ISLAMABAD, May 17: The actual utilisation of the Public Sector Development Programme (PSDP) allocation has remained very low and stood at Rs72.5 billion or just 49 per cent of the total allocation during the first nine months of the current fiscal year. Official documents suggest that the actual expenditure from July 2004 to March 2005 was Rs72.5 billion of the total allocation, including Rs11.6 billion in foreign aid. However, the expenditure of 49 per cent of the allocated amount is slightly higher than the development expenditure of 48.6 per cent incurred during the same period last year (2003-04).
“It is still less than expected, owing mainly to the shortfall in foreign aid disbursement, which was only Rs11.6 billion against the provision of Rs36 billion,” an official note to the National Economic Council said. Moreover, the short releases and expenditures were because Rs1.6 billion was released to the Khushal Pakistan Programme-II against the allocation of Rs4.1 billion.
“Similarly, the social sector has shown a poor utilisation ratio by and large,” said the document. This sector was allocated 30 per cent of the total PSDP. There has been slow utilisation of funds despite the measures taken by the National Economic Council last year to speed up and improve utilisation of funds and detailed quarterly reviews of the development projects by the Planning Commission and relevant line ministries.
In each quarterly review meeting, the federal secretaries and principal accounting officers were asked to ensure that projects were completed on time, within the approved cost and that its objectives were also fulfilled. Also, from the second quarter onwards, the PSDP releases were linked with the approved cash and work plans. After the approval of these plans by the Planning Commission and the Finance Division, further releases were to be made without waiting for a formal request from the line ministries and without asking for any expenditure details. These releases were made in the beginning of each quarter.
The slow utilisation of development funds has been a chronic problem with Pakistan’s implementation machinery which has faced criticism from both international lenders and economists. They said the slow release and utilisation of funds in the first nine months of any fiscal year meant that maximum funds were released to the contractors and executing agencies in the month of June, resulting in huge leakages and compromising the quality of utilisation.
The Ministry of Finance and Planning Commission, however, claimed that expenditure is likely to pick up in the last quarter of the current fiscal year as the project authorities have reported that they will be able to consume their entire allocated amount of Rs148 billion in water, power, transport and communication sectors.
