PSDP projects: Ministries, Divisions asked to ‘cut your coat according to cloth’

ISLAMABAD: Ministry of Planning, Development and Special Initiatives (M/oPD&SI) has advised all Ministries/ Division to prioritise their development projects within allocations in the federal budget rather than sending cases for any additional allocations or for authorisation of funds beyond Finance Division’s release strategy, sources close to Planning Minister told Business Recorder.

Sharing the details, sources said, M/o PD&SI has apprised the Ministries that the exercise for formulation of PSDP FY 24-25 started with issuance of PSDP Call Circular on February 22, 2024 requesting all the Ministries/ Divisions (concerned) to submit proposals/ demands for PSDP. The initial demands from Ministries/ Divisions totalled Rs 2.80 trillion for 1366 projects.

Planning Commission conducted several consultative meetings in April 2024 to align the received demands with the NEC guidelines and the total demand was revised downwards to Rs. 245 trillion. This revised total demand had to be adjusted against Indicative Budget Ceiling (IBC) of Rs. 1.221 trillion for PSDP FY 2024-25 as conveyed by Finance Division on May 24, 2024.

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The Annual Plan Coordination Committee (APCC) considered the proposed PSDP FY 2024-25 over several meetings starting on May 31, 2024. The PSDP for FY 2024-25 was submitted for consideration by the NEC at size of Rs 1.221 trillion.

The IBC was subsequently increased by Finance Division to Rs. 1.50 trillion but was later reduced to Rs 1.40 trillion. The project-wise budgetary allocations were accordingly adjusted and the PSDP FY 2024-25 was approved by the NEC in its meeting held on June 10, 2024 at size of Rs 1.40 trillion. The same was laid before the Parliament as part of the Finance Bill for FY 2024-25.

After exhaustive discussions on the budget the Parliament, keeping in view fiscal constraints and in order to meet the primary balance targets, approved the PSDP 2024-25 at further reduced size of Rs 1.15 trillion on June 28 2024. Later Finance Division intimated on July 26, 2024 that the size of PSDP was Rs 1.1 trillion.

Accordingly, the project-wise budgetary allocations have been adjusted while according priority to core, foreign funded and near-completion projects as per the NEC approved criteria.

According to the Ministry of Planning, Development and Special Initiatives, the PSDP FY 2024-25 is under the constraint of fiscal space which leaves no room for any upward revisions as far as project-wise budgetary allocations are concerned. However, some Ministries/ Divisions/ Agencies have been approaching Planning Commission for additional allocations to their projects.

Planning Ministry argued that it is understandable that Ministries/ Divisions/ Agencies consider their own projects to be of top priority. However, those Ministries/ Divisions/ Agencies do not have a holistic view of the priorities of other Ministries/ Divisions/ Agencies as well as the constraints upon development budget.

Further, entire development budget has been allocated project-wise and no lump sum amount is available for any further allocations.

Ministries/ Divisions/ Agencies were requested to also note that authorisation of funds quarter-wise is determined by Finance Division and the Planning Commission is bound to follow Finance Division’s release strategy. Therefore, it is not possible for the Planning Commission to allocate/ authorise amounts beyond Finance Division’s release strategy.

After explaining the entire allocation strategy, Planning Ministry has advised all Ministries/ Divisions/ Departments to prioritize their projects included in PSDP FY 2024-25 (as per the Govt’s priority / direction) while remaining within allocated ceilings and re-appropriation of funds within allocated budgets to priority projects as per NEC approval (Foreign Funded, Core, Near Completion & New initiatives) rather than sending cases to Planning Commission for any additional allocations or for authorisation of funds beyond Finance Division’s release strategy.

Copyright Business Recorder, 2024