The Annual Plan Co-ordination Committee (APCC) is likely to recommend total outlay of Rs 494 billion for 2009-10 Public Sector Development Programme (PSDP) in its meeting scheduled for May 22. The APCC will consider the total outlay of PSDP to recommend to the National Economic Council (NEC) for approval, which is expected to meet on June 1.
According to sources, the APCC is expected to recommend Rs 294.4 billion allocations under the 2009-10 Federal PSDP and Rs 200 billion for the provincial PSDP. Under Federal PSDP, the APCC will consider proposed allocation of Rs 192 billion for Federal ministries; Rs 35 billion for special programme; Rs 27.4 billion allocation for special areas programme; and Rs 40 billion for corporations. The allocation of ERRA is to be Rs 25 billion.
The APCC is also considering Option B, which is as follows: Rs 450 billion for Federal PSDP and Rs 200 billion provincial PSDP, making a total outlay of Rs 650 billion. But, according to some officials of the Planning Commission, the APCC is not likely to recommend this higher amount because of the severe financial crunch that the country is facing. Officials are of the view that Federal PSDP may not be significantly higher than Rs 260 billion due to this financial crunch.
The Planning Commission had received demands of over Rs 851 billion from all ministries, departments and agencies and the Planning Commission was of the view that the Federal component of the PSDP should be Rs 473 billion. The government has allocated Rs 371 billion to the Federal PSDP and Rs 170 billion to the provincial PSDP in the current financial year 2008-09.
It has deducted Rs 34 billion for Benazir Income Support Programme (BISP) from the Federal PSDP and put it into recurring budget. After deducting the amount of Rs 34 billion for BISP, the government allocation of Rs 337 billion in the budget for the Federal PSDP has been reduced to Rs 219 billion. This decline of Rs 118 billion attributed to financial constraints had one overarching objective to achieve the revised fiscal deficit target of 4.3 percent of the gross domestic product (GDP) as committed to the International Monetary Fund (IMF).
The fiscal deficit target agreed with the IMF for the 2009-10 financial year has also been revised upward to 4.6 percent of the GDP against the earlier target of 3.4 percent of GDP.
On February 13 when the Prime Minister visited the Planning Commission, the envisaged cut in the PSDP was Rs 100 billion. The additional Rs 18 billion is due to continuing financial constraints, which compelled the government to further slash the PSDP for the current financial year. The Finance Ministry released Rs 120 billion for development projects during July-March of the current fiscal year for development projects under the 2008-09 Federal PSDP.