ISLAMABAD, March 14: The National Economic Council (NEC) meets here on Monday to consider a three-point agenda, including eight-month review of the economic performance with a robust full-year forecast and problem-ridden implementation of the development programme.
Prime Minister Zafarullah Khan Jamali will preside over the meeting. All the four chief ministers, AJK prime minister, the federal economic ministers and provincial finance ministers will attend the meeting.
The meeting will also review new development schemes cleared by the Central Development Working Party (CDWP) and the Executive Committee of the National Economic Council (Ecnec) during the year.
According to the NEC working papers available with Dawn, overall economic growth is projected to surpass budgeted target of 5.3 per cent of GDP, despite about 11 per cent decline in inflow of remittances, 43 per cent drop in foreign direct investment during the first eight months of the year and lower than estimated cotton yield.
The government estimates that "performance of various sectors of the economy during the first 7-8 months indicates that key sectoral as well as GDP growth will be higher than the targets".
The NEC data suggests that inflow of remittances at $2.3 billion in seven months is less than $2.5 billion of the same period last year. The remittances from the United States during the first seven months have declined by 11.3 per cent to $678 million and 29 per cent from Dubai to $266 million.
The government, however, expects to achieve the target of $3.6 billion foreign remittances at the year end. The higher growth during July-January period in large-scale manufacturing is expected to maintain its momentum in the ensuing months and is likely to post a double-digit growth after a long time.
"In agriculture sector, growth is expected to be close to the target despite setback to the cotton crop. The services sector is expected to grow correspondingly," says the summary to the NEC.
The quality of the PSDP utilization remains a challenge for the government. The NEC documents, however, suggest that re-allocations of funds would improve the situation.
"The mid-year review of the PSDP shows that with re-allocation towards fast moving projects and effective monitoring the target of public investment is likely to be achieved."
The summary to the NEC has also listed some key findings of the PSDP review. It conceded that PC-1s of 52 projects have not been received in the planning commission as of now for which allocations had been made in the federal budget. A total of 130 projects were included in the PSDP without PC-1s at the start of the fiscal year.
More than 72 per cent of the PSDP projects costing Rs100 million and above had no independent project directors (IPDs) despite standing instructions for appointment of the IPDs in such projects.
Similarly, internal monitoring of PSDP projects by the relevant ministries and divisions was undertaken in only 22 per cent of the projects. Also, the problems of separate project staff, capacity to absorb releases, delayed releases and tendering were encountered during the monitoring.
Furthermore, project implementation was delayed in many cases because of late appointment of project directors and supporting facilities. The summary pointed out that this situation emerged despite three rounds of physical monitoring by the Planning Commission of all projects costing Rs40 million and above which constitute 83 per cent of the PSDP.
The summary to NEC noted that a total of Rs25.3 billion were released up to Dec 31, 2003, for approved projects costing Rs40 million and above which was 34 per cent of the allocation compared with 27 per cent during the corresponding period of last year.
The overall utilization amounted to Rs22 billion or 30 per cent of the total allocation compared with 26 per cent in the corresponding period of last year. The government is expecting that the improved macro-economic indicators, continuity in economic policies, political stability and favourable setting for regional cooperation will not only give a spur to the current growth momentum but also lay strong foundations for sustained growth during the coming years.
