Khyber Pakhtunkhwa lacks capacity to use growing foreign funds

The billions of rupees worth of ‘budgetary support’ has improved the Khyber Pakhtunkhwa government’s chances of spending more out of the foreign grants in the financial year 2012-13, according to development planners. “We are hopeful that the provincial government will record a marked improvement by utilising a greater amount of grants being provided by foreign donors,” said an official development planner. A couple of other official development planners, however, disagreed when Dawn asked for their views. According to them, the provincial government’s foreign funded development portfolio was too large and its line departments were quite weak to handle it at a time when the size of the locally funded component of the Annual Development Programme has also grown manifold in the last few years. They based their views on the provincial government’s performance in the financial year that ended on June 30 last. The government had allocated Rs16.113 billion for 39 foreign funded projects, including an accumulative amount of Rs12.8 billion that had been estimated to be provided as grants to the province by donors. The rest of Rs3.3 billion was of loan money. “If the recent history is anything to believe, then the provincial government does not stand a chance to ensure 100 per cent utilisation of foreign funds reflected in its new ADP,” said a senior official. Against the initial allocations of Rs16.1 billion, the province has estimated to spend Rs7.5 billion out of the foreign assistance, making only 47 per cent of the initially estimated allocations. However, most official development planners believe that the province stands better chances to improve its utilisation of funds out of foreign assistance this year because a large chunk has been provided to it as ‘budget support.’ “DFID (Department for International Development) would provide funds as ‘budgetary support’ that will help utilise funds at a faster pace,” said an official. He said the provincial government would not be required to get approval of its projects from the Central Development Working Party since the money would be placed with the provincial education department as budgetary support. The United Kingdom’s development department, according to the official, would provide the over Rs1.1 billion first tranche as support to the Khyber Pakhtunkhwa education sector programme and Rs4.026 billion second tranche for the same programme in the ongoing financial year. An official concerned said the provincial education department would be able to plan and decide its KP lacks capacity to use growing foreign funds activities out of the ‘budgetary support’ funds without being required to take approvals from CDWP or PDWP, saving time. The provincial government has estimated that it would receive Rs19.56 billion grants from international donors and foreign loans of Rs3.7 billion in the current financial year. It will require the provincial government to spend an accumulative amount of Rs23.3 billion on 52 projects that would make up an all time high foreign funded development portfolio of the province. DFID will be the major development partner of the provincial government as it will provide about Rs7.5 billion as grant followed by Rs3.3 billion to be provided by European Union, Rs2.5 billion by Narcotics Affairs Section of the US government, and Rs1.2 billion by the Multi Donor Trust Fund. Those, who believe that the province won’t make a better use of the grant money, said a lot of money was meant for improving road network and construction of school buildings and a large number of smaller infrastructure development schemes. “Construction work usually takes a lot of time to complete and even it takes time to initiate work on such projects,” said a development planner. However, the optimistic ones among planners said utilisation of foreign funds would be improved this year because many of the projects were in implementation phase, while there won’t be many official procedures to satisfy. The official said a large amount of foreign funds could not be spent last year because work on some projects started late only after their planning documents (PC-1) were granted approval by the competent official forums. According to the Khyber Pakhtunkhwa government’s ADP for 2012-13, there will be a total of 52 projects to be executed with foreign assistance. Some 13 new projects will be launched in the new financial year, requiring the official executing agencies to get PC-1s of their projects approved from the competent official forums. “It means we can expect delays and non-utilisation of foreign funds,” said an official of the planning and development department.