Need to revamp PSDP system


July 07 - 13 , 2003 




Infrastructure development projects in Pakistan are handled at different levels such as the union council, the town council, the district government, the provincial governments and the federal government. A large number of agencies/institutions attached to the federal ministries, provincial departments and the district governments also implement such projects. In addition, development funds are allocated to the members of the national/provincial assemblies for carrying out development projects in their respective constituencies. The federal government and the international financing institutions are the main funding sources for financing these projects, mostly under the Public Sector Development Programme (PSDP). Federal government funds are allocated to the ministries as well as the provinces from which part of the funds percolate down to the districts and union councils. These projects generally aim to improve the living conditions of the people, provide employment and to help alleviate poverty. It is imperative that only priority projects are initiated for timely implementation and completion within the budget.

The federal budget for 2003-04 has since been approved while the provincial budgets are in process. An allocation of Rs 160 billion has been made in the federal budget for PSDP, showing an increase of 20 % over original allocation for the previous year. The on-going schemes under PSDP are expected to be completed at the federal level while a number of new schemes shall be initiated this year for implementation by the ministries and their attached agencies. Same would be the case at the provincial and the district government levels. Each provincial government, keeping in view its resource positions, has also made allocations for development projects under the ADP. In addition, there are expected to be a number of priority projects to be implemented at the provincial level from special federal funds as well as the district level schemes to be financed by the provinces. It is satisfying to note that substantial funds have been allocated for implementation of the development projects. Let us hope and pray that these funds are actually used well for projects meant to improve the living conditions of the people.

Actual implementation of projects under PSDP for 2002-03 has been slow, probably due to weaknesses in the monitoring and implementation apparatuses. Out of Rs 134 billion earmarked for PSDP, only Rs 39.7 billion were utilized during the first nine months of the financial year. At this rate, it is unlikely that remaining funds would be utilized during the last three months for implementation of various important projects. Chances are that by the year-end substantial part of the funds arranged from donor agencies such as the ADB and the World Bank for PSDP projects would also remain unused due to various reasons. It is sad that the government's efforts of earmarking/arranging funds for this important sector get thwarted because of the slow implementation of projects.This sluggish process perhaps has been repeated year after year and consequently there has not been much improvement in the lives of the people. The situation has to change.

It may be appreciated that mere expanding of the entire PSDP allocations would not necessarily yield the desired benefits to the people if other essential conditions were ignored in the execution of the projects. For each physical/social infrastructure project, procurement of services, land and materials are required. Acquisition of each such item has to be proper ensuring value-for-money and also eliminating or minimizing pilferage or wastage of resources. A review of the past press reports show that the following main reasons adversely affected realization of PSDP projects:

* Alleged misuse/wastage of funds in the acquisition of land needed for implementation of large development projects.

* The executing/implementing agencies allegedly made excess payments or the payments were authorized in violation of the prescribed procedures, as reported by the government auditors.



* The international donor agencies, overseeing progress of projects partly funded by them, have termed progress of quite a few of the projects as unsatisfactory.

* The international donor agencies have reportedly indicated to the government that earmarked funds might be withdrawn if the progress of the funded development projects were not improved.

* The projects approving authorities are often approached for supplementary approvals due to delays/slippages in the time schedules or cost overruns.

* Some of the elected district Nazims complain of the delays by the provincial governments in the release of funds for PSDP projects.

With a view to improve the implementation of the PSDP projects, the government has recently considered the following measures which would help to some extent but are not likely to resolve all PSDP issues.

The Finance Minister in a newspaper interview reportedly said that the government has decided to empower the Planning Commission to conduct physical inspections of various development projects, and based on these inspections to immediately divert allocations of slow moving projects to other sectors in order to make maximum utilisation of budgetary allocations.

The government and the ADB reportedly reached agreement on a strategy to improve implementation of all future loan projects. The plan to be implemented from July 1, 2003 involves establishment of full time Core Project Management Units (CPMUs) to be funded initially through five revolving funds by the Ministry of Finance and departments of finance in Balochistan, NWFP, Punjab and Sindh for provincial projects. The ADB review mission reportedly observed that the government's core project implementation capacity needed significant strengthening considering that the disbursement, contract award and imprest account turnover ratios were still declining. Establishment of CPMUs is expected to ensure improved project implementation ownership and accountability as well as benefit in project preparation, appraisal, PC-1 approval, loan negotiations and implementation.

For a country like Pakistan facing resource constraints, major issue is not just how to raise sufficient funds, but how to ensure value-for-money while spending these funds for implementation of PSDP projects. It is therefore imperative that the whole process of PSDP from project initiation to implementation might be critically reviewed and revamped on priority basis. Participation of the prospective beneficiaries, transparency in the purchase of land and award of contracts, use of information technology for robust design of the projects and subsequent monitoring, intensive training of the officers manning the project teams and their motivation coupled with accountability are some of the priority areas. The government might assign this revamping task to the Planning Commission, with support from the ADB and other international agencies. The Planning commission might be suitably strengthened for the assignment. Some of the priority areas for revamping the PSDP system are discussed below:



The Project teams are the key for smooth implementation of the projects. The officers on these teams have to be well-trained and also to be emotionally motivated for the successful implementation of the projects. Training has to be extensive to enable them handle diverse activities in the project implementation. Initially training may include discussion on project parameters and project approval process, prescribed requirements in the award of contracts, procurement procedures for ensuring value-for-money and disbursement documentation prescribed by the government as well as the international lending agencies. Adequate funding for training has to be earmarked out of the big allocation made for the development projects. Delays in allocation of funds for training and the revamp process may possibly compromise safe utilization of the larger allocations for PSDP projects.

PSDP projects are handled at different layers of the government- the federal, the provincial and the district. The training of the officers and the revamp of the system has to be for all the layers and for all areas in the country. The task may preferably be handled by the Pakistani experienced professionals. However, in special circumstances help and guidance may also be sought from institutions such as the ADB and other international agencies.

Motivation plays a big role in improving the performance of the officers on the project teams. The officers must be made aware of the benefits both financial and otherwise, that they can expect with the successful implementation of the project. This is expected to enhance the effectiveness and the efficiency with which the project would be undertaken. The reward to the team as well as the people at the higher levels may be made known. They should also be made aware of the accountability in case the projects fail to meet the prescribed goals and there are overruns in capital cost or the time taken for project implementation. Responsibility might be matched with authority and sufficient number of officers may be assigned to the teams. As a policy, the names of the project teams, their supervisors and the project contractors to be displayed at the project site for posterity. Transfer of team members to be avoided during the implementation of PSDP projects.

Existing procedures and formats of project documents might be revised to make compatible with the present day needs. Project details might be finalized after open discussion particularly with the potential beneficiaries of the project. Only those projects may be included in the PSDP that meet the proper eligibility criteria. Project details must be posted on the website of the agency implementing the project as well as the concerned Ministry Department. This would help in the better design and appropriateness of the project. Cost and time data would also get reviewed. It has to be ensured that the projects are prepared well and the resources for implementation are earmarked on timely basis. There has be in place a proper mechanism for removing on timely basis, through appropriate corrective measures, any weaknesses in the design, approval, implementation or operation of the projects. Remedial measures may be specifically considered for tackling the reasons listed earlier for slow implementation of PSDP projects.

The selection criteria for PSDP projects as well as other allied procedures might be improved in line with the practices presently followed by the international financing agencies. Areas that are generally considered by the ADB and other international financing agencies for providing lending assistance include: economic viability, technical feasibility, and financial soundness; effect on development activity in the country concerned; contribution to the removal of economic bottlenecks; introduction of new technologies to raise productivity; expansion of job opportunities; strengthening of institutions according to criteria of good governance and integration of environmental and social considerations into the projects. These agencies periodically arrange meetings with the project teams largely to explain the procurement practices and the documentation required for seeking disbursement of funds. Full use may be made of the experience and resources at the disposal of these institutions.

The Finance Minister, while announcing the national budget, said that the main thrust of the budget was to meet challenges such as the accelerated growth designed to reduce poverty and create employment; an increased outlay on education, health and human development; and the development of proper infrastructure in the areas where it is inadequate. The review and revamp of the entire PSDP system for improved project implementation is expected to help the government successfully meet these challenges.