The small coalition partners are putting pressure on the government and demanding a significant portion of the proposed Rs950 billion Public Sector Development Programme (PSDP) for the next fiscal year. This request may result in further delays for strategically important projects.
Sources revealed to The Express Tribune that major demands for funds came from parties such as the Jamiat Ulema-e-Islam (JUI) and smaller Balochistan-based parties. Prime Minister Shehbaz Sharif chaired a meeting on Monday to review the demands put forward by the coalition partners.
During the meeting, one coalition partner demanded that the government release 40% of the annual PSDP during the first quarter of the next fiscal year. They argued that this would enable them to launch major projects before the general elections. However, such a demand for such a large portion of funds in just one quarter is unprecedented. Typically, only 7% to 15% of the total budget is spent during the first three months of the fiscal year. According to sources, Finance Minister Ishaq Dar did not agree to this demand.
Pakistan is currently facing its most challenging times, with a high risk of default. However, the political leadership is not making wise decisions due to competing interests among the 13 coalition partners.
Sources mentioned that the JUI, which controls the Ministry of Communication and the National Highway Authority (NHA), has managed to include many of its projects in the next year’s PSDP. However, due to competing demands and limited resources, the Ministry of Planning could not prepare the working paper for the National Economic Council (NEC) meeting scheduled for today (Tuesday). The PM is scheduled to chair the NEC meeting that will formally approve the next fiscal year’s PSDP and will also take up other important issues.
According to sources, the NHA is demanding at least Rs160 billion, a 63% increase from the proposed Rs98 billion budget for the next fiscal year. Out of the proposed Rs98 billion, the Ministry of Planning had allocated Rs19 billion for new projects, which the JUI found insufficient to fund its recommended schemes.
The Ministry of Communication, led by the JUI, has submitted a list of nine prioritised projects to the government, including eight projects under the Dera Ismail Khan Package, the hometown of JUI Chief Maulana Fazalur Rehman.
When contacted, the Planning Ministry declined to comment on this matter.
Sources say the Ministry of Communication aims to include its nine prioritised schemes worth Rs85 billion in the budget for the next fiscal year. Although the government has already included four schemes and indicated an allocation of Rs12.2 billion, the Ministry of Communication is seeking additional funds.
A senior government functionary stated that if the Ministry of Communication does not agree, the government will have no choice but to include all projects, but it will allocate only notional money. The government has already agreed to include a project worth Rs14.3 billion for the construction of the Abdul Khel Interchange to Dhakki to Kalurkot road (45 Km), and Rs5 billion has been proposed for the next fiscal year.
For the rehabilitation and upgrading of the Pezu-Tank Road, Rs3.2 billion has been proposed for the next fiscal year out of the total cost of Rs4.9 billion, according to the sources.
Similarly, for the construction of the two-lane DI Khan Bypass, with an estimated cost of Rs3.1 billion, Rs2 billion has been proposed. The government has also proposed an allocation of Rs2 billion for another JUI project, the Rehabilitation and Upgradation of Kundal Interchange to Chashma (DI Khan Development Package), against the estimated total cost of Rs2.8 billion.
The NHA is already managing a portfolio of 66 projects worth Rs2 trillion, and the inclusion of nearly a dozen more projects will have adverse effects on the ongoing schemes. Under the DI Khan package, the JUI has also demanded the inclusion of the Rs18 billion Ramak-Daraban project, the Rs16 billion dualisation of Qureshi Morr of Mianwali-Muzaffargarh road, and the Rs14 billion Isa Khel-Lakki Marwat project in the next year’s PSDP.
A technical review of Pakistan’s public sector development portfolio by the International Monetary Fund (IMF) has found that the PSDP has become “unaffordable” due to limited fiscal space and the need for Rs12 trillion in financing to complete the projects.
PM Sharif expressed hope on Monday that a deal would be reached with the IMF this month. However, sources indicate otherwise. Previously, the government had proposed a total of Rs154 billion or 22% of the PSDP for the transport and communications sectors, against the earlier indicated Rs700 billion PSDP.
The government intended to prioritise ongoing mega projects of the NHA, Railways, Maritime Affairs, and Defence Production. However, political pressures may force these projects to be placed lower on the priority list.
Published in The Express Tribune, June 6th, 2023.
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