ISLAMABAD: The Finance Division has agreed to provide Rs1.2 trillion for the next fiscal year Public Sector Development Programme (PSDP) against the demand of Rs1.5 trillion by the Ministry of Planning and Development.
Sources said that the Ministry of Planning and Development in consultation with Ministries/ Divisions worked out the bare minimum demand of Rs2.49 trillion for PSDP 2024-25.
The Finance Division was requested to allocate an initial basic ceiling (IBC) of Rs1,500 billion; however, it (Finance Division) conveyed IBC of Rs1221 billion for PSDP 2024-25. The same was conveyed to the Ministries, Divisions which submitted project-wise budgetary proposals with certain reservations and thin spreading.
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The prime minister has constituted a committee to be headed by the Minister for Planning and Development with the Minister for Finance, Minister for Economic Affairs, and Minister for Petroleum, Ali Pervez Malik, Deputy Chairman Planning Commission, Secretaries of Finance, Power, Communication and Water Resources Divisions as its members to review mechanism for development funding. Two meetings of the committee were held on 17th, and 21st, May 2024 and suggested some important elements to formulate a pragmatic PSDP.
Ministries/ Divisions initially demanded over Rs2.7 trillion for 1366 projects having throw-forward of over Rs9 trillion for PSDP 2024-25. However, consultative meetings held in April 2024 to categorise the projects and propose project-wise demands for PSDP 2024-25 in line with guidelines approved by the NEC meeting on January 29, 2024.
The NEC guidelines in order to address the formulation of the Public Sector Development Programme (PSDP) 2024-25 were that priorities should be accorded to allocation of development funds to strategic and core ongoing projects, with a particular focus on water resources, transport and communications, and energy sectors.
Moreover, priority should be accorded to projects with 80% plus expenditure in all sectors with the aim of completing them during the fiscal year 2024-25 and Ministries and Divisions were asked to ensure allocation according to annual phasing of ongoing projects while remaining within the Indicative Budget Ceiling (IBC) as per PFM Act 2019.
The Planning Ministry also added that due to fiscal constraints and huge throw forward, inclusion of new projects in infrastructure sector should be minimised and only 10 per cent of development budget fiscal year 2024-25 should be considered for allocation to new projects.
The particular focus of these new projects should be on supporting exports, enhancing productivity, fostering competitiveness as well as industrial development, agro industry and seed development, etc. As per guidelines of the NEC, the priority will be given to PPP projects, where PSDP funding is either used as equity or as viability gap.
Copyright Business Recorder, 2024
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