PHOTO: AFP
ISLAMABAD:
In a budget dominated by the China-Pakistan Economic Corridor, Pakistan plans to allocate upwards of $14 billion in total development spending for fiscal year 2016, though remarkably only 20% of that will be financed by foreign lenders.
On Tuesday, the Annual Plan Coordination Committee (APCC) approved a Rs1,418 billion national development programme for the fiscal year that ends June 30, 2016, an allocation that is up 20% from the outgoing fiscal year’s budget.
Foreign lenders will finance 20% of the national development programme and provide Rs283.4 billion loans during fiscal 2016. For the federal development budget, this ratio goes higher to 31%, mainly due to projects that are part of the China-Pakistan Economic Corridor (CPEC).
Headed by Planning Minister Ahsan Iqbal, the APCC cleared Rs580 billion for the federal Public Sector Development Programme (PSDP) – an increase of just over 10% over this year’s budget of Rs525 billion. To fund this year’s spending, the federal government will seek Rs182.7 billion in foreign loans.
Another Rs838 billion will be spent by the four provinces from their budgets, which is Rs188 billion or 28% higher than the outgoing fiscal year’s Rs650 billion provincial annual development programme. The provinces will obtain Rs100.6 billion in foreign loans to finance their development spending.
Federal ministries have seen their development allocations cut by 15% from Rs296 billion this year to Rs251 billion for fiscal 2016.
The government also appears to be relying on some creative accounting this year with its budget numbers. It reduced the development allocations of the water and power ministry’s water sector projects, while space was also created by shifting a couple of large development projects of the Pakistan Atomic Energy Commission (PAEC) outside the budget.
The development budget of the Pakistan Atomic Energy Commission (PAEC) has been reduced from Rs51.5 billion to Rs30.5 billion for the new fiscal year. In absolute terms, the PAEC budget was reduced by Rs21.1 billion or 41%. Out of the Rs30.5 billion, over Rs25 billion will go to Chashma Nuclear Power Plants projects, which are nearing completion. The Karachi Nuclear Power Plants will be funded by creating a special purpose vehicle and their expenses will not be booked on the budget.
The devolution of health-related projects to provinces also created fiscal space, which will be utilised to finance CPEC projects. The National Health Services, Regulations and Coordination Ministry’s development budget has been drastically reduced to Rs6.2 billion from Rs27.1 billion.
The water sector’s allocation has also been reduced from Rs43.4 billion to Rs30 billion, a reduction of 30%. However, the power sector allocation has been increased by 7% to Rs72.8 billion in the new budget.
The National Highway Authority will get the lion’s share in the new budget. As much as 34% of the total federal budget or Rs200 billion will go to the NHA to complete the road projects of the CPEC. The allocation is Rs88.5 billion, 79% higher than outgoing fiscal year’s development budget. Another Rs41.3 billion has been allocated for three road sector projects of CPEC.
The ports and shipping ministry’s development budget has been increased from Rs2.6 billion to Rs14.5 billion.
For parliamentarians’ discretionary spending, the development budget allocation has been increased from Rs12.5 billion to Rs20 billion for the new fiscal year. Parliamentarians’ projects will be funded under the name of Pakistan Millennium Development Goals.
The federal government has also earmarked Rs30 billion for ending disparities in development among the provinces, which is 16% less than the outgoing fiscal year’s budget. Another Rs40 billion has been allocated to bail out the ailing state-owned Pakistan Railways. The Higher Education Commission will receive Rs20.5 billion which is slightly higher than this year’s allocation.
Published in The Express Tribune, May 27th, 2015.
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