PM forms new committee to end inter-ministerial dispute

Tug-of-war between planning, finance ministries threatens FY24-25 development budget

ISLAMABAD:

Prime Minister Shehbaz Sharif has constituted yet another committee, this time to end an inter-ministerial dispute, as neither the planning ministry nor the finance ministry are willing to take ownership of 100 provincial nature schemes with a cumulative cost of Rs573 billion.

The dispute arose just days before the approval of the fiscal year 2024-25 development budget by the National Economic Council, the constitutional body responsible for approving development schemes and their inclusion in the national development agenda.

Sources told The Express Tribune that PM Sharif formed the committee after the planning ministry thrice rejected a proposal from the finance ministry to assume responsibility for provincial nature schemes. The committee has been given a 10-day deadline to find a solution to the dispute.

The premier has appointed Ahad Khan Cheema, a trusted bureaucrat-turned-politician and the federal minister for Economic Affairs, as the chairman of the committee. The committee members include Secretary of Finance, Imdad Ullah Bosal, and Secretary of Planning, Awai Manzur Sumra.

This is the second committee established by the PM to address issues related to the development budget for the next fiscal year. Earlier, he formed a committee under Planning Minister Ahsan Iqbal to finalise the financing envelope for the next fiscal year, now estimated at around Rs1 trillion.

The sources indicated that the PM initiated this committee after identifying discrepancies between the two key ministries during the budget-making process.

Due to political considerations, various successive governments initiated over 100 projects in different provinces, Azad Jammu & Kashmir, and Gilgit Baltistan. These projects, funded by the federal government, are executed by provincial and special regions’ governments.

Presently, about 100 projects worth Rs573 billion are included in the Public Sector Development Programme (PSDP). As of June last year, Rs124 billion had been spent on these projects. For this fiscal year, Rs168 billion had been allocated, but the entire amount has not been released, leaving significant funding requirements.

The sources revealed that the finance ministry proposed removing these 100 schemes from its domain and transferring them to the Ministry of Planning.

Due to severe fiscal constraints, the government has begun excluding provincial nature projects from PSDP. If the dispute between the ministries persists, it could undermine funding for the next fiscal year, said the sources. However, the Ministry of Planning is committed to retaining these projects as part of PSDP to safeguard the Rs124 billion already spent as of June last year.

The finance ministry believes these projects are included in the PSDP by the planning ministry after approval from the Central Development Working Party (CDWP) and the National Economic Council (NEC).

The Ministry of Finance asserts that the Rules of Business, 1973, assign the formulation of an Annual Plan for Development to the Planning Ministry, which has the necessary institutional setup for all stages. Placing these projects under the Finance Division deviates from the Rules of Business 1973 and creates operational issues in disbursement, accounting, reconciliation, and reporting to legislative inspection forums, compromising efficiency.

However, the planning ministry argues that reflecting these allocations under the Finance Division’s demand ensures seamless and direct inter-governmental transfer and release of development grants to Area and Provincial governments in line with the Finance Division’s release strategy. The Provincial Finance Wing in the Finance Division facilitates and processes inter-governmental transfer of funds, a mechanism absent in the Ministry of Planning.

The planning ministry aims to reduce the number of provincial projects in the next year’s PSDP and is not in favour of assuming responsibility, according to sources.

Former Prime Minister Anwaarul Haq Kakar led the NEC in January this year, urging provinces to take responsibility for 75 new projects to alleviate the centre’s financial burden of Rs200 billion. The NEC then decided that the federal government would not implement all provincial projects with zero financial progress.

Published in The Express Tribune, May 21^st, 2024.

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