05 March 2005	Saturday	23 Muharram 1426

ISLAMABAD, March 4: The government is anticipating overall inflation to go in double digits by June, first time after eight years, owing to continuous increase in the prices of petroleum and essential consumer goods, it is learnt.

The National Economic Council (NEC) was informed on Thursday that inflation has already increased to 8.8 per cent in the first seven months (July-January) against a full year budgetary target of 4.3 per cent and it was likely to be in double digits at the end of the current fiscal year.

A senior government official who attended the NEC meeting told Dawn that the expected rise in inflation was mainly attributed to rising trend in petroleum, wheat and flour, sugar and construction materials, beef, chicken, onions and mutton.

He said the government had no control over the petroleum prices while last year's wheat production stood at maximum of 18 million tons against a target of 20.2 million tons.

The meeting was also informed that inflation stood at 3.58 per cent in 1999-2000 but increased to 4.41 per cent in 2000-01. It reduced again to 3.54 per cent in 2001-02.

It declined further in 2002-03 to 3.10 per cent but rose to 4.57 per cent in 2003-04 and surged to 8.8 per cent in the first seven months of the current fiscal year.

The NEC was informed that federal share in the annual public sector development programme (PSDP), excluding foreign exchange component, was Rs112.4 billion. Of this, Rs44.4 billion or 39.5 per cent was released in first six months and utilisation was Rs36.2 billion or 81 per cent of the total releases.

The NEC was also informed that 112 federal projects under the PSDP were more or less on schedule while 78 projects were behind the target. The reasons for delay included delayed release of funds, inter-departmental disputes, contractors' inefficiency, land acquisition and law and order problems.

The NEC was told that the government had decided last year to appoint project directors for projects with costs higher than Rs100 million. However, the project directors could not be appointed for 250 such projects. The project directors were, however, appointed for 120 projects.

The planning commission suggested that projects included in the PSDP 2004-05 that had not been approved by the competent forums by February 2005 should be dropped with immediate effect and identified a total of 57 projects of this category, mostly relating to the roads and highways in the Punjab, Sindh and NWFP.

The three provinces contested this proposal and took the stand that they should not be punished for the inefficiencies of the National Highway Authority (NHA) or other federal agencies and instead projects falling in their respective areas should be expedited.

The NEC, therefore, directed the chairman of National Highway Authority to get these projects approved from the relevant forums latest by April 30, 2005. Some of these projects included Thatta-Badin Coastal Highway, Larkana-Khairpur Indus Highway bridges and improvement of Jacobabad Bypass and a portion of N-56.

The planning commission also proposed that projects would not be included in the next year's PSDP (2005-06) unless their PC-1s were submitted to the commission latest by April 30 to avoid unnecessary allocations for unapproved projects.

The provinces also objected to this proposal and demanded extension in the deadline. The NEC, therefore, set April 30 as deadline for submitting PC1 for federal projects and May 31 for provincial projects. However, the projects with PC-1s submitted by the provinces by May 31 would be included in the PSDP 2005-06 only if they were approved by the competent forums before the end of first quarter (September-end) of the next fiscal year.

The NEC also enhanced the powers of the central development working party (CDWP) to approve projects up to Rs500 million worth of cost instead of existing Rs200 million. Even though, the projects to be approved by the CDWP would constitute only seven per cent of the total projects.

The sources said the scope of the projects to be approved by the CDWP would, however, remain unchanged in view of cost escalations in the past few years as powers to approve Rs200 million worth of projects had been set more than a decade ago.

The NEC also decided to hold its pre-budget meeting by end of May 2005 to approve macro-economic framework and public sector development programme for the next year. The meeting also decided to circulate the mid-term budgetary framework (MTBF) of the current year to the provinces for their comments before the next NEC meeti1ng.