PM approves mechanism for direct transfer of funds to GB

After decades of applying unnecessary and prolonged procedure of transfer of government funds to Gilgit Baltistan, the center has finally changed the process by adopting a direct transfer of fund system to pave the way for fast progress on development projects.

Prime Minister Imran Khan has recently approved a summary forwarded by Ministry of Planning, Development and Special Initiatives (PD&SI) regarding transfer of development fund to GB on the pattern of Azad Kashmir which would ultimately delete the unnecessary role of Ministry of Kashmir and other departments in the process which has long been causing delay in transfer of fund to the area.

A simple procedure regarding transfer of development funds from the center to GB takes up to 40 days mainly due to unnecessary and lengthy procedures being followed for decades.

As per available documents, the PM has approved the new mechanism under which the Ministry of Finance, after completing formalities, would transfer the fund to GB directly and the regional government would execute the federal PSDP projects.

The Ministry of Planning and Development through the summary has given the justification that GB has an independent provincial set up having its independent consolidated fund like other provinces. This is why the mechanism of intergovernmental fiscal transfer as applicable to other provinces should be adopted in the case of GB.

It may be noted that the lengthy process regarding the release of funds was only specific to GB, as all other provinces, including AJK, were being facilitated with fast-track procedures for funds transfer. As per documents available with this scribe, it takes only 10 days to transfer funds to the accounts of AJK from the Center once a release request is made.

“As per the existing procedure, the AJK government directly sends release requests to the Planning Commission, which completes the entire necessary paperwork with the Ministry of Finance and State Bank of Pakistan (SBP) within 10 days,” an official explained. “But for GB, the regional government needs to first make a release request to KA&GB, which forwards the same to the Planning Commission. PC then sends authorization letters back to KA&GB and the latter sends a sanction letter to the Accountant General Office in Gilgit since the ministry cannot directly send the letter to SBP. The AG office in Gilgit, after due process, sends a credit request letter to SBP.” According to documents, in the case of GB, the KA&GB ministry takes at least two weeks to issue a release sanction letter, apart from the time involved at the Planning Commission. Similarly, the Gilgit AG Office takes a minimum of 10 days to issue a credit request to SBP. The involvement of KA&GB in case of GB delays the disbursement of project funds by around 35 to 40 days.

Although both GB and AJK fall under the ministry of KA&GB, the lengthy procedure was being followed only for GB. Keeping in view the unnecessary delay in transfer of funds, the GB government had requested the center to release development funds as per the AJK model so as to enable the GB government fast track development portfolio.

It is pertinent to mention that the delay was being seen only in the transfer of development funds, whereas non-development funds (block allocation) of GB were already being transferred through the Finance Division without the involvement of KA&GB.

On the request of the GB government, the Planning Commission had asked the concerned ministries to consider the request of GB and ensure fast track disbursement of funds of PSDP-funded GB portfolio projects.

According to sources, the officials of the ministry of KA&GB have been opposing the simple procedure of transfer of funds for its intention to have supervision and control over the development funds. It is to be recalled that the incumbent government has already announced a historic Rs370 billion development package for GB, which needs fast-track disbursement of funds.