26 July 2004	Monday	08 Jamadi-us-Saani 1425

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ISLAMABAD, July 25: The federal government has asked all the ministries and divisions to use up 25 per cent of their development budget by September 30, 2004, to ensure maximum budget utilization during the current fiscal year, Dawn has learnt.

Sources in the finance ministry said an official memorandum had been sent to all the ministries and divisions, asking them to prepare cash plans of each project under their control.

The ministries and divisions have also been authorized to incur 40 per cent expenditure of their current budgets during the first half (July 1-December 31) of the current year, 2004-05.

The government has been under criticism for low utilization of development cash during first two to three quarters of each fiscal year that later results in bulk releases in the fourth quarter. This practice compromises the quality of fund utilization, the sources said.

The government is often faced with the question what is the use of announcing higher allocations for development when real utilization usually remains low due to erosion in federal and provincial governments' capacity to implement projects.

The government has, therefore, decided to authorize federal secretaries to utilise 25 per cent of the development budget in each quarter so as to ensure maximum utilization of Public Sector Development Programme (PSDP) every year.

The government has already empowered federal secretaries/principal accounting officers to utilize up to 50 per cent and 45 per cent of the social sector and other development allocations without prior approval of the ministry of finance.

The government has allocated Rs202 billion for public sector development programme for the current fiscal year as compared with Rs160 billion allocation last year.

The PSDP utilization during first 10 months of last year had amounted to about 53 per cent of the Rs160 billion allocation but the government stated to achieve a utilisation level of Rs153 billion at the end of the year.

Final utilisation figures of last year are yet to be compiled. The National Economic Council had approved to put in place a new release and utilization policy early last month to follow up on the allocations through quarterly reviews with principal accounting officers.

The government says a major factor in slow utilization during the earlier part of the financial years is attributable to release of funds pattern, which is divided equally over the four quarters while different projects may have a different pattern of fund requirements.

The broad parameters of the overhauled policy included enhancement of delegated powers at the ministry and project levels to facilitate faster expenditure. The land acquisition procedures are in the process of being made faster by the provincial governments in view of this being a major cause of project delays.

Also, there would be a direct electronic link between project directors with the planning commission, the ministries concerned and the finance division. The software of this link has been developed.

The scrutiny procedures for funds release are also being simplified at the level of financial adviser organisation, the AGPR and the treasury, and the present range of checks will be minimised.

The release of funds to projects would be made on the basis of cash plans prepared strictly in accordance with their varying work requirements. Monitoring and evaluation cells would be established in each ministry and division to monitor their own projects while adequate funding would be made available for ongoing projects to the general exclusion of new projects. This would reduce 'throw forward' and completion of projects already started.