Uplift budget cut by 13% for FY 2019-20

Published: May 24, 2019


ISLAMABAD.: The federal and four provincial governments have proposed nearly Rs1.6 trillion for development spending in next fiscal year, which is lower by Rs227 billion or nearly 13 per cent due to International Monetary Fund-backed fiscal consolidation programme.

The Annual Plan Coordination Committee (APCC) recommended on Thursday Rs1.586-trillion National Development Budget for fiscal year 2019-20 to the National Economic Council. The budgetary allocations for new fiscal year are lowered by Rs227 billion when compared with Rs1.813 trillion original allocations for the outgoing fiscal year.

In an illegal move, Asif Sheikh whose contract was terminated on May 15 after Islamabad High Court declared his appointment illegal, made presentation on the next year’s budget to the APCC. The Planning Ministry last week notified to terminate Sheikh’s contract and his action of sitting in the APCC meeting tantamount to contempt of IHC judgment.

Govt to spend 1% of PSDP on green programme

The Rs1.586 trillion is exclusive of Rs250 billion that the federal government plans to spend outside its budget aimed at partially compensating low budgetary allocations for the development purposes.

The APCC approved a total Rs1.837 trillion for development spending by federal and provincial governments, said Federal Minister for Planning and Development Makhdoom Khusro Bakhtiar, after chairing the APCC meeting.

The minister said that Rs675 billion have been allocated under federal Public Sector Development Programme (PSDP) and Rs250 billion will be spent under public-private partnership mode.

He said that the next year’s federal PSDP will be used only to fund projects of national importance and added that the federal PSDP cannot be seen with the lens of province-wise allocations.

“The government has made best PSDP plan while keeping in mind the fiscal challenges being faced by the country,” the minister noted.

Nearly Rs350 billion will be arranged from foreign lenders to finance the country’s development needs.

The planning minister said that in the next fiscal year 200 new projects will be initiated and the government has allocated 27pc of the federal PSDP for the new schemes. Bakhtiar maintained that the government will fully fund those ongoing schemes where more than 80pc work is already completed.

Merged Fata districts see development budget cuts

The indicated amount of Rs675 billion is not sufficient to meet the requirements of the ongoing projects but yet the planning ministry has allocated money for the new initiatives.

The federal government’s proposed development budget is Rs675 billion and combined development budget of the four provinces is estimated at Rs912 billion. The NEC has the authority to increase the federal PSDP.

The provincial Annual Development Plans of Rs912 billion for 2019-20 is Rs101 billion or 10pc less than the outgoing fiscal year’s original allocations.

The proposed federal PSDP of Rs675 billion is also Rs125 billion or 15.6pc less than the outgoing fiscal year, according to the planning ministry’s documents. The federal government’s decision to cut the federal PSDP by nearly 16pc and setting aside a big chunk for discretionary spending will have serious implications on the ongoing schemes

However, against the original annual national allocation of Rs1.813 trillion, the actual development spending is expected to remain less than Rs1.2 trillion due to steep cuts in the budgets in the outgoing fiscal year.

Govt to earmark Rs1.8tr for development budget

For the next fiscal year, the governments are not allocating big chunks for development budgets due to fiscal constraints and the IMF’s condition to contain the primary deficit to just 0.6pc of the GDP or nearly Rs260 billion. The primary balance is the sum of difference between total expenditures, excluding interest payments, and the total revenues.

This can only be achieved by either slashing the development budget and defense budget or substantially increasing the revenues.

Out of Rs675 billion federal PSDP, an amount of Rs124 billion will be meant for discretionary spending, which is not in line with Prime Minister Imran Khan’s vision to end discretionary spending.

The government has proposed Rs64 billion for security enhancement initiatives and temporary displaced persons, Rs22 billion for erstwhile Federally Administered Tribal Areas and Rs10 billion for PM’s Youth programme. An amount of Rs24 billion has also been allocated for parliamentarians schemes.

Out of Rs912 billion indicated by the provinces, Punjab’s annual development budget for new fiscal year will be Rs400 billion, one-fifth less than last year’s original allocation of Rs500 billion. In its revised estimates Punjab has shown only Rs165 billion actual spending.

Sindh’s proposed annual development plan is Rs290.3 billion as against Rs315 billion in the outgoing fiscal year. Sindh too has shown only Rs190 billion spending in the revised estimates.

Khyber Pakhtunkhwa’s annual development budget is expected to be Rs142 billion as against outgoing fiscal year’s original allocation of Rs108 billion. Its revised development spending estimates were Rs181 billion.

Balochistan’s government has proposed Rs80 billion as against original allocation of Rs90 billion for outgoing fiscal year. The Balochistan government showed its revised spending estimates at Rs46 billion.

Overall, all the federal ministries would get Rs371billion, which is only Rs5 billion higher than the outgoing fiscal year.

The transport and communication sectors have been given Rs200 billion budget in the next fiscal year. The water sector will get Rs70 billion in the next fiscal year due to allocations for Diamer-Bhasha dam and Mohmand dam.

The Pakistan Atomic Energy Commission’s development budget has been increased to Rs25 billion.

The Ministry of National Health Services budget has been cut to Rs20 billion. The Higher Education Commission and the Education Ministry has been given Rs32 billion.

For special areas like Azad Jammu and Kashmir and Gilgit-Baltistan, an amount of Rs39 billion has been proposed in the new budget. An amount of Rs8 billion has been proposed for the environment sector, Rs12 billion for Ministry of Food and Agriculture and Rs2 billion for Ministry of Industries.

For knowledge economy initiative, Rs13 billion has been proposed. The Earthquake Reconstruction and Rehabilitation Authority has been given Rs5 billion.

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