PSDP faces prospect of deep cuts

ISLAMABAD: Ministry of Planning, Development and Special Initiatives (MoPD&SI) is said to have decided to further trim rupee funded Public Sector Development Programme (PSDP) 2021-22 from already reduced level of Rs 600 billion due to fiscal constraints, well informed sources told Business Recorder.

Earlier, MoPD&SI decided to slash PSDP byRs 200 billion (25 percent) to Rs 600 billion from Rs 800 billion in the PSDP 2021-22 as per agreement with International Monetary Fund (IMF) and asked Ministries/Divisions to send their recommendations though the amount budgeted under this head was Rs 900 billion.

M/o PD&SI has written another letter to all the Ministries/ Divisions saying that in continuation of its letter of March 31, 2022 and April 13, 2022 on revision of PSDP 2021-22, requisite project wise revised allocations are awaited which are delaying rationalization of PSDP.

“It is imperative to state that due to fiscal constraints the development portfolio is expected to be reduced further, hence, it is reiterated that Ministries/ Divisions should thoroughly review their respective portfolios and avoid unnecessary re-appropriation or additional demand and ensure compliance of the guidelines as conveyed on April 13, 2022,” said Planning Chief, Sohail Hanif in a letter to all the Federal Secretaries.

The Ministries/Divisions were requested to furnish the revised projects-wise allocations while remaining within the respective revised rupee allocation communicated through Office Memorandum.

Planning ministry to release development funds for Q4

The Ministry/Division wise review will be made on weekly basis on percentage utilization/expenditure and additional cut, if required, will be implemented on slow moving Ministries/ Divisions.

The Ministries/Division were also directed that while working out project-wise revised allocations. follow guidelines may be adhered to: (i) to ensure completion of maximum projects as targeted, by June 2022;(ii) allocations of high impact/national priority projects may be protected and utilized to achieve physical targets as planned; and (iii) the re- appropriation of funds may be made as per guidelines issued on February 28, 2022.

On February 24, 2022, Finance Division in a letter to Planning Division had conveyed that PSDP 2021-22 should be revised to Rs 700 billion from Rs 900 billion.

The Ministries/ Divisions that will face maximum cut in their PSDP are Finance Division, Water Resources Division, National Highways Authority, Power Division, Planning Division and Housing Division.

The allocation of Cabinet Division has been increased by Rs 20 billion, whereas no deduction has been made in allocation of SDGs supplementary funds of Rs 22 billion.

According to Planning Division, in order to cater for the shortfall of Rs 200 billion, allocation of Rs 800 billion has been rationalized downward to Rs 600 billion whereas foreign aid component will remain as per original budgetary allocation of Rs 100 billion.

The details of Ministry-wise proposed revised PSDP 2021-22 allocations sans foreign aid are as follows; (i) Aviation Division original Rs 1,872.92 million- revised, Rs 1,404 million; (ii) Board of Investment, from Rs 80.000 million to Rs 60.000 million; (iii) Cabinet Division from Rs 46,155.000 to Rs 68,145.000 million; (iv) Climate Change, Rs 14,327.000 million to Rs 10,745.000 million;(v) Commerce Division, Rs 1,613.500 million to Rs 1,210.000 million;(vi) Communication Division, Rs 451.322 million to Rs 338.000 million ;(vii) Defence Division, 1.977.635 million to Rs 1,708.000 million;(viii) Defence Production Division, Rs 1,745 million to Rs 1,309.000 million; (ix) Establishment Division, Rs 800.000 million to Rs 600.000 million; (x) Federal Education & Professional Training Division, Rs 8,539.604 million to Rs 6,504.000 million; (xi) Finance Division, Rs 121,261.31 million to Rs 104,061.000 million; (xii) Higher Education Commission, Rs 40,450.000 million to Rs 24.242.000 million; (xiii) Housing & Works, Rs 24,211.511 million to Rs 19,182.443 million ;(xiv) Human Rights Division, Rs 279.200 million to Rs 181.801 million ;(xv) Industries and Production Division, Rs 2,916.082 million to Rs 2,187.062 million; (xvi) Information and Broadcasting, Rs 1,399.683 million to Rs 1.049.762 million; (xvii) Information Technology & Telecom Division, Rs 8,111.056 million to Rs 6,083.292 million; (xviii) Inter Provincial Coordination Division, Rs 3,734.736 million to Rs 1,493.886 million; (xix) Interior Division, Rs 21,048.715 million to Rs 14,566,673 million; (xx) Kashmir Affairs & Gilgit Baltistan Division, Rs 65,459.903 million to Rs 47, 394.927 million ;(xxi) Law and Justice Division, Rs 6.027.351 million to Rs 2,746.589 million; (xxii) Maritime Affairs Division, Rs 2,059.717 million to Rs 1,612.288 million; (xxiii) Narcotics Division, Rs 489.393 million to Rs 458.369 million; (xxiv) National Food Security and Research, Rs 11.017.280 million to Rs 8,262.960 million; (xxv) National Health Services, Regulations & Coordination, Rs 19,003.506 million; (xxvi) National Heritage & Culture Division, Rs 125.926 million to Rs 94.445 million; (xxvii) National Highway Authority (NHA), Rs 91,558.472 million to Rs 77,668.854 million; (xxviii) Pakistan Atomic Energy Commission (PAEC), Rs 27,000.000 million to Rs 27,000.000 million (no downward revision); (xxix) Pakistan Nuclear Regulator Authority, Rs 200.000 million to RS 200.000 million ;(xxx) Petroleum Division, Rs 3,249.540 million to Rs 2,437.155 million; (xxxi) Planning, Development and Special Initiatives Division, Rs 19,245.527 million to Rs 9,247.661 million; (xxxii) Poverty Alleviation & Social Safety Division, Rs 598.910 million to Rs 449.183 million ;(xxxiii) Power Division, Rs 29.311.047 million to Rs 12,276.360 million ;( xxxiv), Railways Division, Rs 26,908.506 million to Rs 20, 181.380 million ;(xxxv) Religious Affairs & Interfaith harmony Division, Rs 493.849 million to Rs 370.387 million ;(xxxvi) Revenue Division, Rs 2,355.067 million to Rs 1,766.300 million ;(xxxvii) SUPARCO, Rs 5,368.864 million to Rs 3,293.116 million ;(xxxviii) Science and Technology Division, Rs 8,341.000 million to Rs 4,200.000 million ;(xxxix) Water Resources Division, Rs 91,712.692 million to Rs 68,764.519 million; (xxxx) SDGs Supplementary Funds Rs 22,000.000 million - no change; (xxxxi) Covid-19, Rs 5,000 million- no change; (xxxxii) VGF for PPP projects, Rs 61,500.000 million to Rs 24,906.387 million and; (xxxxiii) ERRA, Rs 000,000.000 to Rs 7,426.025 million.

The sources said there will be no change in allocation of Rs 100 billion made in the PSDP 2021-22 as foreign aid, due to which the total revised PSDP will be Rs 700 billion from original budgeted allocation of Rs 900 billion.

Copyright Business Recorder, 2022