ISLAMABAD, May 21: The budget for 2002-03 will witness, for the first time, Rs40 billion direct foreign funding to the provinces for which the next Public Sector Development Programme (PSDP) is being restricted to Rs90 billion only compared to Rs140 billion of the current fiscal year.

The National Economic Council is meeting here on June 1 under the chairmanship of President Pervez Musharraf to approve the new development strategy along with the PSDP for 2002-03.

International donors have said that from now onward they would be directly extending financial assistance to the provinces for which the federal government should stand as guarantor. The foreign aid to be offered to the provinces will not be reflected in the federal budget.

Donors specially the World Bank and the Asian Development Bank believed that the devolution of power at grassroots level could not be ensured if funds were not offered directly to the provinces for onward distribution to the local governments.

Official sources told Dawn here on Tuesday that the NEC, the highest body on economic decision making, would also be briefed about Rs810 billion federal budget for 2002-03 compared to Rs751.7 billion of the current financial year.

The meeting to be participated by all the four governors, provincial finance ministers, additional chief secretaries, federal finance minister, deputy chairman Planning Commission and other high federal and provincial officials will discuss and approve the funding requirements of the provinces. It will also approve a number of new development projects to be undertaken during the next financial year.

Before NEC, the Annual Planning Coordination Committee will meet on May 24 under the chairmanship of deputy chairman of Planning Commission, Dr. Shahid Amjad Chaudhry to approve new development projects to be placed before NEC for final approval.

Sources said that a number of development projects had been disapproved by the Priority Committee of the Ministry of Finance because of paucity of funds. These projects will now come up for discussion in the APCC meeting.

Sources said that substantial funds would be allocated for poverty alleviation in all the four provinces, Azad Kashmir and Northern Areas.