Finance Ministry has decided to empower Planning Commission to release funds for development projects in Public Sector Development Programme (PSDP) with the objective of reducing the throw forward liability of Rs 3 trillion by 20 to 30 percent, Business Recorder has reliably learnt. The final decision is expected to be made by the first week of August 2010.
"All Ministries will directly report to the Planning Commission instead of Finance Ministry for release of funds for development projects," sources said, adding that Planning Commission's recommendation will be binding on the Finance Ministry. Earlier, ministries and Divisions requested the Finance Division for fund release.
Ministries and divisions will be directed to submit quarterly fund requirements and after examining their demands, the Planning Commission will recommend release of funds to the Finance Ministry. "This process will ensure timely release of funds for development projects," sources maintained. Planning Commission has also held a conference to enhance awareness of the new mechanism for release of development funds within ministries and divisions.
The strategy to delete slow moving projects, new projects that have not yet commenced and those projects that would devolve on provinces after the National Finance Commission award would rationalise PSDP 2010-11 and reduce throw-forward liability, sources maintained.
After rationalisation of the PSDP, no further cut will be made in the total PSDP allocation but the number of projects may be reduced to divert funding to result oriented projects, a stance supported by the World Bank. The federal size of 2010-11 PSDP is Rs 280 billion.
The government has declined to fund hundreds of provincial projects, at an estimated cost of Rs 140 billion. However provincial governments are also unwilling to take financing responsibility for them. Around 50-60 percent work has been completed on some ongoing provincial projects, which have been dropped. "National Economic Council (NEC) had directed provinces to bear the remaining cost of these ongoing projects from their own resources after enhanced share in NFC award, but failed to convince the provinces to complete the projects," sources said.
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