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ISLAMABAD: Ministry of Planning, Development and Special Initiatives has issued guidelines for Public Sector Development Programme (PSDP) financial year 2024-25 according to which priority should be accorded to allocation of development funds to strategic and core on- going projects, with particular focus on water resources, transport and communications, and energy sectors, sans provinces, well informed sources told Business Recorder.

PSDP is a critical policy instrument to achieve balanced regional development, promote harmony and national integration through public investment.

Ministry of Planning, Development & Special Initiatives under the Rules of Business 1973, inter-alia, is assigned to formulate PSDP on the basis of indicated resources vis-à-vis sectoral, regional priorities and development targets set under the national plans/strategies duly approved by the National Economic Council (NEC).

PSDP is an operational and integral part of public sector investment which is prepared in close coordination with all stakeholders.

1H: Provincial PSDP spending rises 19pc YoY

According to the Ministry, the process of PSDP 2024-25 formulation and its projections for 2025-26 and 2026-27 has been initiated to enable the sponsoring Ministries/Divisions/Agencies to deliberate and prepare their respective development portfolios in line with the provisions of Public Finance Management (PFM) Act 2019. The time schedule of major activities for preparation of PSDP 2024-25 has been requested.

The following are the priorities and guidelines/criteria for the preparation of PSDP 2024- 25 as approved by NEC: (i) priority should be accorded to allocation of development funds to strategic and core on- going projects, with particular focus on water resources, transport and communications,

and energy sectors;(ii) priority should be accorded to projects with 80% plus expenditure in all sectors with the aim of completing them during FY2024-25;(iii) Ministries/Divisions may ensure allocation according to annual phasing of on-going projects while remaining within the Indicative Budget Ceiling (IBC) as per PFM Act 2019;(iv) due to fiscal constraints and huge throw forward, inclusion of new projects in infrastructure sector should be minimized;(v) only 10% of development budget FY2024-25 should be considered for allocation to new projects, with particular focus on supporting exports, enhancing productivity, fostering competitiveness, deepening and spreading digital infrastructure, innovation driven enterprises, industrial development, agro industry and seed development, blue economy, science & technology, R&D and innovation reforms;(vi) while making allocations for PSDP projects, DDWP approved projects will only be allocated resources after full needed allocations have been made;(vii) there will be a moratorium on approval / budgeting of projects involving O&M and

recurring nature expenditures;(viii) Economic Affairs Division (EAD) will provide firmed up foreign aid estimates to be disbursed during FY2024-25, with further two years’ projection in consultation with all stakeholders;(ix) Ministries/ Divisions should prioritize and allocate adequate rupee cover to the foreign

funded projects within the IBC for smooth execution of foreign funded projects and uninterrupted inflow of foreign exchange and to honour international obligations;(x) provincial nature projects shall not be considered for approval / financing except those in least developed districts as approved by the NEC and as determined by Planning Commission;(xi) Principal Accounting Officers should ensure placement of full-time Project Directors as per applicable guidelines and put in place qualitative / quantitative monitoring indicators to avoid time and cost overruns; and (xii) priority will be given to PPP projects, where PSDP funding is either used as equity or as viability gap.

Besides the above guidelines, following broader instructions may also be considered while preparing the project-wise budgetary proposals for the PSDP 2024-25: (i) as per Public Finance Management Act, 2019, unapproved projects would not be made part of the development budget ;(ii) all Federal Ministries / Divisions and Provincial Governments should thoroughly scrutinize in order of priority their respective approved portfolio to determine whether the proposed projects fall under the overall development objectives of the Government. Due priorities may be given to the ongoing projects of national significance initiated under the regional equalization programs/ packages to ensure regional balanced development in the country;(iii) those new approved projects which fall under the federal subject and mitigate the adverse drastic effects on the climate change may be encouraged for financing.

In case of new proposed projects /program, 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/SDGs;(v) cost of the projects to be financed through foreign aid as rupee cover should be reflected separately with source (donor name), amount with currency and equivalence in Pak rupees;(vi) project-wise estimated utilization status of federal share in development assistance, provided to the provinces during Fiscal Year 2023-24 and demand for Fiscal Year 2024- 25 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 piece meal;(vii) 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;(viii) in case of schemes being financed on cost-sharing basis between the Federal and Provincial Governments or with any other agency, the cost, expenditure, and proposed allocations 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. It may be clarified to the 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 Governments concerned; and (ix) provision for payment of equipment, Interest During Construction (IDC) and Custom Duties etc. may be adequately reflected separately under the proposed demand.

Planning Division has asked all the Ministries/ Divisions that the entire development programme may thoroughly be reviewed by the PAOs as per guidelines and the requisite information be provided on the prescribed proforma. All figures in relevant columns may be indicated in million Rupees only. aBrief project profile and core objectives of the project may be provided.

Ministries / Divisions have also been requested to provide one-page write-up on PSDP strategy, pertaining to respective sector/Ministry/Division for FY 2024-25 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. proposal may contain as to how proposed portfolio would assist to achieve balanced regional development.

The proposals of Public Sector Corporations/ Bodies under the Ministries/Divisions for PSDP 2024-25 and projections for 2025-26 and 2026-27 may also be furnished on the prescribed proforma I for Corporations i.e. WAPDA, NHA, NTDC, etc.

Keeping in view the important role of public sector investment for development (other than PSDP), Ministries/ Divisions and autonomous bodies have also been requested to furnish the details of development programs being financed with their own generated resources on the proforma.

Copyright Business Recorder, 2024

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