The development budget released to district governments in Khyber Pakhtunkhwa risks lapsing as only 21pc of the total allocation was consumed in the first 10 months of the current fiscal year.

A number of political, institutional, operational, and technical issues have persistently limited the ability of the district governments to expeditiously utilise the development fund.

The KP Local Government Act 2013 envisioned that 30pc of the provincial development budget would be set aside and distributed among the 25 districts through the Provincial Finance Commission (PFC).

Official data shows that the KP finance department has released Rs21.7 billion for development, in three instalments, to local governments.

One of the major issues to emerge in the local government’s development budget was fund utilisation capacity which was lacking in most of the districts

The first release was made on the very first date of the fiscal year, however, the second release was made with a delay of almost three months in December, while the third release in March — after another delay of two months. The target for the whole year is over Rs28bn.

However, no centralised record is maintained at the finance department of the utilisation of funds at the two other tiers of local government — the Tehsil Municipal Administrations (TMAs) and the village/neighbourhood councils.

District governments in KP are facing two major challenges — delay in the timely release of funds and low utilisation/expenditure owing to several factors.

As per official data, the highest district development funds of Rs406.83 million were released to Peshawar district in the first 10 months, while the lowest development funds of Rs145.78m were released to district Tank.

An official of the finance department said releases from the provincial government to the districts are made homogeneously and thus there is no bias in terms fiscal transfers to the local governments. Expenditures across the districts, however, are not homogeneous and exhibit great variation.

One of the major issues to emerge in the local government’s development budget was fund utilisation capacity which was lacking in most of the districts.

Due to the weather, among other reasons, certain districts could not initiate the development budget till the end of April 2017. These include Abbottabad, Bannu, Batagram, Tank, and Kohistan.

Shangla, though low on most socio-economic indicators in the province, exhibits the highest rate of utilisation proportionate to the releases.

And analysis of the data reveals that most of the biggest districts and those performing well in many of the socio-economic indicators in the province — Peshawar, Swat, Nowshera, Mardan, Mansehra and Kohat — show poor performance in terms of fund utilisation.

Apart from the districts having incurred no utilisation of development funds till date — Batagram, Bannu, Abbotabad, Kohistan, Tank — other districts like Mansehra, could not perform even at par with average execution.

According to the DFID funded sub-national governance programme in KP, the average combined utilisation of development funds is higher in districts like Nowshera, Lakki Marwat, Karak, Haripur, D.I. Khan and Buner, than the average utilisation of funds in other districts.

While the Planning and Development Guidelines for Local Governments warrant at least 20pc allocations for education and 10pc for health in the district development budget, these sectors get little attention by the district political leadership in terms of utilisation.

As per data, only 9pc of the total development budget utilisation is directed towards education whereas only 4pc of the total releases were used for health.

Drinking water, sanitation and roads which attract the favour from local politicians, together show 56pc of the total development utilisation. This highlights lack of political will in prioritising key priority sectors such as education and health.

This is further emphasised when only 7 out of 25 districts made any expenditure in the education sector whereas only 6 districts invested in the health sector.

The challenges for the poor utilisation of funds identified in an official document show that in some districts, no an amicable design for budget allocation was reached due to rifts among councillors.

As mandated in the Budget Rules 2016, the PFC shall provide provisional estimates of fiscal transfers to local governments before November each year. Similarly, final allocations to the district government must be communicated by mid of May each year.

However, PFC allocations to districts could only be communicated by June 20 for FY2016-17, limiting the ability of the district governments to prepare and approve their budgets before the start of the ensuing year.

Councillors’ unwillingness to follow rules to utilise development spending through routine executing agencies; lack of adequate institutional capacity of devolved departments to deal with the unprecedented quantum of the development budget, remained key impediments in an expeditious pursuit of development execution.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017