Punjab Cities Program

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The development objective of the Punjab Cities Program for Pakistan is to strengthen the performance of participating urban local governments in urban management and service delivery.The proposed Punjab Cities Program (PCP) is aligned with the World Bank Group’s Pakistan Country Partnership Strategy (CPS) FY15-20.The operation is expected to contribute to the Bank’s overarching goals of ending extreme poverty and promoting shared prosperity by delivering improved urban infrastructure inclusively and in ways that enhance economic growth and development in the participating cities.The proposed operation will be financed through a hybrid of Investment Project Financing (IPF) and Program-for-Results (PforR) instruments.The larger part of the Operation is financed through the PforR instrument, which has proved to be an effective mechanism for managing conditional grants to LGs and for strengthening institutions and systems for the sustainable delivery of infrastructure and services.GoPunjab has an ongoing formula-based 14 mechanism of fiscal transfers to urban LGs to support urban governance and municipal service delivery, through the Provincial Finance Commission (PFC) Award.The Government now plans to introduce a program of performance-based grants (PBGs) to urban LGs. The new program will not affect existing formula-based PFC transfers to the 16 MCs participating in PCP over its duration.For the duration of the PCP Operation (2018-2023), the scope and boundaries of the Government program will thus be identical with those of the PforR Program PBGs at the provincial level will be new; however, basic aspects of performance-based financing were piloted under PMSIP.The PCP PforR (Window 1) will pilot the PBG system, focusing on the ULGs or MCs of the 16 selected secondary cities. 1) Performance-based Grants will be financed through the Bank’s PforR instrument and will support PBGs to 16 MCs in Punjab; 2) Institutional strengthening will address the risks to achieving the development objective identified by the Technical, Fiduciary Systems, and Environmental and Social Systems Assessments.