ISLAMABAD, May 24: The Annual Plan Coordination Committee (APCC) approved here on Friday Rs140 billion Public Sector Development Programme (PSDP) for 2002-2003.

Now the National Economic Council (NEC) will meet here on June 8, with President Gen Pervez Musharraf in the chair, to finally approve the size of the PSDP for the next financial year.

Official sources told Dawn that the NEC meeting was likely to effect a Rs8 to Rs9 billion increase in the PSDP so that new development projects could be adequately accommodated, especially relating to transport and communications.

The sources said the federal funding in the new PSDP had been reduced owing to non-utilisation of funds by different ministries and divisions.

The APCC, which was presided over by Deputy Chairman Planning Commission Dr Shahid Amjad Chaudhry, decided that the federal funding in the new PSDP will be restricted to Rs95 billion, while Rs45 billion will be extended to the provinces directly by the donor agencies. This has been decided that during the next financial year, donors will negotiate their assistance directly with the provinces, with the federal government acting only as a guarantor.

There was a heated discussion during the APCC meeting in which sponsoring agencies were criticized for not utilising funds, the sources said. The meeting was told that during the first 9 months of the current financial year, only 40 per cent funds could be utilised by the sponsoring agencies.

The officials of the ministry of finance were of the view that since enough funds had not been utilised, there was no justification to make higher allocations in the next PSDP.

Since the government did not have funding problem because of the substantial foreign support available, the ministry of finance had released 6 months’ funds to the ministries and divisions at the start of the current financial year. However, the sponsoring agencies did not utilise these funds. “There was no economic activity, how could there be any utilisation?” argued an official during the meeting.

A major disappointment was that the agricultural sector, despite having an increased quantum of cash, failed to utilize the money during the current financial year.

Secretary Information Technology (IT) Ashfaq Mehmood made a hard speech and questioned why no additional funding was being made available for undertaking greater economic activity, the sources said.

He said Pakistan had been offered a lot of foreign funds while the Paris Club rescheduled $12.5 billion Pakistan debt for 35 years. He said savings should have been spent on the welfare of the people.

He said fiscal space had been provided by the donors and bilateral creditors which should have been effectively utilised by the government.

The APCC decided to extend considerable funds to the water sector projects, especially Raising of Mangla Dam, Extension of Right Bank Outfall Drainage (RBOD), Gomalzam Dam, Mirani Dam, Thal Flood Water Canal, Left Bank Outfall Drain stage-1, Chashma Right Bank Canal, National Drainage Programme and Upper Rechna Remaining Deg Drainage project.

Good funding has also been recommended for power projects, health, education, rural development, woman emancipation and poverty alleviation programme, the sources said.