Islamabad: Confronting severe financial challenges and cutting back on development funding under the IMF programme, the Annual Plan Coordination Committee (APCC) has recommended a Rs 1,221 billion development programme at the federal level for the fiscal year 2024-25.
In the upcoming budget, the government has abolished discretionary funding for parliamentarians under the Sustainable Development Goals (SDGs) and allocated no funds for the Earthquake Reconstruction & Rehabilitation Authority (ERRA). The utilisation of the Public Sector Development Programme (PSDP) faced significant reductions, with only Rs 379 billion used out of the Rs 950 billion allocated for the current fiscal year 2023-24.
The APCC, chaired by Deputy Chairman Planning Commission Dr. Mohammad Jehanzeb Khan, approved the PSDP at Rs 1,221 billion. The committee projected a GDP growth rate of 3.6 percent and an inflation rate of 12 percent.
For the provincial annual development plans, Punjab and Sindh were proposed Rs 700 billion and Rs 763.7 billion, respectively, with no indications for KP, Balochistan, Gilgit-Baltistan (GB), and Azad Jammu and Kashmir (AJK) in the next budget.
Of the proposed Rs 1,221 billion PSDP, Rs 877 billion is allocated for infrastructure, up from Rs 553 billion in the previous budget. The social sector budget was cut to Rs 83 billion, down from Rs 203 billion. Special areas such as AJK and GB received Rs 51 billion, while Rs 57 billion was allocated for merged districts. The allocation for Science & Information Technology increased to Rs 102 billion, compared to Rs 42 billion in the last budget. Additionally, allocations for governance, production sectors, food and agriculture, and industries were raised.
The APCC noted Pakistan’s economy faces multiple challenges, including severe fiscal indiscipline and deficits. The PSDP’s throw-forward increased from Rs 3 trillion in 2013-14 to around Rs 9.8 trillion, while the allocation and expenditure averaged Rs 630 billion during the same period. The size of the PSDP, as a percentage of GDP, shrank from 1.7 percent in 2013 to 0.9 percent in 2023-24, exacerbated by inflation and the depreciation of the Pak Rupee. The IMF programme’s primary deficit management has further cut PSDP funding, worsening development investments.
To achieve a primary surplus under the IMF programme, the Finance Division issued a back-loaded release strategy at varying rates for each quarter, contrary to the NEC approved strategy. This led to significant earmarking and cuts, compressing the size of the PSDP 2023-24 to Rs 717 billion after adjustments.
The formulation of Ministry/Division wise Indicative Budget Ceilings (IBCs) for PSDP 2024-25 faces challenges, including Rs 186 billion liability rollover from 2023-24, thin spreading of allocations, additional demands for important projects, and the need for post-flood rehabilitation and new initiatives.
A number of federally funded projects executed by provinces face delays due to the current fund release system. To address this, the Finance Division/CGA, on the Planning Commission’s recommendation, established the Asaan Assignment Account 2020 to ensure timely fund flow to project authorities for provincially executed projects.
