LAHORE, May 13: The federal government has sounded a warning to the districts that funds transferred to them under the Khushhal Pakistan Programme during the current fiscal would lapse if not utilized by June 30, 2002.

The warning, a person close to the situation told Dawn here on Monday, has come from the local government ministry. “The ministry has recently sent a letter to the province to forward it to the district governments for speeding up the development works under the KPP to save the funds from being lapsed,” the source said.

The letter, however, has baffled the economic planners in the Punjab who believe that the funds transferred to the districts could not lapse under the Punjab Local Government Ordinance 2001, said the source. Quoting Section 109 of the ordinance, the source insisted that only the “district assemblies had powers to reauthorize the unutilized funds transferred in to the Provincial Account IV” during the next fiscal year. “Even the provincial government does not have powers to withdraw funds transferred to the districts in the PA IV,” added the source.

The Section 109 of the ordinance states “the funds credited to a local fund or a provincial account (PA IV) shall be expended by (the) local government in accordance with the budget approved by the concerned council.”

“We’re unable to understand the mechanism (if there is any) by which the ministry or even the provincial government will be able to withdraw the unutilized funds from the local councils’ accounts,” the source wondered. However, he added, the provincial government had “passed on the letter to the districts as such,” in order to make them speed up utilization of the KPP funds.

The 34 districts of the province were to get a total of Rs8.3 billion — Rs6.3 billion from the Centre and Rs2 billion from the province — under the KPP to carry out development works in their respective areas during the current fiscal year. Over Rs6 billion have already been transferred to them.

“The provincial government has nothing to do with the spending of the KPP funds. These have to be spent by the local councils as decided by their council,” the source said.

The sources, however, conceded that the utilization of the KPP funds remained pretty unsatisfactory. “Only about 15 per cent of the funds provided to the districts have been spent in more than 10 months of the current fiscal. They have only one and a half month to utilize the remaining funds, a target that is not possible to achieve,” the source said, adding that the provincial administration expected utilization of close to 40 per cent funds by the end of the fiscal.

In most cases, the local councils are claimed to have “already identified and approved the development schemes under the KPP and floated tenders for them.”

The delayed passage of the district budgets for the year, the lengthy procedures involved in identification and approval of the schemes and floating of tenders for their execution are stated to be the main factors behind the unusually low utilization of the funds.

“The suspension of all kinds of activities for an entire month in April, when physical work on most schemes was due to commence, because of preoccupation of the Nazimeen and government officials with the presidential referendum is one more important factor responsible for an extremely slow utilization of the funds by the districts,” say officials of the Finance Department.