April 07, 2007	Saturday	Rabi-ul-Awwal 18, 1428

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ISLAMABAD, April 6: Development funds utilised in the first half (July-December) of the current financial year totalled Rs87.4 billion, only 35 per cent of the Rs250 billion Public Sector Development Programme for federal projects for the year.

The Planning Commission has, however, accused provincial governments of making delayed payments to project authorities.

“The provincial governments very often delay release of federal funds to project authorities,” complains federal planning secretary Zia-ur-Rehman.

The Planning Commission has taken up the issue for resolution with the National Economic Council (NEC), the highest decision-making body on national economy and development. The council will meet next week.

“Such delays adversely affect project implementation,” Mr Rehman wrote to the NEC, requesting that “the provincial governments be advised to release funds to project authorities within 15 days of their receipt from the federal government”.

Another reason for the slow utilisation of funds is lack of project directors. The Planning Commission has conceded that “the process of appointment of independent project directors especially in social sectors is slow”. The PC has proposed to the NEC to direct executing divisions at the federal level to complete the process of appointment of independent project directors for all projects costing Rs100 million and above by April 15, 2007, and to follow government guidelines in this regard.

With this pace of utilisation, the government was unlikely to utilise more than 80 per cent of funds allocated for the annual development programme, said a senior official.

“But don’t be surprised if we show 100 per cent utilisation of funds by the end of the year,” he said, adding that maximum funds would be released a few days before the close of financial year.

International lending agencies and civil society organisations have been critical of the practice involving release of major chunk of annual allocations in the closing months of the year.

They are of the view that such a practice compromised the quality of utilisation and mostly serving accounting needs as most of these funds are used for unnecessary purchases and paid to contractors even if the projects remain unfinished.

Government officials, on the other hand, argue that fresh projects normally start slowly and then pick up pace in the third quarter of the financial year, although most of the projects are spread over many years.

Under a decision of the prime minister, the Planning Commission now gives top monitoring priority to projects initiated on the directives of the president and the prime minister, followed by projects of higher allocation and then projects at advanced stage of completion.

The PSDP 2006-07 envisaged an investment of Rs385 billion, including Rs115 billion provincial development programmes. An allocation of Rs250 billion was made for federal PSDP that also included foreign loans of Rs37 billion. Against this, the ministry of finance released Rs99 billion by close of December against Rs74 billion of the same period last year. This means total releases this year amounted to 39.6 per cent, showing an improvement of 3.3 per cent over the same period last year when this percentage was 36.3 per cent.

The utilisation of funds on ground was, however, reasonably better than last year. Last year, the utilisation of funds in the first six months had stood at Rs59.8 billion or 29.3 per cent of the total Rs204 billion PSDP. This increased to Rs87.4 billion this year, or 35 per cent of Rs250 billion PSDP.

The Planning Commission, however, claims this as a “remarkable improvement” and attributes it to cash/work plans and strict monitoring system.