Pakistan plans Rs 600 bn PSDP for next fiscal

Islamabad: The Pakistan Finance Ministry has indicated an allocation of Rs 600 billion for the Public Sector Development Programme (PSDP) for the next budget that will keep the planning ministry walking a tightrope to meet the financing needs of ongoing projects as well as funding the new initiatives.

The ministry has started sending indicative budget ceilings to various departments as the government is considering announcing the budget on June 5. However, no final decision has been made about the budget date as the country is dealing with the coronavirus pandemic, The Express Tribune reported.

The government has also decided to shorten the approval process of the development budget and the Priorities Committee meetings might not take place this year.

The indicative budget includes Rs 530 billion spending for core development activities being undertaken under the umbrella of the PSDP. The remaining Rs 70 billion have been proposed for projects being administered by the finance ministry including meeting the military’s certain development needs from the PSDP.

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The Rs 600 billion development envelope size for the fiscal year 2020-21 is Rs 101 billion or 14.4% less than the original budget of this fiscal year. The actual spending in this fiscal year, however, is likely to remain around Rs 525 billion due to lower than expected revenue collection and development activities coming to a grinding halt because of the partial lockdown in the country to stem the spread of Covid-19 infections.

Planning Minister Asad Umar on Tuesday reviewed the indicative budget. The total financing needs of the ongoing and already approved projects are estimated at nearly Rs 6 trillion.

The Rs 600 billion is equal to 1.3% of the projected size of the GDP in the next fiscal year, which makes it one of the lowest development spendings.

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However, economic activities are expected to remain suppressed in at least the first quarter of the next fiscal that will limit the spending capacity of the government ministries and departments.

Sources in the planning ministry said it would be impossible to undertake new initiatives without increasing the size of the PSDP.

However, the indicative budget is subject to the approval of various forums, including the National Economic Council, which is headed by Prime Minister Imran Khan.

In the current fiscal, the government had authorised Rs 30.2 billion spending on projects recommended by parliamentarians, Rs 27 billion by the Higher Education Commission, Rs 154.5 billion by the National Highway Authority, Rs 38 billion for military needs from the development budget and Rs 23 billion for erstwhile FATA.

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