To a question on actual disbursements and their utilisation under the much-trumpeted Kerry Lugar Act, an official of the Economic Affairs Division told the Public Accounts Committee that the US disbursed $2.08 billion in three years.
The government received only 24% or $485 million of the funding while the rest $1.53 billion was disbursed through NGOs, said EAD Additional Secretary Rao Ifthikhar.
Under the Kerry Lugar Act 2009, the US has legislated to provide $7.5 billion in civilian assistance over a period of five years. The emphasis of the assistance is energy production, economic growth, agriculture improvement, education, health and infrastructure across the country.
International donors in recent times have opted to channel their funds through non-governmental organisations rather than the government.
The Act envisages $1.5 billion in assistance every year. However, the total disbursements indicate that the US delivered only 45% of the promised funds in the last three years and most of them were spent through NGOs, leaving issues of transparency unaddressed.
Pakistan has been trying convincing the US to disburse at least half of the KL money through the government channels in an effort to make best use of the aid money. Rao said Pakistan has taken up the matter with the US authorities but still there was no change in disbursement formula.
Pakistan has no control over the money being spent through NGOs. Moreover, these NGOs’ administrative expenses are extremely high, leaving little behind to be spent on operations. The PAC will give its views after seeing the list of the NGOs.
The PAC also showed its apprehensions over the policy under which the federal government obtains foreign loans and re-lends to provinces and departments. It found that after relending the loans, the federal government did not have any control to avoid misuse of funds. At the end of the day the money is returned by the federal government, putting burden on the taxpayers, it observed.
“Most of the money borrowed from abroad is being misused and in past cases have been reported where officials like Salman Farooqi, Secretary General to President and former Agriculture Secretary Zafar Altaf did not have record of use of foreign funds, said PAC member and former federal minister Riaz Hussain Pirzada. He further said that corruption level is the highest in foreign loans.
The PAC directed the Auditor General of Pakistan to hold a meeting with stakeholders to workout a mechanism for ensuring better utilisation of foreign loans.
EAD Secretary Javed Iqbal told the PAC that the division had proposed new mechanism under which periodic reviews of the foreign-funded projects will be held and the secretaries of the respective departments will be responsible for delaying the project and improper utilisation of the funds.
Published in The Express Tribune, August 31st, 2012.
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