Reduced PSDP funding plan being crafted

The federal government finalised the framework for the release of funds related to the development projects of the next financial year, following Rs250 billion cut in the Public Sector Development Programme (PSDP), sources said on Monday.

They said that funds would be released on a priority basis for projects related to energy, water resource conservation and infrastructure projects, while the development budget related to social sector, information technology (IT), higher education, health and housing would be reduced.

Hours before the approval of the budget for fiscal year 2024-25 last week by the National Assembly, the government cut the proposed PSDP of Rs1.4 trillion by Rs250 billion in a bid to create fiscal space for withdrawing some taxes without jeopardising the expected IMF deal.

The sources said that planning ministry had started work on the preparation of the revised PSDP. According to them, ongoing projects, foreign-funded projects and schemes with 80% work completion would not face the funding cuts.

It had been decided that priority would be given to funds for energy, water resources conservation and infrastructure projects. For the hydel power projects, Rs45 billion was allocated for Mohmand Dam and Rs40 billion for the Diamir-Bhasha Dam project.

There are a total of 142 projects worth Rs181 billion in the communication sector. Of them, 126 projects worth Rs167.8 billion were ongoing and 16 new projects worth Rs12.48 billion. In the energy sector, the sources said, 45 projects worth Rs104 billion would be completed under the PSDP.

After slashing the Rs250 billion from the PSDP allocation, there was a possibility of reduction in the development budget related to social sector and IT sector, higher education, health and housing. According to the sources, block amount allocated to various sectors could be reduced or eliminated.