ECNEC decisions

The Executive Committee of the National Economic Council (ECNEC), which met under the chairmanship of the Finance Minister on 18th February, reviewed progress on the current Public Sector Development Programme (PSDP) projects and put in place a mechanism to monitor Madressah reforms progress.
It also approved two projects in water sector estimated to cost Rs 23.79 billion, two projects in physical planning and housing worth Rs 0.5 billion, one project each in population welfare, culture and communications amounting to Rs 0.3 billion, Rs 0.4 billion and Rs 0.5 billion respectively. Besides, it was noted with satisfaction that the existing projects were on track.
Funds were being effectively utilised and outcome-based approach was being followed.
An important decision was the approval of monitoring mechanism to review progress of the Rs 5.8 billion Madressah Reform Project and the education ministry was made responsible for implementing this project.
In order to make the PSDP an effective vehicle of economic change, the ECNEC approved recommendations for improved training, establishment of a fund release committee, diversion of funds to high priority areas, training of project directors, and setting up of core project management units.
It was also decided to establish planning and monitoring cells, and to create separate projects accounts.
Further, all divisions were directed to appoint project directors for each project not later than March, 2004.
A cursory glance at the proceedings and decisions of the ECNEC meeting would indicate that most of the initiatives were right and well targeted.
Proper management of water resources and its increased availability for agricultural production is of course the need of the hour and ECNEC has devoted most of the available funds for the purpose.
Such a policy would not only be beneficial for economic prospects of the country but would also ensure better distribution of income over time.
Adequate availability of resources for population welfare, physical planning and housing would also be useful in many ways.
The decision on Madressah Reform Project was a bold one, especially keeping in view the resistance to such an initiative from certain quarters.
We would urge the government to continue on this path resolutely because of its long-term benefits.
Such a policy would not only promote enlightenment and social harmony but would also ultimately produce a class of citizens who are more employable and useful members of society.
However, the observation of the ECNEC that PSDP projects were on track was hard to believe and in a way bizarre.
In an effort to provide more resources for social sectors to meet the growing challenge of improvement in infrastructure and poverty alleviation, the size of the PSDP for 2003-04 was increased to Rs 160 billion, which was 19.4 percent more than Rs 134 billion originally budgeted for 2002-03 and 21.5 percent over the revised PSDP for 2002-03.
Such an ambitious target, it now seems, was probably fixed for only good public relationing and without much consideration for the utilisation capacity of the country.
According to the statistics provided to the ECNEC, releases for PSDP during the first six months of the current fiscal were recorded at only 34 percent of the annual allocations.
At this rate of spending, the government would hardly be able to utilise Rs 100-110 billion by the end of the fiscal year against a budgetary allocation of Rs 160 billion.
The slow utilisation during the earlier part of the year would also force the authorities to make hasty releases in the last quarter thus compromising the quality of project implementation. The result of such an approach would only be far from satisfactory.
Sadly, this is not something unusual but a recurring phenomenon. Prompted by the desire to upgrade the country's infrastructure, reduce poverty and create employment coupled with the availability of increasing fiscal space in the recent past, the economic managers have been allocating higher amounts of resources for PSDP without giving much thought to the utilisation capacity of the country and ultimately ending up with the same vexing results.
The utilisation, it may be noted, has remained low despite the fact that principal accounting officers of the relevant ministries and divisions had been authorised to draw up to 50 percent of the total allocations under the social sector and 45 percent for infrastructure projects without prior approval from the federal government.
It means that much more concrete measures need to be taken to improve the utilisation capacity and bring performance at par with the promise.
If the situation on this account is not rectified and soon, ordinary citizens would tend to think that mere allocations are just an eyewash and without much substance.