Uplift funds to contain fiscal deficit: Only 25pc PSDP releases made in five months

ZAHEER ABBASI

ISLAMABAD: The government seems to have adopted a tight policy to release development funds to contain the fiscal deficit as only 25 percent PSDP releases have been made during the first five months of the current fiscal year, it is learnt.

The government has released only Rs74 billion for PSDP during the first five months (July-September 2011), which is only 25 percent of Rs290 billion federal government public sector development programme. A Finance Ministry official said that slow releases are an indication that development expenditure, like previous year, would be used for financing fiscal deficit. The government had reduced PSDP by Rs100 billion during last fiscal year. According to the official, major challenge to the fiscal framework was from payment to power sector for its losses.

The government released Rs 37.6 billion for infrastructure development projects during the first five months of the current fiscal year against the allocation of Rs 157 billion in the budget. The development releases for social sector during July-November 2011 stood at Rs 36.3 billion against Rs 129.6 billion allocation for the current fiscal year in the budget.

Total size of the PSDP for 2011-12 is Rs 290 billion including Rs 36.5 billion foreign exchange component (FEC) and Rs 33 billion as special programme.

According to official figures the government was not able to release any funds for most of hydro projects because bilateral and multilateral donor assistance did not materialise.

An amount of Rs 47 million was pledged for Khan-Khawar Hydro Power Project but to-date nothing has been disbursed. Similarly, foreign aid of Rs 700 million was pledged for Allai Khawar Hydro Power Project in Batagram-Besham district of Khyber Pakhtunkhawa from Abu Dhabi Fund but nothing has been disbursed during the first five months of current fiscal year.

It was projected that Rs 372 million would be provided by Abu Dhabi for Dubir Khawar Hydro Power Project, Rs 2 billion by Saudi Arabia for Neelum Jhelum Hydropower Project, Rs 133 million by Germany for Keyal Khawar Hydro Power Project, Khyber Pakhtunkhawa, Rs 491 million by France for rehabilitation of Jaban Hydro Electric Power Station, Rs 10 million by ADB, Kuwait, Germany, IDB and Japan for transmission arrangements for power dispersal of Ghazi Barotha and Rs 350 million by Japan for upgradation of NPCC (load dispatch system) H-8, Islamabad.