The planning ministry has proposed to the new government to close around 764 development projects, costing Rs2.3 trillion with a view to cleaning its own-created mess and creating fiscal space for the new projects.

The ministry has given a briefing to Ahsan Iqbal while keeping in mind new ground realities – change of political leadership and limited fiscal space that does not allow funding of huge development portfolio, insiders said.

They said that the ministry suggested to Iqbal that the projects having zero or very little spending and those of provincial nature should be dropped from the Public Sector Development Programme (PSDP). The ministry has proposed that a total of 764 schemes having a cumulative cost of Rs2.3 trillion should be excluded from the PSDP purview.

At present, 1,169 schemes are part of the PSDP costing Rs6.3 trillion. The ministry has recommended winding up of 65 percent of the total schemes that will reduce the overall PSDP financing by 36 percent to Rs4 trillion.

The ministry has proposed that the government may drop 326 projects of the provincial nature, which will save Rs97 billion, said the sources. However, it wastes billions of rupees that have already been spent on these schemes.

The federal government had done a lot to fund the national development framework projects and there was need to reduce the PSDP size, said a senior official of the Planning Commission, while speaking on condition of anonymity.

He added that the commission had also sent a summary to the National Economic Council (NEC) with a request to ban the approval of new federally funded provincial projects, except those that fall in the notified under-developed areas of Pakistan.

During the Pakistan Tehreek-e-Insaf’s (PTI) tenure, many provincial nature projects were approved under political expediency. The previous government had added a few projects of Dera Bugti and Gujarat districts to lure its allies, said the sources.

Similarly, the ministry has worked out that 439 projects that have so far received nil to less than 10 percent financing against the total cost can be closed. The remaining financing requirement of these schemes is Rs2.3 trillion, excluding the Mainline (ML)-I project of the China Pakistan Economic Corridor (CPEC). The government will retain the ML-I project that has Rs1.1 trillion cost.

But the closure of these schemes would waste Rs266 billion that have already been spent on these projects, said the sources.

There were 85 projects in the PSDP that received less than 10 percent funding. Their total cost was Rs504 billion, while Rs266 billion had already been spent on them, they added. There were another 371 schemes having an estimated value of Rs1.7 trillion but did not receive any financing.

The sources said that the planning minister has not yet made any decision about closing the projects and would take a decision after further deliberations. They said that the minister would scrutinise the projects before making a decision about the closure.

During discussions, the possibility of closing those projects that received up to 20 percent of the funding requirements, said the sources. There are about 84 such schemes having Rs191 billion cost. Their remaining financing requirements were estimated at Rs123 billion, the sources added.

The planning minister faces a challenge to create a fiscal space for the new initiatives that the coalition government might like to announce as part of its development agenda.

Iqbal has also invited his predecessor Asad Umar for a farewell meeting, also with a view to seeking his input on the projects of the previous government that Umar would like the new government to retain in the PSDP.

For this fiscal year, the PTI government had approved Rs900 billion development budget, which it had slashed to just Rs600 billion before it was ousted from power. However, the limited fiscal space is not sufficient to finance even the ongoing schemes.

The sources said that there were hardly 26 projects that were of national importance and are part of the PSDP. They have a total cost of Rs2.8 trillion. Despite their importance, the previous government allocated only Rs157 billion for carrying out work on these schemes of national importance in the current fiscal year.

The ministry also briefed Iqbal that there were 604 projects that had been approved at the lowest level –the Departmental Development Working Party that is headed by the secretaries concerned. The cost of these projects is Rs374 billion and the majority of these could be dropped, they added.

The ministry has also recommended the closure of the Sustainable Development Goals (SDGs) programme –which is essentially a funding mechanism for the parliamentarians’ schemes. The recommendation has been made on the ground that these schemes were also of provincial nature.

The PSDP spending would remain low in the next fiscal year too, in case Pakistan and the International Monetary Fund agree to revive the stalled bailout package.

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