Budget 2022-23: PSDP outlay for next fiscal year set at Rs800b for 5% GDP growth

Mehtab Haider

June 05, 2022

Labourers work on a building construction site in Karachi, Pakistan February 25, 2016. — Reuters/File

APCC recommends allocation of Rs2,184b for National Development Plan of the National Economic Council.
Approves macroeconomic framework for next budget with target of 5% GDP growth rate.
Sindh, KP ministers raise objections over reduced allocation of funds for federal PSDP in their areas.

ISLAMABAD: The Annual Plan Coordination Committee (APCC) on Saturday recommended the allocation of Rs2,184 billion for the National Development Plan of the National Economic Council (NEC) in the upcoming budget 2022-23, including a federal development outlay of Rs800 billion and provincial development plans of Rs1,384 billion.

The Sindh and Khyber Pakhtunkhwa government ministers raised objections to the reduced allocation of funds for the federal Public Sector Development Programme (PSDP) in their respective areas. The NEC is now scheduled to meet under the chairmanship of PM Shehbaz Sharif on June 7 for approving the national development outlay and macroeconomic framework for the upcoming budget.

The APCC also approved a macroeconomic framework for the next budget with a real gross domestic product (GDP) growth rate target of 5% for the next budget against 5.97% for the outgoing fiscal year.

The government has projected that inflation will remain in double digits but expected to remain in the range of 11.5%, however, many economists have termed the government-made projections on lower side in the context of stabilisation programme being pursued under the advice of the International Monetary Fund (IMF) programme to withdraw fuel and energy subsidies and then raising taxation in the coming budget.

The federal PSDP for outgoing fiscal year 2021-22 was revised downward from Rs900 billion to Rs550 billion and in the working paper, it was projected that the actual utilisation of the PSDP funds would be standing at Rs498 billion till the end of June 2022.

The APCC, which met under the chairmanship of Federal Minister for Planning and Development Ahsan Iqbal on Saturday, approved the PSDP outlay of Rs800 billion for the next fiscal year 2022-23.

The government allocated Rs60 billion for the Sustainable Development Goals (SDGs) achievement programme executed by the parliamentarians in the coming budget.

It inserted Mainline-1 (ML-1) as part of the PSDP and earmarked allocation of just Rs5 billion in the next budget. The government allocated Rs18 billion for Diamer Bhasha Dam (for dam part) and Rs7 billion for its land acquisition. The total cost of the Bhasha Dam is estimated at Rs479.686 billion. For Earthquake Reconstruction and Rehabilitation Authority (ERRA), the government made zero allocation in the next budget.

During a media briefing after the APCC meeting, the planning minister told reporters that the PML-N-led government had left over Rs1,000 billion in 2017-18, which was reduced to Rs500 billion as the national exchequer was emptied.

He added now the government would finance all the projects of national importance. Replying to a query, he said the PTI government achieved 5.97% growth mainly because of rebasing of national accounts.

Out of Rs800 billion allocation for the PSDP for 2022-23, the government earmarked Rs433 billion for infrastructure, including Rs84 billion for energy, Rs227 billion for transport and communication, Rs83 billion for water and Rs39 billion for Physical Planning and Housing sector.

The government made allocation of Rs144 billion for social sector in the upcoming budget against an allocation of Rs103 billion in the outgoing fiscal year.

Out of the total Rs144 billion allocation for social sector, the government earmarked Rs23 billion for health and population, Rs45 billion for education, including Higher Education Commission (HEC), SDGs achievement programme Rs60 billion and others Rs16 billion.

For the provinces and special areas AJK and Gilgit-Baltistan, the government made an allocation of Rs96 billion and merged districts of KP Rs50 billion.

The government allocated Rs16 billion for governance, Rs13 billion for food and agriculture and Rs5 billion for industries.

The APCC was informed that the Finance Division indicated Rs500 billion for PSDP in the next budget. The demands received from ministries/ divisions for development funds was to the tune of Rs1,713 billion for approved ongoing and new projects.

The major chunk of demands received from M/o Water Resources (Rs279 billion), M/o Communication (Rs317 billion), PAEC (Rs175 billion), Power Division (Rs98 billion), Aviation Division (Rs30 billion) and HEC (Rs45 billion), etc.

Originally published in The News