Federal Budget FY16, the government's third fiscal budget, is about to be announced this week, and from all the pre-budget talks and information divulging activities, it looks like the government will have to move onto the next level i.e., from macroeconomic stabilization to kick starting the stagnant growth spell. An indication of this comes from the growth level of around 5.5 percent proposed for the next fiscal year.
In such a case where the GDP growth rate has been raised to revive the economy, one ingredient is Public Sector Development Program (PSDP), which is the chief tool that the government uses to provide financial resources for development projects and programs; a big increase in total federal PSDP spending over last year is proposed, which will likely take it to over Rs580 billion for FY16.
Minister of Planning and Development has been reported to have said that Rs250 billion will be earmarked only for power projects that run on LNG. This is around 43 percent of the total, assuming that the total federal PSDP is Rs580 billion.
Fiscal consolidation, growth, infrastructure and energy are anticipated to be the key areas of focus for the government in Budget FY16 that hinge directly or indirectly on imported LNG power projects, and the implementation of the $46 billion CPEC. So apart from the LNG projects, a key focus of PSDP allocation in the budget will be for the China-Pakistan Economic Corridor (CPEC), which include not only infrastructure related projects like roads and bridges, but also energy projects with the Chinese investment; around Rs150 billion might be allocated for motorways and roads - another 25-26 percent of the total.
Apart from the allocations for National Highway Authority, power sector, shipping and port, and railways, which should yield improved energy supply and enhanced industrial activity, another key area of attention might be interior ministry where Rs3.5 billion has been decided to be spent on setting up a military force and providing security to the Chinese workers in Pakistan under CPEC.