ISLAMABAD: Due to limited fiscal space, Planning Commission (PC) has directed the Ministries to focus on Public Private Partnership (PPP) and Build-Own-Transfer (BOT) financing mode development projects for FY 2022-23, well informed sources told Business Recorder.
According to PC, development programs and projects, after thorough need assessment, are conceived, prepared and approved by the competent fora for financing through public sector development program (PSDP). Since resources under the PSDP are constrained; therefore, public sector investment attracts the private sector by providing conductive regulatory and business-friendly environment to undertake commercial, industrial and development activities to achieve the overall long-term development goals.
The process of PSDP 2022-23 formulation and its projections for subsequent years 2023-24 and 2024-25 has been initiated to give ample time to the sponsoring and executing Ministries/ Divisions/ Agencies to deliberate and prepare their respective development portfolios on broad-based consultation and due diligence.
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Planning Commission says the following broader guidelines/ instructions may be adhered to while preparing the project-wise budgetary proposals for the PSDP 2022-23: (i) all Federal Ministries/ Divisions and Provincial Governments should thoroughly scrutinize the approved portfolio to determine whether these projects fall under the overall development objectives set under National Development Framework and policy of the Government.
The proposed program of the Ministries/ Divisions should have a basic logic of intervention for achieving the high-level sectoral objectives by optimizing limited PSDP resources (inputs) to produce maximum outputs (high visible impact projects) which contribute to outcomes and eventually to high-level development goals set under approved plans; (ii) Ministries/ Divisions should also focus on core projects with tangible deliverables that may be undertaken on priority with adequate funding for early completion during next year;(iii) as per Public Finance Management Act, 2019, no new project which has not been technically approved would be made part of the development budget. The NEC in its meeting of June 7, 2021, set March 31, 2021 as deadline for submission of PC-Is for approval;(iv) COVID-19 pandemic has left adverse impact on socio-economic fabric globally including that of Pakistan.
Therefore, projects which mitigate the adverse impact of COVID-19 and give impetus to uplift socio-economic conditions of people through projects preferably of short gestation creating employment opportunities and health coverage;(v) as Pakistan is facing economic challenges like trade imbalance, current account deficit, limited FDI; therefore, the relevant Ministries like Commerce, Industries & Production, National Food Security & Research, Science & Technology, IT& Telecom, Board of Investment (BoI), etc., should take extra measures to improve competitiveness, innovations, ease of doing business with objective to enhance production, exports, FDI, etc.
For this purpose, viable projects may be envisioned for financing / co-financing through federal PSDP; (vi) approved timelines and financial phasing of projects may be assigned priority while allocating resources for ongoing, as well as, new projects.
Ongoing projects which have reached an advanced stage of completion should adequately be funded in order to complete such projects during the fiscal year 2022-23 on priority. The projects started under CPEC initiative and supporting it, may also be given priority for timely completion to earn the socio-economic benefits of the initiative.
The criteria of resources allocation of 80:20 ratio for on-going and new projects respectively be followed while submitting project wise budgetary proposals; and (vii) owing to limited fiscal space and increased level of throw-forward of budgeted portfolio, efforts should be made for undertaking the development projects on innovative financing basis, i.e., Public Private Partnership (PPP) and BOT in terms of co-sharing of cost and responsibility for operation and maintenance of such projects.
Planning Commission has maintained that Pakistan is signatory to achieving SDGs by 2030. All goals are important; therefore, budgetary proposals should have a clear identified and intended tangible outcome and relevance criteria to the SDGs, i.e., 1 to 17 goals. Moreover, those development programs and projects which mitigate the adverse drastic effects on climate change may be encouraged for financing.
The programs and projects to be proposed for inclusion in the PSDP should be arranged in order of priority within each sector/ sub-sector so that if resources fall short of demand, low priority schemes may either be dropped, postponed or allocations be adjusted/ rationalized within respective IBC accordingly. Due priorities may be given to the projects initiated under the regional equalization programs/ packages to ensure regional balanced development.
The cost of the projects to be financed through foreign aid should be reflected “separately with source in Pak rupees indicating the estimated expenditure on import of goods and services.
This is necessary because under certain foreign aid Agreements, the Government of Pakistan is required to first incur the expenditure in local currency and claim reimbursement thereof later on to maintain fiscal discipline, proposals for re-appropriation/ adjustment of funds may not be entertained during early quarters, i.e., July-December period. Therefore, concerned Ministries/ Divisions/ Agencies should indicate/ earmark resources to projects/ programs after exhaustive in-house review and deliberations with all stakeholders including Sector Chiefs, M/o PD&SI so that need for re-appropriation/ adjustment during early quarters does not arise.
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PC has further directed that while processing approval and funding of projects for PSDP 2022-23, the Federal Ministries/ Divisions should also observe the provisions of 18th Amendment, i.e., the division of subjects between the provinces and the federation. Undertaking projects falling in the domain of provinces to be avoided and provisions contained in the policy on financing of provincial nature projects notified by M/o PD&SI on August 16, 2021 as approved by NEC on June 7, 2021 to be strictly followed.
Project-wise estimated utilization status of federal share in development assistance, provided to the provinces during Fiscal Year 2021-22 and demand for Fiscal Year2022-23 should be provided by the Planning & Development Board/ Departments of the respective Provinces in a consolidated form and not by the line/ attached departments in piecemeal.
The Ministries/ Divisions have been asked to provide updated information in requisite columns particularly indicating the correct nomenclature and revised cost, if any, of the schemes/ projects as approved along with name of competent forum, date of approval and date of completion so as to avoid any discrepancy during budget formulation process.
The schemes being financed would be on cost-sharing basis between the Federal Government and Provinces or with any other agency, the cost, expenditure, and proposed allocations to be clearly indicated separately, wherever applicable, and only federal share of cost worked out to ascertain the exact level of throw-forward at the time of considering allocations against the federal share in PSDP. However, cost sharing agency that as per NEC guidelines, release of federal share would be subject to matching allocation and release by the agency/ department/ Provincial Government concerned.
Provision for payment of equipment, Interest During Construction (IDC) and Custom Duties, etc., will be adequately reflected separately under the proposed demand. This would assist while considering allocations for such projects under PSDP 2022-23.
The entire development programme will thoroughly be worked out as per guidelines and the requisite information supplied on the prescribed proforma. All figures in relevant columns may be indicated in Million Pak Rupees only. The foreign component expressed in dollars, if any, may also be converted and indicated in Pak Rupees in line with this Ministry’s circular of October 24, 2013.
Brief project profile and core objectives of the project may be given as this will facilitate the forum at the time of deciding the allocation of funds.
Ministries/ Divisions have been asked to also provide one pager write-up on PSDP strategy, pertaining to their respective sector/ Ministry/ Division for FY 2022-23 covering, among others, benefits from the proposed investment, boosting the exports, productivity, jobs creation, supporting role to stimulate private sector investment and impact on poverty alleviation.
The proposals of Public Sector Corporations like WAPDA, NHA, NTDC, etc., for PSDP 2022-23 and projections for 2023-24 and 2024-25 may also be furnished on the prescribed proforma.
To have full picture of public sector investment for development (other than PSDP), Ministries/Divisions have also been requested to furnish the details of programs/ projects of their attached/ subsidiary corporations/ organizations and autonomous bodies, being financed with their own resources on the proforma.
Finance Division may furnish the detail of development investment/subsidies other than PSDP.
Copyright Business Recorder, 2022
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