ISLAMABAD: The government has slashed the Public Sector Development Programme (PSDP) for the ongoing fiscal year by Rs204 billion.
The official document reveals that a 30 percent cut (Rs184 billion) was made in the PSDP to maintain the primary budget balance, thereby, compressing the size of PSDP 2023-24 to Rs746 billion from the original allocation of Rs950 billion.
Additionally, Rs20 billion was diverted to the non-development side during the year and a 20 percent (Rs184 billion) cut was made in releases of the 4th quarter to maintain the primary budget balance, thereby, compressing the size of PSDP 2023-24 to Rs746 billion. As a result, the PSDP was revised downward to Rs746 billion for the current fiscal year from the original allocation of Rs950 billion.
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The utilisation position of PSDP 2023-24 up to 30th May 2024 stood at Rs379 billion which included Rs331 billion with the rupee component and Rs48 billion foreign aid component, whereas, authorisation against sanctioned amount of Rs487 billion.
The official paper reveals that the National Economic Council (NEC) on 6th June 2023 approved Federal PSDP 2023-24 at a size of Rs950 billion including foreign aid of Rs75 billion. Besides Rs200 billion (non-budgeted) were targeted to be channelised through PPP mode including Rs25 billion for 4RF Sindh Package.
In order to ensure smooth execution and completion of ongoing development projects, the NEC accorded approval of policy guidelines including (a) flexible release strategy at the rate of 25 per cent for each quarter, (b) non-deduction of CDL from released funds under PSDP, (c) exemption of development spending from austerity measures, (d) non-diversion of development funds to recurrent side, and (e) implementation of Assan Assignment Account Procedure.
The Finance Division issued a back-loaded release strategy at the rates of 15 per cent, 20 per cent, 25 per cent, and 40 per cent contrary to the NEC-approved release strategy for quarters Q1, Q2, Q3, and Q4 respectively. As per release strategy, out of total releases of Rs131 billion in the first quarter of 2023-24, Rs61.26 billion (46.7 per cent of first quarter releases) were earmarked to SDGs schemes, leaving behind only Rs69.74 billion (53.2per cent of the first quarter releases) for allocation to all remaining PSDP projects.
Additionally, Rs20 billion diverted to the non-development side during the year and 20 per cent (Rs184 billion) cut was made in releases of the 4th quarter to maintain the primary budget balance, thereby, compressing the size of PSDP 2023-24 to Rs746 billion. Further, Rs29 billion were deducted at source by the Finance Division on account of CDL recovery. Thus, the actual/effective size of PSDP was reduced to Rs717 billion.
The share of provincial projects and programmes in the federal PSDP was around 33 per cent irrespective of the fact that such projects/ schemes were responsibility of the provincial governments after the 18th Constitutional Amendment.
The inclusion of these projects in PSDP hampered the financial and physical progress of the core/ mega projects of national importance hence undermined as limited space was available for such projects. On the other side, the pressing demand of over Rs300 billion emerged to provide budgetary cover to the foreign aid secured by the Ministries/Divisions during the course of the financial year.
In order to ensure the smooth execution of projects, an uninterrupted inflow of foreign exchange and to honour international commitments, the NEC accorded approval of 72 provincial projects along with the SDGs Achievement Programme for closure and drop from the PSDP.
The allocation of Rs102 billion was diverted to meet the rupee cover requirements of foreign-aided projects. Necessary adjustments/re-appropriations to fast-moving projects within the overall size of PSDP 2023-24 was made after the mid-year PSDP review.
Moreover, principal accounting officers (PAOs) were allowed to undertake re-appropriations within budgeted portfolio. In order to meet critical additional demands for core/mega projects of national importance, foreign aided projects, near completion and fast-moving projects, during July 2023-May 2024, an amount of Rs65 billion were re-appropriated by Ministries/Divisions, whereas, TSGs amounting to Rs113.6 billion were recommended to important projects/ programmes within the approved size of PSDP 2023-24.
Copyright Business Recorder, 2024
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