ISLAMABAD: With provincial governments still reluctant to own the federal government's new framework for economic growth after the passage of the 18th Amendment, international lenders have stopped funding development projects and programmes because of lack of integrated strategies and clear policies and implementation agenda.

Informed sources told Dawn that while shelving the decades-old system of formulating five-year development and economic plans, the Planning Commission had put in place a new framework for economic growth in which provinces' aspirations and development needs had not been taken care of.

“The new framework was introduced by the deputy chairman planning commission with the maximum input from outside authors but apart from a couple of seminars provincial governments were not consulted through institutional engagement,” a senior official in the Sindh government pointed out.

He said the deputy chairman planning commission was facing resistance even from within the Planning Commission to implement the new growth strategy, adding that the 10th five-year plan finalised in consultation with provincial governments was shelved by Dr Nadeem ul Haque just before its launch in May 2010.

At a recent consultative session with development partners, federal and provincial governments organised by the Planning Commission on defining roles in the health sector in the aftermath of the 18th Amendment, the Sindh government informed participants that 29 per cent of the country's population did not receive any health service from public or private sector and therefore the provinces should be provided all required resources for about two years to provide the heath service to these segments of society.

The Sindh government also put on record that vertical programmes, still being looked after by the federal government, were created without taking provinces into confidence. As a result, there were overlapping in such programmes which could not be corrected in the absence of the provincial latitude in utilisation of the PSDP funds in an integrated manner.

It was also pointed out that provinces had entrusted the federal government with powers to establish a 'Drug Regulatory Authority' but confusion still prevailed whom to contact about issues on drug manufacturing and control in the absence of such an authority.

The Khyber-Pakhtunkhwa government complained that the federation was no more funding any project in the health sector on cost-sharing basis after the passage of the 18th Amendment.

“As a matter of fact 82 per cent of the budget is used in salaries and the little is left for operational expenses,” the official said.

On questions of transparency in utilisation of funds provided by lending agencies, it has been pointed out that the foreign aid was only 1 per cent of the GDP while 99 per cent funding for health came from local resources and hence the focus should be on ensuring transparency in use of local resources.

The official record suggests that USAID has told the federal government that “development partners are waiting to see how mechanisms are being reshaped in the aftermath of devolution, specifically how coordination (among federal and provincial governments and lending agencies) works” and hence the need for consultations at all levels.

The UK's Department for International Development (DFID) has told the government to set priorities with intended outcome. The DFID said it had been providing help in generating budget support as well as sectoral budget support at the federal level for reasons that Centre had mechanisms in place in the form of Poverty Reduction Growth Strategy, Medium Term Development Framework, health policy, financial systems and procurement rules, but “in the absence of such mechanisms at provincial level it will be difficult for us (development partners, including DFID) to invest”.

The Australian Aid has also pointed to the need for integration of preventive programmes and flexibility in fund flow and proper utilisation after transfer of policy function to provinces.

International lenders have, however, supported the new growth framework. It has now been agreed to by all stakeholders to hold planning and coordination sessions on a quarterly basis, with provinces taking the lead and the Planning Commission coordinating the process. It has also been decided to strengthen the aspect of human capital with the framework for economic growth.