Dar, the Finance Ministry has incorporated indicative ceiling of Rs580 billion into Budget Strategy Paper (BSP) for the next budget 2015-16.
“Finance Ministry is directing the planning managers to protect major initiatives and also run the ongoing schemes of PSDP,” said one top official and added that the government would have to make hard choices keeping in view existing resource constraints.
In a letter written by Minister for Planning, Development and Reforms Professor Ahsan Iqbal to Finance Minister Ishaq Dar, pressing upon the need for making an allocation of Rs725 billion for the federal PSDP in order to undertake sufficient allocation for certain mega projects such as for the terminal and other infrastructure of LNG, there was requirement of Rs100 to Rs125 billion allocation alone for this project.
Pakistan will have to allocate resources to accelerate the process on projects under CPEC where China had committed inflows of $46 billion.
The Finance Ministry high-ups say that the PSDP allocation could go up to Rs600 billion to Rs625 billion but the resource allocation beyond this limit did not seem feasible keeping in view the budget deficit target of 4 percent of GDP under the IMF programme for 2015-16.
However, the sources said Pakistan requires public investment to boost growth coupled with job creation and reducing poverty. The government had allocated Rs525 billion for federal PSDP in the outgoing fiscal year 2014-15 and it is estimated that the government will be able to spend Rs400 billion to Rs425 billion maximum with share of foreign aid of approximately Rs102 billion.
When asked about estimates of “savings” in PSDP in the context of IMF programme, the official of Planning Commission said that the government had allocated Rs55 billion for Lahore-Karachi Motorway in the PSDP of which Rs25 billion released last year while remaining amount would remain un-utilized. For Coastal power projects, the government had allocated Rs12 billion in the PSDP which would remain un-utilized in the current fiscal year.