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November 8, 2019

Government shortens budget release process for uplift projects

Business

November 8, 2019

ISLAMABAD: Government on Thursday decided to release half of the funds earmarked under the public sector development program in the first half of a fiscal year, in a bid to speed up uplift process.

The finance division said it took the decision in line with the Prime Minister Imran Khan’s directive to speed up process of development projects and schemes. The division shortened the budget release process for public sector development program (PSDP) following the World Bank’s call for proper utilisation of development budget.

The World Bank also raised concerns over the performance of local consultants, terming it as a reason behind delayed execution of development projects. Traditionally, 40 percent of PSDP funds are released during the first two quarters. Under the mechanism, 20 percent each is released in first and second quarters, and 30 percent each in third and fourth quarters.

“Half of the budgetary allocations for approved PSDP projects have been made instantly available to ministry of planning and development by revising finance division’s release strategy,” the finance ministry said in a statement.

“Now 50 percent funds are available for the first two quarters, without any complication. The quarter wise release will be 20:30:30:20.” The ministry said the steps are aimed at easing funds flow and to remove bottlenecks and boost economic development.

The measures to speed up development process include increased availability of funds, friendly processes and incentives for early and proper utilisation of funds. The government further decided to give incentives of advance releases to the executing agencies, which would utilise funds appropriately within required time period.

“There shall be no ways and means clearance of finance division for the approved PSDP projects for the first three quarters of the financial year,” the ministry said. “The practice of endorsement by officers of finance division on the PSDP funds releases sanctioned by the PAOs (principal accounting officers) is also being withdrawn forthwith.”

The finance ministry said the whole process of authorisation, releases and sanctioning of PSDP allocated funds should be dealt between ministry of planning, development and reforms and ministries / divisions and concerned PAOs.

The finance division has already issued the updated revised release strategy for approved PSDP projects to formalise the measures.

Under the strategy, the ministry of planning, development and reforms and other line ministries / division have been amply enabled to speed up utilisation of PSDP funds in accordance with the revised release strategy and Public Finance Management Act 2019. “These steps will ensure adequate money supply, less tier control and ease of operation in the development program,” the finance ministry said.

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