04 April 2004	Sunday	13 Safar 1425

ISLAMABAD, April 3: The federal government has directed the provinces to utilize their development funds "effectively" to qualify for more resources under the 6th National Finance Commission (NFC) award.

Official sources told Dawn here on Saturday that the ministry of finance had asked all the provinces to explain as to why they did not spend adequately when all the required funds were made available to them well in time.

Sources said that Punjab had spent 49 per cent of its funds under the ongoing Public Sector Development Programme (PSDP) during the first seven months of 2003-04. Similarly, Sindh, the NWFP and Balochostan spent 32 per cent, 22 per cent and 11 per cent, respectively, out of the cash made available to them during July-February of the current financial year.

The authorities of the NWFP and Balochistan were specially warned by the Centre for having spent much less.

The Balochistan government argued that it could not spend adequately due to bad weather in winter, particularly during the snowfall period. The NWFP replied it could not prioritize the development projects that resulted in less spending.

"Provinces will have to show capacity to consume increased funds for seeking additional money, especially under the new NFC award," a source said.

He regretted that Punjab and Sindh, too, could not satisfy the Centre during various meetings, including that of the National Economic Council (NEC) held recently, about their failure to effectively use their funds.

The source said the provinces had been directed to justify the usefulness of their spending so that they could be extended more financial assistance by the federal government.

Another official source said that the ministry of finance had done its homework according to which it could not offer more than 46 per cent share to the provinces in the new NFC award that had already been delayed by two years.

Responding to a question, he said if the president and the prime minister intervened then the finance ministry might have to offer a little more share to the provinces.

"But in that case we will have to tell them that the budget deficit will increase if we concede to the demands of the provinces to offer them 50 per cent share in the new award," he added. He insisted that the provinces must utilize their allocated funds to seek more from the Centre.

However, the source said that stretching the provinces' share from the present 37.5 per cent to 46 per cent would mean an overall 2.5 per cent increase which he termed "enormous and unprecedented" by any standard.