MORE than a quarter of projects included in the public sector development programme (PSDP) for fiscal 2006 are moving sluggishly. Poor project management and utilization rather than lack of funds, are the key causes. Add the growing politics between Islamabad and the provinces to this scenario and the worsening shortage of skilled managers and supervisors.

These problems came into the limelight at the just-concluded session of the National Economic Council (NEC), country’s highest economic policy-making body.

But again, instead of the decisions of the NEC that are eagerly awaited by the all stakeholders ranging from provincial governments to the private sector and the people, what it left in its trail are the new controversies over government-claimed reduction in poverty and unemployment.

Disturbing questions are repeatedly being asked ? Is the claimed “fast track” economic development really going on?

Development for whom? Is there any concern at all for equity? Is the government staging a repeat of “the 22 family syndrome”—but this time different characters coming to the fore, and in a much larger number? Does anyone remember who drowned President Ayub’s 10-year long mighty government—lack of democracy or lack of equity?

The latest meeting of NEC came on the back of the Council’s June 1, 2004 decision to monitor implementation of the PSDP more regularly and on a quarterly basis. The first quarter review for 2006 PDSP took place in October, and the second one in late January.

The Rs272 billion PSDP 2006 includes a federal programme of Rs204 billion, including foreign assistance of Rs41 billion. Islamabad is constantly increasing its funding share in PSDP. It’s up from Rs113 billion in 2004 to Rs204 billion in 2006.

Out of Rs163 billion, Rs64.5 billion, or 39.6 per cent, was released during July-December, 2005. It is nearly 50 per cent higher compared to the like period of the last year when it was Rs44.4 billion. The projects actually utilized Rs52.8 billion, or 82 per cent, against the released amount of Rs64.5 billion, a shade better than the like period of last year.

The utilization improved on the back of better cash plans, timely releases and close monitoring by the Planning Commission (PC). Until two years ago, funds were released broadly under a formula, providing cash on 30-50-20 per cent basis during the year. But, more funds are now provided even at the start of new fiscal year according to the cash plans and upfront requirements of projects.

The new procedure ensures a greater involvement of the supervising ministries and the concerned provincial government. The procedure is more effective.

How far the implementation is sluggish? Dr Akram Sheikh, deputy chairman PC, puts the number of such projects at 25 percent of 1,1512 ongoing projects which are to cost Rs1.734 trillion .” These projects are moving slowly, as they are behind their laid down implementation scheduled,” he says.

The NEC has decided to move on several fronts to speed up project implementation, with the help of a new six-point programme. Rather than channelling federal funds through provincial governments, money will be given to project managers direct. Accountant General Pakistan Revenue will cut down procedural delays and its repeated objections.

A new federal policy on recruitment of project personnel will be adopted, as the current ban on recruitment in Punjab and Sindh is adversely affecting completion. Core project management units (CPMUs) will be established for large, and donor-funded projects, for associating project directors at the inception stage. Quick transfers of project personnel will be avoided.

Projects costing Rs100 million or more will have independent directors. In the case of large projects, PC-1 for acquisition of land will be prepared as Phase-1. After necessary arrangements, other parts of the project will be considered as phase-II.

Project start ups were delayed because no funds were released. These include Khushhal Pakistan Fund, development of less developed districts, and village electrification under Roshan Pakistan.

The mid-year review of PDSP prepared by the PC for 2006, indicates infrastructure projects used at 32.2 percent funds in the first half of the year. These include atomic energy 57.4 per cent, water and power 28.1, petroleum and natural resources 29.1, communications 46.7, ports and shipping 20.6, and railways 47.8. Fund utilization by Khushhal Pakistan village electrification and several special projects was very high.

Utilization of funds in education was 21.7 per cent, higher education 31.8 percent, health 24.7 per cent, social welfare and special education 24.1, population planning 21, labour and manpower a poor 1.2, women’s development also poor at 5.3, Kashmir and Northern Areas 27.2, and States and Frontier regions 52.1 per cent.

Percentage wise, the funds used by IT and Telecom were 20.4, science and technology 24.9, culture, sports and youth affairs 27.7, tourism 40.9, works 24.9, defence 55.6, food, agriculture and livestock 27.3, environment 9.8, industries and production 5.7, interior 25.8, law, justice and human rights 13.9, establishment 17, cabinet 40.6, information and broadcasting 4.1, narcotics 26.1, planning and development 31.7, statistics 21, commerce 3.9 and foreign affairs 0.3 per cent.

The overall utilization for all projects averages 29.3 per cent. The total revised allocation for all PSDP projects for 2006 is Rs204 billion, against which the release was Rs73.959 billion, while the utilization in the first half of 2006 was Rs59.793 billion, according to the NEC review.

Prime Minister Shaukat Aziz who chaired the NEC, said “overall poverty has declined from 32.1 in 2001 to 25.4 per cent in 2005, according to Pakistan Social Living Standards Measurement Survey (PSLSMS) conducted during 2004-05. Urban poverty declined from 22.7 in 2001 to 17.2 per cent in 2005. Rural poverty declined from 39 in 2001, to 31.8 per cent in 2005.”

The numbers have generated a lot of comment—the sentiment mostly ranging from a surprise to incredible. The new poverty numbers are based on lowering the calorie intake from 2,550 to 2,350.

Dr Akram Sheikh said unemployment is down from 7.7 percent in fiscal 2004 to 6.8 per cent now, as 5.5 million jobs were created over the last two years. NEC was also informed that per capita income will increase to $825 by end of fiscal 2006.

Poverty and unemployment, it is said, is at least three per cent more than the official claim. Officials even insist that PSLSMS numbers were “massaged” and prematurely released while the Federal Bureau of Statistics, itself hugely suffering on account of poor credibility and its statistics being considered suspect even by the government, is still working on poverty and employment data.

Criticism of the poverty and unemployment reduction figures focuses on various counts. “The government claims that growth rate has gone up only over the last two years, then how poverty has gone down in the last four years,” asks Dr Kaiser Bengali.

“Government’s own reports like expenditure and consumption patterns negate its claim of poverty reduction,” says Dr Nawaz Hakro, Professor of Economics, Quaid-e-Azam University. “I am not surprised over what government has claimed, because figure-fudging is done by some non-elected officials.

Nevertheless, if the government stands by its 8.4 per cent GDP growth claim for 2005, it would have brought down poverty and improve employment situation to some extent. But when the official statistics confirm an inflation rate of 11.5 per cent, what do the people need? Credibility, it is tested every hour of the day, and night, in bazaars.