Project Case Study
Conducting an emergency review of Pakistan’s Earthquake Reconstruction and Rehabilitation Authority
Fiduciary risk assessment of Pakistan's earthquake authority
In October 2005 a major earthquake, registering a magnitude of 7.6 on the Richter scale, hit the north of Pakistan, causing devastation and the loss of some 75,000 lives.
The international community responded with over $5bn of post-earthquake reconstruction aid to respond to the immediate crisis.
In early 2006, the Government of Pakistan held a conference to raise a further tranche of money to fund the reconstruction and rehabilitation of the area, much of which had been destroyed.
The response was a total of $6.2 billion to be managed by the Earthquake Reconstruction and Rehabilitation Authority. The Department for International Development (DFID) contributed £35 million to this fund, and other donors included the World Bank, the Asian Development Bank and the European Commission.
DFID Pakistan’s management asked us to perform a detailed analysis of the public financial management systems in place to ensure best practices in managing these earthquake reconstruction resources and avoiding any loss of funds through corruption. At short notice, we deployed a consultant to the area affected by the earthquake, including Kashmir, the North West Frontier Province, Jammu, and also to Islamabad, to examine and map expenditure controls and procedures for the fund.
The Adam Smith International team conducted a review comprising an overview of the earthquake reconstruction authority’s financial management and accounting mechanisms, a process for housing reconstruction and livelihood grants, reviews of financial management arrangements, an update of the 2004 fiduciary risk assessment of the federal government of Pakistan and an assessment of procurement in line with principles of value-for-money and transparency.
With this information, we made a number of recommendations to improve the fiscal management of the fund, to bring its procedures in line with international best practice, and enable it to effectively handle the international funding it had received and implement reconstruction projects in affected areas.