The target for development spending in next fiscal year is projected at Rs 710 billion, with the federal government’s Public Sector Development Programme of Rs 280 billion while the provincial governments are likely to spend Rs 430 billion on their annual development plans.
The meeting of Annual Plan Coordination Committee (APCC) termed energy, water, communication and transport sectors as the top priority areas for development spending next fiscal year. The National Economic Council (NEC) headed by the Prime Minister Syed Yusuf Raza Gilani and attended by provincial Chief Ministers, besides the officials will finally approve the development projects for the next fiscal year.
Finance Minister Dr. Abdul Hafeez Shaikh in his opening remarks at the APCC meeting stressed that the available resources should be utilized in most efficient manner.
He said funds would be provided on priority to those projects that were nearing completion, as there was a shortage of resources.
However he said that overall the development spending was likely to increase provincial governments would be spending more than the federation.
As a result of 7th NFC Award, provinces have received Rs 300 billion additional from the federal government during the current fiscal year. With the availability of more resources, the provinces could spend more on the supply of potable water, law and order and health facilities, he said.
During the next fiscal year, the top priority of the government remains overcoming the energy shortages for which an allocation of Rs 148.2 billion was made so that the construction of mega hydel power projects could be expedited.
This includes an allocation of Rs 1.9 billion for the construction of 43 small and medium dams during the next fiscal year. An allocation of Rs 118 billion was proposed for the social sectors and Rs 14 billion for other projects while Rs 10 billion set for the Earthquake Reconstruction and Rehabilitation Authority (ERRA). The PSDP also includes Rs 70 billion for the public sector corporations.
The private sector had been demanding increase in development spending as this would give momentum to the economic activity and lead to creation of more jobs.
The size of the federal PSDP had been kept at the last year level, as 18 ministries were devolved. However, the federal government plans to continue funding for the health care, population and higher education projects for the next few years.
APCC approved an allocation of Rs 18 billion for Diamer Basha Dam, Rs 13 billion for Mangla Dam raising project, Rs 11 billion for Neelum Jehlum Hydel power project. Allocation for the Chashma Nuclear power projects III and IV was made under Rs 22 billion budget of the Pakistan Atomic Energy Commission. For enabling SUPARCO to meet the deadline of sending satellite in the orbit by an allocation of Rs 2.1 billion was made and Rs 6.8 billion for projects of the National Highway Authority (NHA).
It is important to mention that the federal ministries had demanded Rs 480 billion but due to limited fiscal space APCC recommended only projects worth Rs 280 billion for the consideration of the NEC. The foreign exchange component for the federal development projects next fiscal year is estimated at Rs 38.4 billion.
APCC also decided that unless a project was not critical; no new development project would be initiated next fiscal year. Projects on which 10 percent of the total allocations had been spent would be deferred and after ascertaining which of the projects on which 20 to 30 percent allocation was utilised were critical the rest would be also put on hold.
APCC noted that due to financial constrains insufficient funds have been provided for water and power and for National Trade Corridor projects. Similarly, complete funds were also not allocated for critical importance transport sector projects for providing up country link to Gwadar Port. Fund demanded by FATA, Gilgit Baltistan and AJK could not be fully met.
The PSDP for FY 2010-11 faced difficulties right from the beginning as country was hit by devastating floods in August which forced diverting of development funds for the rehabilitation of flood affectees.
The forced reducing the size of federal component from Rs 280 billion to Rs 180 billion. The allocation of infrastructure was revised to Rs 74 billion from projected Rs 135 billion, social sectors was slashed to Rs 100 billion from Rs 134 billion while others were reduced to Rs 6 billion for the original allocation of Rs 11 billion.
