30 August 2004	Monday	13 Rajab 1425

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ISLAMABAD, Aug 29: The Asian Development Bank (ADB) has expressed serious concern over Pakistan's incapacity and poor quality to spend its development allocations. It has called for strengthening of institutions and improvement of implementation capacity of the government.

In its latest assessment of the Pakistan's public sector development programme, the bank has noted a substantial increase in the size of its uplift plan. It, however, said: "There are serious concern about its capacity to implement this large programme."

For the current fiscal year, Pakistan has earmarked Rs202 billion for the public sector development programme (PSDP), against the last year's allocation of Rs160 billion.

"In the first nine months 2003-04, only 48 per cent of the federal PSDP allocation had been spent. In the past, development spending has consistently fallen short of the budgeted allocations, reflecting poor implementation capacity," said the ADB.

The bank is more concerned over the fact that over half of the development allocations are released in the last three months of the fiscal year that normally result in large scale slippages. The government has yet to reconcile or make public its accounts of the last fiscal despite close of the year about two months ago.

The ADB said: "Also there has been a pattern of spending a large part of development allocations in the last quarter of the year, which undermines the quality of expenditure. Hence there is an urgent need to strengthen institutions and improve implementation capacity of the government."

The ADB's criticism of the country's implementation capacity has come at a time Pakistan is in the process of putting in place a new government with an economic background that could focus on improving the funds utilisation capacity and implementation machinery in the very beginning.

The bank has noted that the development expenditure of 2003-04, as shown in the revised estimates appearing in budget documents, showed a sharp increase of 18.8 per cent to Rs106.9 billion in 2004. As a percentage of the GDP, development expenditure increased from 1.87 to 1.96.

Meanwhile consolidated development expenditure showed a sharp increase of 17.6 per cent to Rs1512 billion. As a percentage of the GDP, it increased from 2.7 to 2.8. There was a larger increase in development outlays by the federal government than by the provincial governments.

"However, the revised estimate of development outlay shown in budget documents may be over-estimated. The reconciled accounts for the first three quarters of the year show that only Rs54.9 billion (51.4 per cent of total outlay) had been spent under this head.

Although, there is a considerable bunching of expenditure in the last quarter of the fiscal year, it may be difficult for the government to spend Rs52 billion in the last quarter," the bank said.

The bank has strongly proposed to improve the project implementation capacity. "With additional resources now available for development, the government must enhance its capacity to full and effectively utilise the enlarged public sector development programme," it said.