ISLAMABAD, June 15: The World Bank and the Asian Development Bank (ADB) have indicated to provide $1.8 billion ($900 million each) to help meet Rs156.3 billion external financing as announced in Rs903 billion new budget.

However, sources in the local multilateral agencies told Dawn here on Tuesday that one of the major concerns of the donors was the weak implementation of the policies which needed to be "vigorously monitored" during the next financial year.

Donors also said that the government would have to ensure timely budgetary releases to the provinces, ministries and divisions so that the development budget was exhausted fully in 2004-05. The government has been accused of making roughly 30 per cent less development spending during the outgoing fiscal year.

The sources said that $700 million were likely to be offered by the US government to help cover the external resources, required to fund the new budget. "We have called upon the government to prioritise its funding requirements so that important sectors like infrastructure development get adequate resources," a source said.

He said it was encouraging to note that the government had planned to spend Rs 87 billion on infrastructure development during the next financial year. The sources said that the government would have to prudently spend funds especially for infrastructure projects like Gwadar, coastal highways and power transmission to discourage corrupt practices.

Sources also said that the government needed to effectively push forward tax reforms, failing which it would be difficult to achieve Rs 580 billion revenue collection target set for 2004-05.

They said that there have been tax reduction and tax adjustments in the new budget that might create problems to achieve the new tax collection target. "Therefore, there is an urgent need to reform and revamp the whole CBR as quick as possible", a source said regretting that the reform process was slow, which required to be accelerated.

"Then the government will have to make sure that the fiscal deficit remains below 4 percent (over Rs200 billion)", another source said. He was of the view that the fiscal deficit must be sustainable to avoid having problems at a later stage.

He said that reduction in tariffs, duty cut on the import of machinery, capital goods and raw material were the positive aspects of the new budget which would have a good impact on growth and manufacturing. However, the source said that without adequately supporting the agriculture sector, it might not be easy to achieve 6.6 per cent GDP growth rate in 2004-05.