ISLAMABAD, Sept 20: The government would pass on the impact of increase in international oil prices to the consumers if prices maintain upward trend, said adviser to the prime minister on finance Dr Salman Shah.

Talking to reporters here on Monday after the inaugural ceremony of Public Sector Capacity Building Project, he said the discussions on National Finance Commission (NFC) award would be resumed from the point where all parties were nearing consensus.

He said the decision to reconstitute NFC would be taken by Prime Minister Shauakt Aziz. The issues had been narrowed down when the discussions collapsed in June this year, said Mr Shah who was assisting Punjab as consultant on NFC.

Responding to a question Dr Shah said higher inflation was based on one time cost-push factors of higher oil prices and recent wheat crisis. Inflation during last two months was nine per cent, which the government expected to reduce in future.

John Wall, the country director, World Bank, told reporters that the government policies have forced investment to grow which is increasing aggregate demand in economy.

He said that higher inflation was a sign of growing economy. He said higher demand is putting pressure on local markets by creating shortages of supply, which would lead to higher imports if local production is not increased. This could create a shortage in the domestic market.

Mr Wall said the macro fundamentals like budget deficit was under control, exports were rising and economy had crossed six per cent GDP growth. He said the power sector was improving, although recent line losses targets were missed. He said the hydel power generation has increased and line losses would be reduced in the long run, which would be consumed through subsidy from federal government. This would affect fiscal deficit, he said.

Earlier, the advisor to the prime minister on finance launched in association with the World Bank at Rs3.5 billion capacity building programme for the public sector institutions and civil servants.

The project aims at training civil servants to improve delivery of services. The world Bank will provide a credit of $55 million under the project. The objective is to raise the overall quality of policy formulation, public service delivery, human resource management and overall productivity and performance of the government.

Mr Shah said more than 500 civil servants would acquire technical and specialized training through degree and non-degree training programme at the national and foreign universities.

Improvements will be made in public sector training institutions like Civil Services Academy, NIPAs, National School of Public Policy and Recruitment systems reforms unit (RSRU) will be strengthened.

Broad-based civil service reforms will be facilitated through Civil Services Reforms Unit (CSRU) and key ministries/agencies in the forefront of design, implementation and monitoring of policy reforms and key regulatory agencies will be strengthened.

The adviser said a deterioration has been observed in the quality of civil services due to absence of a career grooming system to prepare them for higher responsibility, inadequate training system, under investment in human capital and inappropriate centralization of decision-making system.

The public sector capacity building project by addressing all these issues will lead to good governance. He said that in addition to training at least 500 civil service officers of federal, provincial, district and ex-cadre, occupying key mid- level positions in domestic and foreign institutes, the programme will be undertaken for upgradation of pre-service and in-service domestic public sector training institutions including Civil Services Academy, NIPAs, NSPP.