Ministry overrides its own guidelines

ISLAMABAD - Finance Division, which directs other ministries to rationalize their expenditure in the wake of ongoing financial crisis, overrides its own guidelines while initiating billions of rupees new schemes instead of completing the ongoing projects.

Pakistan is facing one of the worst economic and financial crises of its history. The government is short of required money to support the ongoing development projects and has asked the Planning Commission to rationalize the development expenditure.

The economic managers have started contemplating to cut development budget for the current financial year, even before maiden meeting of Central Development Working Party, a body authorized to approve up to Rs 500 million development projects.

The govt has twice postponed the scheduled meetings of the CDWP due to lack of funds.

The Finance Division, which is already running 80 projects has singled out 22 more schemes in spite of serious financial problems. The estimated cost of 80 development projects is Rs 94 billion. So far it has incurred an expenditure of Rs 32.3 billion, which is slightly above one-third of the total requirement.

Instead of providing maximum funds to complete these projects at the earliest, the Ministry has allocated about Rs 14 billion for fiscal year 2008-09, which is one-fifth of the remaining requirement of Rs 61.7 billion, causing further delay in the completion of ongoing projects.

In Public Sector Development Programme 2008-09, the Finance Division has announced 22 new development ventures, which would cost Rs 53.7 billion. Out of it, the Finance Ministry has fixed Rs 36.8b in the federal budget, which is more than two-thirds of the total financing needs of new schemes.

With inclusion of new projects, the Finance Ministry funding requirements have swelled over Rs 115 billion and it has a total allocation of Rs 50.7 billion for total 102 projects.

The total outlay of PSDP 2008-09 is Rs 550 billion, out of which Rs 170 billion are allocated for provinces. The Planning Commission sources say the government may slash this allocation up to Rs 350 billion in the coming months.

The government is running a portfolio of more than 2200 development schemes of past many years. According to its own estimates, the government needs at least Rs 500 billion per annum for the next 4-5 years to just complete the ongoing schemes without initiating any new project. Most of these projects have been delayed for many years, which have pushed up their actual cost due to inflationary impacts.