Development budget: Govt decides to earmark Rs86b for ‘new initiatives’

Proposed amount to be used for projects cleared by PM for 2014-15 Public Sector Development Programme.

ISLAMABAD:

The federal government has decided to allocate almost one-fifth of next year’s proposed Rs506 billion development budget for implementing ruling party’s manifesto, moving away from the strategy of giving almost the entire budget to ongoing schemes for speedy completion.

The decision to earmark a huge sum of Rs86 billion or 17% of the proposed budget in the name of ‘new initiatives’ has been taken to implement projects that Prime Minister Nawaz Sharif has cleared to include in the 2014-15 Public Sector Development Programme, said sources in Ministry of Planning and Development.

These projects will be initiated in the energy sector and under the Pak-China Economic Corridor. The sources said the process of seeking requisite approvals will begin soon. Pakistan and China have already signed Memorandum of Understandings for initiating projects worth $34 billion in five years under Beijing’s plan to secure oil and gas supplies through Gwadar port.

Pakistan has to earmark the rupee component against the promised foreign project loans and almost one-fifth of next year’s development budget will be set aside for this purpose, sources said.

The formal process to approve financial year 2014-15’s development budget will begin this month when Priorities Committee hold meetings. The recommendations of the Priorities Committee are then fine-tuned in the Annual Plan Coordination Committee (APCC) meeting, which then sends the final proposals to the National Economic Council, headed by the premier.

In the current year’s Rs540 billion development budget, an amount of Rs115 billion had been earmarked against new initiatives without specifying projects. The federal government has now decided to slash the Rs115 billion allocation due to shortfall in tax revenues. The proposed Rs506 billion uplift is 6% or Rs34 billion less than the original development budget of the current fiscal year.

According to sources, due to a scarcity of resources, the average completion period of ongoing schemes is more than 11 years. To reduce the backlog, the Planning Ministry has been giving about 95% of development budget to the ongoing schemes for several years .

The causality of implementing ruling party’s manifesto will be the ongoing schemes, as the federal government has decided that all the federal ministries and departments will get development budget for next year, equal to what they got this year.

A senior official of the Planning Ministry confirmed to The Express Tribune that the decision to freeze the development allocations at last year’s level has been conveyed to the federal ministries. Usually, the federal ministries’ budgetary allocations are determined after reviewing their requirements, mainly pace of work.

He said the space has been created for new initiatives after scaling back many ongoing schemes, initiated in the PPP government.

For the current fiscal year, Rs295.5 billion had been allocated to 41 ministries and departments including Rs57.9 billion to Ministry of Water and Power, Rs18.5 billion to Higher Education Commission, Rs29.6 billion for Kashmir Affairs, Rs52.3 billion for Pakistan Atomic Energy Commission and Rs31 billion for Railways. The government is considering allocating the same amount for next year.

In the current year’s budget, an amount of Rs114.5 billion has been sanctioned for corporations, mainly Rs51.5 billion for Wapda and Rs63 billion for National Highway Authority.

Official version

“The (Rs86 billion) will be for new initiatives to implement the party’s manifesto,” confirmed Planning and Development Minister Ahsan Iqbal. He maintained that the implementation of manifesto does not mean implementing the party’s programme. He said the amount will be allocated for projects in the areas of energy, infrastructure, transport and communication, agriculture, industry and human resources.

Iqbal said the projects against the new initiatives will this time be mentioned in the PSDP document.

Published in The Express Tribune, April 1^st, 2014.

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