Funds for unapproved projects won’t be released: ministry – Pakistan

ISLAMABAD: Amid flood complaints from the National Highway Authority (NHA) with unviable road projects and more than Rs400 billion in cash development loans (CDL) from the government, the Ministry of Finance announced Tuesday that no will provide funds for projects not approved this year.

Testifying before a parliamentary panel, three key federal ministries reported on many important decisions related to future fiscal policy. Animated discussions followed as several ministries explained their position, sometimes challenging each other.

The meeting of the Senate Standing Committee on Planning, Development and Reform was chaired by Senator Agha Shahzaib Durrani.

At the beginning of the meeting, the Secretary of Communications, Jawwad Rafique Malik, said his ministry had moved a summary to the Cabinet Economic Coordination Committee, and told him that NHA was no longer interested in cash development loans due to the overload of its portfolio with highway and highway projects. launched under political decisions. Unless the mechanism around the CDLs was changed, its size would continue to grow beyond the financial viability of the CNS. Therefore, the practice of providing CDLs to the CNS should be stopped.

Mr. Malik also complained that NHA was also not receiving full funds for projects that were part of the Public Sector Development Program (PSDP) and that this was the case even in the last two quarters.

The communications secretary says that the highway projects were initiated mainly under political decisions, although most of them may not be economically viable.

CDLs are generally contracted by the federal government with an interest of 2-5 percent and are rented to various corporations and public sector entities with a margin of 14-15 percent.

Then, the Secretary of Planning, Zafar Hasan, told the panel that he was transferring a summary to the Executive Committee of the National Economic Council for approval, so that he could place 20{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of the total funds allocated available to the ministries in the first quarter without waiting for their demands.

Hasan was followed by the Joint Secretary of the Ministry of Finance, Javed Iqbal Khan, who said that the Ministry of Finance would not disburse funds for projects not approved during the current fiscal year to avoid wasting public money. He explained that the finance ministry could not have CDLs acquired for development projects in its books due to the IMF program to control the fiscal deficit.

He said it should also be appreciated that the government was also raising funds from the market in the form of Pakistan Investment Bonds and other instruments to fulfill various responsibilities and financed in part through the performance of the CDL.

During a review of PSDP releases in the last quarter of fiscal year 2018-19, the planning secretary said at the meeting that last year's PSDP was initially Rs1 billion and then rationalized to Rs675 billion, including Rs531bn of components local and Rs144bn. The actual amount released in the previous year was Rs678bn, that is, Rs3bn more than the real PSDP.

The committee also listened to the ministries of communications, energy, water and finance about the status of releases in the last quarter. He was surprised to learn that NHA did not receive any money in the last quarter and expressed concern about it.

The planning secretary said the budget allocated by the NHA last year was Rs188bn and Rs251bn – 134pc was disbursed from the actual budget.

This was unacceptable to the Secretary of Communications, Jawwad Rafique, who said the disbursement reached 134pc or Rs251bn against the allocation of Rs188bn because the government actually received Rs173bn in foreign assistance against its estimated budget of Rs72bn, and reached 240pc of the estimated budget and not It had nothing to do with PSDP publications. On the other hand, the planning division released only Rs78bn from the local component against an allocation of Rs116bn, or only 67pc. As such, the local component declined as foreign inputs increased. The NHA disbursement request in the last quarter of the last fiscal year was rejected without evidence.

Such practice, Mr. Rafique said, hindered the implementation of the project and resulted in cost overruns. He said Rs19.6bn funds against "work done" on several projects were not released by the fiscal closure on June 30, 2019.

Mr. Rafique regretted that highway and highway projects were initiated mainly by virtue of political decisions and the CDLs against such projects were applied to NHA, although most of them may not be economically viable. For example, the Karachi-Quetta coastal road and the roads around Gwadar would remain unfeasible for NHA even for years due to limited traffic.

He said that the NHA portfolio had gone beyond Rs2.5tr and that its CDLs only exceeded Rs400bn. "NHA cannot finance these liabilities even if it sells all its assets."

The Secretary of Planning, Hasan, said in the first quarter of the current fiscal year, the participation of the ASN in the allocated funds amounted to Rs13.2bn and so far Rs10bn had been released. The communication secretary said that the interest of Rs3bn in CDL was deducted at the source and even the remaining amount had not yet reached the NHA since the sanction still floated somewhere between the Ministry of Finance and the Accountant General of Pakistan- Income (AGPR) as the first quarter was coming to an end in a couple of days.

Javed Iqbal of the Ministry of Finance said that NHA funds in the last quarter of the previous year were not released due to late demand. The secretary of communication's response was that many letters and reminders were written for urgent disbursements, but although the finance ministry sanctioned the release, it then blocked the actual disbursements by writing an urgent letter to the AGPR at the last moment.

The planning secretary told the committee that the total disbursement to the water ministry was 103 percent of the total allocation. Regarding four selected projects funded by PSDP, the panel was informed that the energy division required Rs603 million and only Rs80m was released.

The committee expressed dissatisfaction over the non-implementation of its recommendations made in June for the PSDP 2019-20 during the budget session.

Posted in Dawn, September 25, 2019

Source: https://www.dawn.com/news/1507225/funds-for-unapproved-projects-wont-be-released-ministry

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