 0.0

19.6 3,270.1

5.9 145.3

12.1 0.0

59.3 60.1

1,028.3 0.0

87.0 1,379.7

22,978.9 13,666. I 4,311.1

21.7 20.1 23.7 0.0 0.0 5.3

4,240.41 5,475.6

68.1 12.6 0.0

158.3 58.2

3,114.5 0.0

467.7 9,3 12.8 I

49,449.5 48,594.3 46,309. I

2,285.3 855.1

68.9 190.5 21.2

-10.3 -10.0

9.4 _- _ _

-72.6 22.2

92082.2 21.4 4.2

_ _ 17.6

1.8 254.5

_ _ 15490.5

4.6

7.1 8.5

15.0 -49.4 -39.4

44,131.8] 43,591.61 52,183.41 49,232.91 59,790.11 53,615.81 72,428.4 21.11 35.11 Source: The Government of Punjab and district governments' budget documents. I Because of shifting of college education back to the provincial level, the 2006/07jigures are not strictly comparable with those

U Includes allocation for provision o f missing facilities, which i s transferred to, and implemented, by the district governments. of the previous years, except for the Grand Total.

Table 5 Baseline”, Targets and Achievements ol

Outcome Indicator

Indicator

Primary Completion rate in Government schools52

Enrollment Grade Katchi to V (Male)

Enrollment Grade Katchi to V (Female)

Enrollment Grade V I to VI11 (Male)

Enrollment Grade V I to VI11 (Female)

No. o f school councils operationalized as per circulated guidelines

No. o f closed schools

District Government’s total allocation for elementary education (Rs. million)

Total districts’ non-salary budget (Rs. mill ion)

Reduction in missing facilities

Net Primary Enrollment Rates by Gender (excluding katchi5 1)

Baseline Data District Profiles

58 percent

3,487,400

2,897,006

1,025,997

692,176

New initiative

203 1

20,455

66 1

Data as per District Profile on type o f missing facility

Net Middle Enrollment Rate by Gender

(Source: PSLSMS)

October 2006 School Census

61 percent

4,3 12,030

3,733,000

1,222,904

’ESRP Phase 1(200 Baseline 2003

Change

3 percent

24 percent

29 percent

19 percent

Overall: 45

Girls: 43

Boys: 47

Overall: 18

Girls: 18

Boys: 18

,2006) Actual 2006 (Target in

Parenthesis) Overall: 58 (48)

Girls: 55 (46)

Boys: 60 (50)

Overall: 20 (22)

Girls: 19 (24)

Boys: 21 (20)

Annual Program Indicators under Terms of Partnership pop) Agreements Baseline and Achievements

867,605 I 25 percent

85 percent

reduction

Baseline data for Government schools i s from a special Punjab EMIS survey carried out in Spring 2003 to develop district baselines, and covers Government schools. Baseline for outcome indicators i s from PIHS 2001/02. Kutchi is the term used in Pakistan for pre primary grade. In the absence o f student IDS in school census and cohort analysis, the primary completion rate has been estimated by using 6 years time series government school census data; i.e. by comparing the number o f students in Grade 1 vs students in Grade 5 between five census cycles.

50

51

52

Table 6

Building Repair (BR)

New Building (NB)

Water

Wal l

Toilet

Electricity

IMPLEMENTATION OF MISSING FACILITIES PROGRAM

Baseline Requirements Year I

(District Profile 2003) 2004

10,797 1,578

3,790 2,763

12,858 1,789

16,168 2,527

17,663 3,292

24,223 2,822

Year I Expenditure % utilization

Furniture

4,610 (92%)

2,775

Year I Allocation 4,998

Year I1 2005

505

1,863

909

1,447

1,195

80 1

1,734

1.046 8,455.046

Year I1 Allocation

Year I1 Expenditure % utilization

Total

2,083

4,626

2,698

3,974

4,487

3,623

4,509

2,291 28,291 - 5 bil l ion

3.9 bi l l ion (80%)

Source: Punjab Education Department

Table 7

Reform Actions completed under PESAC, PEDPC-I1 and PEDPC I11

Objectives Reform Actions for PESAC and PEDPC I1 & I11

Objectives

Ensure public expenditure i s appropriately allocated to meet Punjab’s education needs

Reform Actions for PESAC and PEDPC I1 & I11

Reform Pil Facilitate transfer o f resources to district governments in order to improve service delivery

Increase transparency o f financial management processes and provincial and district capacity for monitoring financial f lows

Improve transparency in procurement procedures and practices

Letter o f Sector Development Pol icy issued by the Government o f Punjab A medium-term provincial budget framework (MTBF) which gives priori ty t o increasing provincial expenditures o n education by more than 50 percent over a 3-year period

Lr 2: Support Devolution and Public Sector 1 Terms o f Partnership signed between provincial and district governments with agreed annual performance indicators, and conditional grants under PESRP fully transferred to district accounts upon signature o f TOPS

0 50 percent o f districts increased the level o f district non salary recurrent budget for education

Developed accounting procedures to monitor and track sector expenditures

Fortnightly D A C meetings to review and settle a l l arising audit observations (paras) in the Provincial Account No. 1, as w e l l as progressively clear backlogs

Procurement reforms init iated to increase transparency, including replacement o f f ixed schedule o f rates with prevail ing market rates, removal o f requirements for pre-registration o f contractors, and development o f streamlined standard procurement guidelines for goods purchases, and independent ex-post procurement reviews carried out

0 A Procurement Strategy for the province approved

Initial Impact

Maintaining o f targets and commitments under the MTBF - there has been a 50 percent increase in the education sector budget f r o m FY2004-FY2006

anagement Reforms Districts own education budgets have increased by 15 percent for non salary budget, and 72 percent for development

Introduction o f performance-based incentives: f r o m pure need based formula in FY04, a gradual s h i f t towards equal share for performance and need; 30 percent weightage to performance in FY05, increased to 40 percent weightage in F Y 0 6

Full budget reporting system (for both provincial and district budgets) i s in place, and improvements have taken place in expenditure reporting and monitoring

Progressive reduction o f backlogs of un-reviewed audit observations and consolidating accountability in the sector

Procurement n o w more transparent, with n o requirement for pre- registration o f contractors, and annual third party ex-posts procurement reviews being conducted

Reform Pillar Improve education sector management

Improve teacher management

Revitalize school councils t o monitor school performance

Strengthen monitoring & evaluation in order to gauge education outcomes and to improve and re-adjust education policies

Improve equitable access to education

Ensure provision o f quality education through improved teaching and materials

Expand access to education through innovative public private partnerships

~ Improving Quality, Access and Governanc

0

0

Issuance o f guidelines clarifying the role o f School Councils, including their authority t o undertake small procurement o f works, and responsibilities o f school councils in monitoring teacher absenteeism Increased financing for community-managed contracting and provision o f greater authority t o School Councils to manage and implement small c i v i l works

Announced free schooling up to matriculation level Pol icy o f free textbooks announced for primary school students. Introduction o f a stipend program for a l l girls in grades 6-8, targeted init ial ly t o 15 disadvantaged districts with l o w literacy levels

Missing facilities provided to schools based o n needs identif ied by district education profi les

Textbook printing and publishing opened to competition, beginning with the Primer and Class 6 textbooks Reorganized Education Department’s Directorate o f Staff Development for delivery o f teacher professional development programs. Framework for teachers’ Continuous Professional Development approved

Credible monitoring & evaluation system established Independent third party surveys commissioned to assess availability o f stipends and free textbooks at the school level

Established transparent criteria for districts to recruit new contract school-specific teachers, favoring recruitment o f women and local candidates School census conducted to document changes in girls’ enrolment in grades 6-8 for init iating an impact evaluation o f the girls’ stipend program Independent third party surveys init iated for assessing availability o f reform inputs and sector performance Legal restructuring o f Punjab Education Foundation (PEF) Government financing made available to PEF to support private sector programs

in the Education Sector

0

0

0

0

School Councils have been reconstituted (85 percent o f primary schools have SCs), and provided the authority t o spend development funds o n c i v i l works

Capacity building o f School Councils under implementation with NGO support

Free textbooks received by 99 percent government Grade K-X students o n t ime for school year (1 1.25 m i l l i on students received free textbooks)

Almost 28 percent overall increase in public school enrollments, with reduction in gender gaps

Eligible girl students regularly receive quarterly stipends (90 percent o n time delivery); improved girls’ attendance in schools

Number o f girls enrolled in Grades 6 - 8 in stipend target schools has increased by 50 percent ( f rom 186,503 in 2003 to 279,928 in 2006 ), and increases have also happened for boys in stipend districts compared to non-stipend districts

Reduction in missing facilities: work o n 60 percent o f identif ied missing facilities commissioned, with work completed o n more than ha l f

Teacher recruitment n o w being conducted o n the basis o f needs analysis

Over 66 percent o f closed schools have opened through appointment o f teachers

For the f i r s t time, teacher development programs being delivered in partnership with private sector

5.2 mi l l i on books printed through a competitive process

0 The M&E system i s producing data and information for policy and analysis; it has received national recognition and i s being replicated in other provinces

Public private partnerships are being financed through the PEF

Number o f female teacher has increased

Implementation o f merit based recruitment policy has led to better qualified teachers with increased percent holding graduate degrees

Male Female Total

Table 9: Enrollment Changes

Private Sector Enrollments in Punjab Class Kachi to 10

Years

Public Sector Enrolments in Punjab Class Kachi to 10

Years 2004 2005 2006

4,967,625 5,774,746 6,009,906

3,880,100 4,733,626 5,013,132

8,847,725 10,508,372 11,023,038

Male 1,961,559 I 2,649,876 Female Total

Source: Punjab Education Department

1,682,856 2,284,161 3,644,415 4,934,037

Oct-03 Oct-04 Oct-05

I Oct-06

Girls' Enrollment in Stipend Districts Class 6 Class 7 Class 8 Class 9 Class 10 Total

71,251 62,642 52,610 37,746 30,321 254,570 89,396 68,216 57,177 46,458 41,072 302,379

106,088 84,832 65,580 51,809 43,355 357,664 110,689 93,555 75,684 62,589 44,761 387,278

Table 11: Pakistan: Education Indicators

I Pakistan: Education Indicators

I Net Enrollment Rate at the Net Enrollment Rate at the Literacy-Population 10 Years

Source: PIHS, 2001/02; PSLSM 2004/05

PN I I

3

Share of Private Sactor in To

Annex 6: Terms of Partnership (TOP) for Punjab Education Sector Reform Program

Sample Terms of Partnership (TOP) for the Punjab Education Sector Reform Programme (PESRP)

between the Government of the Puniab and District Government X. (2006-07)

The Government o f the Punjab, realizing the need to attend to the l o w social indicators in the education sector and for removing constraints in the provision o f quality education, launched the Punjab Education Sector Reforms Programme (PESRP) in partnership with the District Governments. The performance o f each District Government i s evaluated on an annual basis and future financing o f the reform program i s l inked to the fulf i l lment o f obligations under the partnership and on the utilization o f funds for the specified activities.

THE TERMS OF PARTNERSHIP between the Education Department, Government o f the Punjab (hereinafter called the Provincial Government) and the District Government, X (hereinafter called the District Government) for the execution o f the PESRP are specified below:

1. RESPONSIBILITIES OF THE PROVINCIAL GOVERNMENT.

A) Institutional Arrangements for Programme Implementation

(i) The Provincial Government shall allocate funds for provision o f missing facilities in Government schools o f district X.

(ii)

(iii)

(iv)

The Provincial Government shall arrange for the printing o f textbooks for free distribution to al l students studying in government schools f rom Katchi Class to Class X. These books shall be delivered to the Executive District Officer (Education) for onward distribution amongst students before the commencement o f the next academic year.

Stipend o f Rs.200 per month shall be provided to girls studying in class V I to X in the government schools o f the pre-determined fifteen l o w literacy districts o f the province. The Provincial Government shall arrange for the quarterly transfer o f funds for stipends to the District Government through Account Number IV. Detailed disbursement procedures in line with Government guidelines are already in place.

For the Fiscal Year 2006-07, the resources allocated for provision o f missing facilities in schools are being distributed to the districts o n the basis o f ‘need plus performance formula’ as approved by the Provincial Finance Commission.

a) Sixty percent (60 percent) o f the funds are being distributed amongst the districts on the ‘need basis’. Need index has been calculated by giving equal (20 percent) weightage to three factors: a) uniform distribution o f funds for provision o f missing facilities in schools among a l l districts in Year I o f PESRP Phase II. b) relative student enrolment load c) weighted inverse literacy ratio as per 1998 population census.

b) Forty percent (40 percent) o f funds are being distributed amongst the districts in accordance with a ‘performance index’ which has been calculated on the basis o f following criteria: a) 15 percent on the basis o f increase in district’s own education budget for the FY 2006-07 ; b) 10 percent on the basis o f realignment o f ‘non-salary component o f educational budget’ towards ‘grants to school councils’ for the FY 2006-07 ; c) 10 percent o n the basis o f percentage enrolment increase in the AY 2006-07 over the AY 2005-06 ; and d) 5 percent on the basis of increase in survival rate over the last academic year.

c) Total share o f the District Government X calculated as per above noted ‘need plus performance formula’ comes to Rs. X million.

The Provincial Government has already issued detailed guidelines for the formatiodre-activation o f School Councils (SCs) specifying the revised categories o f members o f these Councils, and their enhanced roles and authorization for making expenditure on the purposes prescribed, including minor c iv i l works, upto Rs 400,000/- in one fiscal year.

The Provincial Government may contract Non-Governmental Organizations / Community-Based Organizations to build the capacity o f SCs, and train SC members o n auditing, accounting, planning, monitoring requirements, and execution o f c i v i l works.

The Provincial Government shall provide upfront funding, through Account Number IV, in six pi lot districts already selected in the f irst year o f the Programme for capacity building o f School Councils. These resources would be in addition to the funds required to be provided to the School Councils by the district itself, through i t s own annual educational budget, in the form o f grant to School Councils.

The Provincial Government shall execute an awareness campaign to in form households about the components o f the Reform Programme to facilitate the realization o f the objectives l inked with these interventions.

The Provincial Government shall issue relevant guidelines to the District Government for mitigating any adverse environmental works undertaken during the Programme.

B) Institutional Arrangements for Monitoring and Evaluation

(i) The Provincial Government has established the Programme Monitoring and Implementation Unit (PMIU), and the said Unit shall continue to provide technical assistance and capacity support to the District Government with the help o f District Monitoring Officers (DMOs).

(ii) The Provincial Government shall provide technical, logistical and managerial support to the district education management under i t s districts’ capacity building programme through provision o f IT related hardware & software, vehicles for ED0 (Education), DEOs, Deputy DEOs and reasonable transport to AEOs, and

high end modular training to the educational managers by a quality set up to boost their professional skills.

The Provincial Government shall provide to the District Government a comprehensive l i s t o f performance indicators, outcomes and expenditure data requirements that the designated district staff (in the office o f the Executive District Officer (Education)) shall monitor, and provide to the Provincial Government as and when required.

The Provincial Government shall conduct annual Third Party assessments o f Programme activities to gauge their effectiveness.

A Third Party review o f teachers’ competencies shall be carried out after each teacher-training cycle to assess i t s efficacy.

2. RESPONSIBILITIES OF THE DISTRICT GOVERNMENT.

A) Institutional Arrangements for Programme Implementation

The District Government shall not reduce i t s non-salary and development allocations in education below the allocation for the previous fiscal year; the district would in fact show an incremental increase in i t s school education budget throughout the Programme duration.

The District Government shall bear recurrent expenditures and would make sufficient additional provisions in i t s FY 2007-08 budget for meeting expenditures incurred on POL and repairs o f hardware to be provided to the district as described at para 1 B) (ii) o f this TOP. Moreover, the District Government shall permit i t s staff to attend capacity building programs as per schedule communicated by the Provincial Government in terms o f para 1 B) (ii).

The responsibility o f the District Government shall be to ensure the timely distribution o f textbooks to students. The Executive District Officer (Education) shall arrange for the delivery o f these books to the schools for distribution among students before the commencement o f next academic year, as per documentation already in vogue for the purpose.

The District Government shall arrange for the distribution o f stipends (in the form o f money orders). The stipend shall be distributed amongst female students as per already circulated guidelines in the fifteen pre-determined l o w literacy districts o f the province.

The District Government shall ensure that expenditure for the School Councils, infiastructural improvements, stipends and others i s accounted for under the same head o f accounts as conveyed by the provincial Finance Department.

The District Government shall undertake recruitment o f teachers o n facility- specific contracts as per approved criteria / guidelines o f the Provincial Government.

(vii)

(viii)

(ix>

(x)

(xi)

(xii)

(xiii)

(xiv)

(XV)

The District Government shall cause the utilization o f funds allocated for provision o f missing facilities in i t s government schools as per the guidelines issued in this regard by the Provincial Government f rom time to time. The District Steering Committee (DSC) as constituted by the Provincial Government vide Notification No. PS/Secy.(I&C)12/2006 dated 30-10-2006 shall prioritize the schemes for provision o f missing facilities in government schools.

The District Government shall ensure that a l l finds received f rom the Provincial Government are utilized within one year o f their release by the Provincial Government.

The District Government would provide a l l missing facilities once the school i s picked up for execution o f missing facilities under PESRP.

The District Government shall be responsible for establishing School Councils in accordance with the guidelines notif ied by the Provincial Government. The District Government would also be responsible for providing adequate funding to such Councils @ Rs. 20,000 per Primary School and Rs. 50,000 per Middle School on annual basis in the form o f a one line transfer. The School Councils shall, in turn, utilize the transferred funds as per the already notif ied guidelines o f the provincial Education Department.

The District Government shall prepare an inventory o f a l l the schools within i t s jurisdiction, and operationalize a l l viable non- functional institutions.

The District Government shall support the effort o f the Provincial Government to enhance awareness o f the interventions being offered to improve enrollment and survival rates.

Where the District Government fails to comply with the Terms o f Partnership, the Provincial Government may make reductions in allocations for the district in the following year.

The funds transferred to the District Government for the above referred interventions shall be subject to audit as per existing laws and rules.

The District Government shall adhere to environmental guidelines issued by the Provincial Government to safeguard the environment and social characteristics o f the area and population l ikely to be affected.

B) Institutional Arrangements for Monitoring and Evaluation

(i) The District Government through the DCO and the EDOs concerned shall collate and maintain the database o f outcomes, performance indicators, achievements o f physical targets, the utilization o f funds and expenditure data by individual l ine items as specified in the requirements communicated to the districts by the PMIU or any other institutiodagency nominated by the Provincial Government for this purpose, and shall provide this information to the Programme Monitoring and Implementation Unit (PMIU).

(ii) The District Government shall be responsible for strengthening the office o f EDO(Education) enabling it to implement & monitor the initiatives o f the Government under PESRP.

3. PERFORMANCE INDICATORS.

The District Government agrees to the annual Programme targets appended as Annex “A”

For and o n behalf o f the District Government X

1. (Zila Nazim)

For and o n behalf o f the Government o f the Punjab

Minister for Education Government o f the Punjab,

Dated:

2. (District Coordination Officer) Secretary Education

Government o f the Punjab

Dated: Dated:

Annex " A of Terms of Partnership

Sr. Uo.

PUNJAB EDUCATON SECTOR REFORM PROGRAMME

Performance Indicators Benchmark Academlc Year (Enrollment 8 Institutions) (200847)

ANNUAL PROGRAMME TARGETS FOR DISTRICT GOVERNMENT FOR THE YEAR 200647

3

4

Enrolment Class I to V (Female) 1 .Class Katchi to I = % 2.Class I to II = %

Survival Rate (Male) 3.Class II to 1 1 1 = % 4.Class 1 1 1 to IV = % 5.Class IV to V = % 1.Class Katchi to I = % 2.Class I to II = %

Survival Rate (Female) 3.Class I1 to 1 1 1 = % 4.Class 1 1 1 to IV = % 5.Class IV to V = %

' IEnrolment Class I to V (Male) !

7

8

Enrolment Class VI to Vlll (Male)

Enrolment Class VI to Vlll (Female) NO. of school councils operationalized as per circulated guidelines (Primary & Middle Schools)

Operationalization of all viable Schools (All Levels)

Performance lndlcators Benchmark F.Y. 200897 (Financlal Allocations) (Rs. In Million)

11

12

I Total budgetary allocation for 9 elementary education by the District

Government

Total expenditure on elementary education during the financial year

Transfer of school budget to Primary & Middle Schools @I Rs. 20,000 & Rs. 50,000 respectively to be operated through School Council as per guidelines provided by PESRP Efficient disposal of all audit paras At least two DAC meetings Dertainina to the education deDartment every month

~ 1;" general and PESRP in part;cular I 13 ITeacher's Presence Rate I

(Zila Nazim)

Dated:

2 (District Coordination Officer)

Dated:

- District Government during

200748

.Class Katchi to I = %

.Class I to II = %

.Class I1 to 1 1 1 = %

.Class 1 1 1 to IV = %

.Class IV to V = %

.Class Katchi to I = % Clara I to II = Oh . - . .- , . .Class II to 1 1 1 = % .Class 1 1 1 to IV = % .Class IV to V = %

Targets to be achieved by District Government Durlng

200748 (Rs. In Million)

,t least two DAC meetings very month

Minister for Education Government of the Punjab, Lahore.

Secretary Education Government of the Punjab Dated:

Quantificatlon of change

%

%

%

%

%

%

Quantification of change

%

%

%

a 1

E 0 0 0 -31s v; N

9

GilgitChitral

Mardan

PeshawarKahat

Rawalpindi

Bannu

Mianwali Khushab

Jhelum

Sargodha

GujratSialkot

Gujranwala

Bhakkar

JhanaLahore

KasurFaisalabad

Sahiwal

MultanD.G.Khan

Bahawalpur

Bahawalnagar

Rahimyar Khan

RohriSukkur

Larkana

Dokri

Nawabshah

Hyderabad

Thatta BadinKarachi

Bela

Gwadar

Panjgur

Kalat

Khuzdar

Quetta

Sibi

D.I.Khan

ISLAMABAD JAMMUand KASHMIR

N.W.F.P.

B A L O C H I S T A N

S I N D H

PUNJABPUNJABPUNJABJhel

um

R.

R.

Ravi

Sutlej

R.

Indus

R.

Nar

aC

anal

Nal

R.

Mouths ofthe Indus

Zhob R.

A R A B I A N S E A

IndusR.

Kuna

r

R.

ApproximateLine of Control

TAJ IK ISTAN

C H I N A

AFGHANISTAN

I S L A M I C R E P .

O F I R A N

I N D I A

70° 75°

35°

30°

75°

25°

70°65°60°

25°

30°

35°

60° 65°

30°

35°

75°

35°

30°

25°

75°70°65°

25°

70°65°

N.W.F.P.

BALOCHISTAN

SINDH

PUNJAB

••

•••

••

•••

•

•

••••

••

• •••• •• ••• • • • • • • ••

Approx. Line of ControlJAMMU

AND KASHMIR

Arabian Sea

TAJIKISTANCHINA

I N D I A

A F G H A N I S T A N

ISLAMIC REP . OF

IRAN

TURKMENISTAN

UZBEK.

PAKISTANPAKISTAN

TAJIK.

PAKISTAN

Islamabad

0 100 200 300 KILOMETERS

0 50 100 150 200 MILES

APRIL 2007

IBRD 35462

PAKISTANFOURTH PUNJAB EDUCATIONDEVELOPMENT POLICY CREDIT

PROJECT PROVINCE

SELECTED CITIES

NATIONAL CAPITAL

MAIN ROADS

RAILROADS

RIVERS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.