The Ministry of Finance has not yet communicated about available resource envelop to Planning Commission in a bid to give them chance for reprioritising development schemes of all ministries/divisions amid existing difficult financial position, it is learnt.
The Planning Commission (PC) had objected over Finance Ministry's unilateral actions for cutting down allocated funds of ministries/divisions related to development projects without taking the PC into confidence. "The ongoing development activities in the country have come to a grinding halt due to massive cut in fund releases," said official sources. They said that cut in Public Sector Development Program (PSDP) by Rs 100-150 billion was imminent in the wake of IMF's demand to reduce fiscal deficit from 7.4 percent of the GDP in fiscal year 2007-08 to around 3.9 percent of the GDP for the current fiscal year 2008-09.
Out of three Ds (defence, debt servicing and development budgets), the easiest way was to cut development expenditure, keeping in view that the incumbent regime is in no mood to curtail expenditure being incurred to run a huge administration.
Deputy Chairman Planning Commission, Salman Farooqi has sent official communication to Finance Ministry seeking exact information about available possible financial resources for giving them chance to set priorities related to development projects under the Public Sector Development Program (PSDP) for the remaining months of the current fiscal year.
"The Planning Commission has already outlined priorities in consultation with the relevant ministries under which it will endeavour to meet demand of social sector such as education and health by saving them from cutting down of their allocated share in the PSDP," said an official of the Gilani government, adding that they could not suspend providing money where 80 percent work on any project was already completed.
"It is not the right approach to slash allocated money for Higher Education Commission (HEC) with which they have sent Pakistani students abroad on scholarships," said sources, adding that the Section Officer of Finance Ministry could not take decision on this subject.
The Planning Commission, sources said, has proposed to the Advisor to PM on Finance Shaukat Tarin for holding joint meeting of Finance Division and Planning Division for taking final decision to prioritise the development schemes at higher level rather than at section officer level.
"This decision should be taken least at Joint Secretary or Secretary level meeting between Finance and Planning Divisions," said the official. When an official in Finance Ministry was contacted, he said that the Finance Ministry exactly knew the fiscal position and they over-performed in achieving fiscal deficit target for the first quarter (July-September) period of the current fiscal year.
"This trend will continue to persist in the remaining three quarters of the current fiscal year," he added. When Chief Economist Planning Commission Dr Rashid Amjad was asked in this regard on Wednesday, he said that the resource situation would start improving onwards owing to substantial reduction in POL prices in the international market.
"We have proposed to the government to curtail expenditures on all avenues where it is possible, but efforts should be made to avoid cutting down development spending as much as possible, keeping in view overall macroeconomic situation," he said.
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