'Power' to release funds: Planning ministry, finance division in a tug of war

Ministry of Planning, Development and Reform and Finance Division are reportedly in a tug of war over "power" to release funds for projects under PSDP, well-informed sources in Finance Division told Business Recorder. Sharing details, sources said, Ishaq Dar as the Finance Minister in his budget speech for Financial Year 2010-11 had announced that PSDP funds would be released upfront and automatically. The Ministry of Planning, Development and Reform was advised to work out the mechanism for release of PSDP funds (rupee component).
The Ministry of Planning, Development and Reform had worked out the mechanism for release of funds in consultation with all the stakeholders. Accordingly, the Ministry assumed the responsibility to release development funds from July 1, 2010. There was no requirement of ways and means clearance by the Finance Division. However, the Finance Division in its fund release strategy for financial year 2012-13 imposed condition of ways and means clearance even during the 1st quarter whereas earlier ways and means requirement was applicable from the second quarter onwards.
The Ministry of Planning, Development and Reform maintains that the release of funds is subject to quarterly demand by the Principal Accounting Officer (PAO). The Ministry has noticed that sponsoring Ministries take considerable time to make demand for release of funds. Further, necessary procedures, eg extension in execution period, cash plans, Project Monitoring and Evaluation System, up-dation etc, are also missing in demand requests. Resultantly, the Project Directors (PDs) do not receive funds for maintaining the pace of work.
The Ministry of Planning, Development and Reform further argues that it is imperative to review the process for release of development funds especially when the powers of development fora for sanctioning development projects are being enhanced. The Ministry of Planning, Development and Reform has proposed the following to simplify the release procedure and make the PAQs responsible for completing all financial and codal formalities: (i) Ministry of Planning, Development and Reform will release project-wise funds (rupee component) allocated in PSDP to the ongoing approved projects of ministries/divisions during the first week of each quarter as per criteria of the Finance Division (ie, 20 percent in 1st & 2nd quarter, 30 percent in 3rd and 4th quarter) without originating demand by the PAQ; (ii) Ministry/Division concerned will be instructed to release funds to the approved projects strictly in accordance with the criteria laid down by Finance Division, pre-requisites of the Ministry of Planning, Development and Reform and other relevant rules; (iii) Ministry/Division will approach Finance Division for endorsement of sanction. On receipt of sanction, Ministry of Planning, Development and Reform will punch the released amount of the project in the SAP system; (iv) with regard to provincially executed projects, the Ministry of Finance will continue to release funds as per existing rules; (v) Ministry of Planning, Development and Reform, will release first tranche of funds to the new projects within one week on receipt of administrative approval of the projects(s) from the Ministry/Division; (vi) Ministry/ Divisions will not release additional funds to any project over and above the allocated amount of the PSDP through internal adjustment. All re-appropriations will be referred to the Ministry of Planning, Development and Reform as per the procedure and rules; and (vii) all Ministries/ Divisions will be responsible for updating project monitoring and evaluation system of each project by 10th of the following month.