ISLAMABAD: The National Economic Council (NEC) is all set to meet under chairmanship of Prime Minister Imran Khan on Wednesday (today) for approving national development outlay of Rs1,324 billion including Rs70 billion for Covid-19 response for upcoming budget 2020-21.
The NEC will grant approval for federal Public Sector Development Programme (PSDP) of Rs650 billion with foreign exchange component of Rs72.5 billion and provincial development outlays of Rs674 billion including foreign component of Rs222.5 billion for upcoming budget.The NEC will also approve macroeconomic framework with GDP growth target of 2.3% and inflation at 6.5% for 2020-21.
Top official sources said that the allocation for ministries/divisions envisaged at Rs307.2 billion, corporations such as National Highway Authority (NHA), Water and Power Development Authority (Wapda) and Power Rs158.3 billion, special areas such as Azad Jammu & Kashmir (AJK) and Gilgit-Baltistan Rs39.5 billion, merged districts of Khyber-Pakhtunkhwa Rs48 billion, Sustainable Development Goals (SDGs) achievement programme Rs24 billion, Covid-19 response and other natural calamities Rs70 billion and for Earthquake Reconstruction and Rehabilitation Authority (ERRA) Rs3 billion for upcoming budget. The size of federal PSDP has been envisaged at Rs650 billion including Rs577.5 billion as rupee component and Rs72.5 billion as foreign aid.
The provincial annual development outlays are proposed at Rs674 billion with rupee component of Rs524 billion and foreign aid of Rs222.5 billion for upcoming budget.
The Finance Division had given the indicative budget ceiling (IBC) for PSDP 2020-21 at Rs650 billion (excluding development budget of Rs70 billion to be managed by the Finance Division) for meeting the financial requirement of ongoing and new projects proposed by the ministries/divisions.
Whereas, funds demanded by ministries/ divisions, provincial governments and governments of AJK and Gilgit-Baltistan were to the tune of Rs1800 billion for FY 2020-21.
In line with provisions of Public Finance Management Act 2019, no unapproved project has been included in PSDP 2020-21. Resultantly, 73% resources have been proposed for ongoing projects and 27% new approved schemes. The large multipurpose dams particularly Diamer Bhasha, Mohmand, Dasu Dams etc. and drainage projects being executed by Wapda have been adequately funded. Land Acquisition for Diamer Bhasha Dam almost completed. Small-scale provincial nature dams, drainage, irrigation schemes etc. were discouraged for financing
Transport and Communications: The ongoing projects of the sector for industrial linkages promoting the trade and commerce in the country were given due priority for funding like projects of NHA especially China-Pakistan Economic Corridor (CPEC) and its supporting projects including major portion of CPEC Western Route.
Likewise, ongoing projects of Railways including ML-I, Maritime Affairs, Defence Production etc. for modernisation of the infrastructure, inter-provincial/ regional connectivity have been financed.
In the aftermath of Covid-19 and resource crunch, NHA and Railway have been advised to defer initiation of new schemes unless very critical and pay full attention to completion of ongoing projects.
Energy/ Power: Energy plays a vital role in country’s economic development. Therefore, prioritised focus remained on projects of power evacuation, expansion and improving transmission and distribution system to minimise line losses and circular debt. Projects for supply of power to SEZs have been adequately financed. Besides, appropriate rupee cover against foreign funded projects has been provided to self-financed power sector schemes by National Transmission & Despatch Company (NTDC)/ Pakistan Electric Power Company (Pepco).
Higher Education: The higher education is one priority sector of the government to meet the challenges of 21st century, quality education in the field of research and emerging technologies like artificial technology, cyber security, robotics and automation, big data and cloud computing, nanotechnology, biotechnology, manmade material, GIS, space technology etc.
The emphasis was on completion of on-going projects with adequate funding. New projects for establishment of universities unless very important, have been discouraged for funding.
Health: Health sector remained priority in the wake of Covid-19 to provide improved health services, prevention and control of communicable diseases, production of medical devices and capacity enhancement of health institutions.
The primary focus would be on strengthening promotive and preventive care, and the public health and hygiene system with supporting community resilience in the country. In addition to Covid-19 responsive initiatives, the focus would be on use of ICT solution to continue to ensure availability of essential health services to population at large. The provincial governments would play role in achieving these objectives as per constitutional responsibility.
Education: The basic education stands devolved. However, federal government is funding the projects for improvement of education system through development of uniform curriculum, standard examination system, establishment of smart schools, TVET development, mainstreaming of madaris and establishment of Directorate General of Religious Education etc.
Science and Technology: To train the manpower in the emerging technologies, establishment of incubators and accelerators to enhance the capabilities of the researchers and research institutes for innovation and creation of knowledge products and technology driven Knowledge economy initiatives etc.
Information Technology: Focus on E-governance, IT enabled citizen services, promotion of IT software products, IT experts, freelancing, IT oriented startups and entrepreneurships, launching of 5G service in near future
Agriculture & food security: modernisation and mechanisation of agriculture sector, productivity enhancement of major crops through efficient irrigation practices, water conservation through lining of water courses, provision of laser land levelling machines, reduction in cost of agricultural inputs / production by adopting right combination of fertilisers and certified seeds, promote agro-based industry to enhance export of value added agri-based products, etc.
Industries and Commerce: Enhance competitiveness through increased productivity, value addition, improved supply chain, quality and innovation to capture market share in the national and international markets, high technology value added exports, effective marketing, exploring new avenues for investment in the mineral and other sectors of the industry, forge new technologies and develop new trade alliances etc.
Climate Change and Environment: Global warming and drastic climate change has adversely affected the eco system. This has devastated effect on all segments and sectors of the societies and economies. Billion tree programme would continue to be financed on priority to mitigate the impact of the global warming
Physical Planning and Housing: The focus will be on formulation of urban contingency plans to mitigate and adapt to the crises of increasing urbanization as well as restoration / recovery plans to manage post-crises scenarios
Monitoring and Evaluation Framework: The M&E Framework will be deployed from FY 2020-21 for monitoring of development projects based on efficient, transparent and accurate database by upgrading PMES System and initiating spatial monitoring
The development of less developed areas is the corner stone of development policy of the government to help promote harmony and national integrity. Over the years, some regions / areas were left behind in the process of socio-economic development due to various reasons. Accordingly, special interventions have been made to enhance allocation of on-going projects and financing of new projects in Balochistan, merged districts of Khyber-Pakhtunkhwa and Gilgit-Baltistan. The allocations of Balochistan projects enhanced despite resource crunch from current years allocation. In consultation with Govt. of Balochistan various projects have been budgeted including Dualisation and improvement of existing N-50 from Yarik-Zhob including Zhob Bypass, Jhal-Jhao Bela Section, Naukandi-Mashkhel in addition to other various road and water sector projects. Similarly, to harness hydropower potential of Gilgit-Baltistan, all on-going hydropower projects have been provided additional funds as compared to CFY. Likewise, in addition to annual development programme of Merged Districts of Khyber-Pakhtunkhwa, 10 Years Development Plan for Merged Districts with an allocation of Rs24 billion is being financed.
PSDP: Public Private Partnership Authority has been established to promote domestic and foreign private investment in infrastructure, increase availability of public infrastructure, reduce transaction costs, ensure appropriate regulatory control and provide legal and economic mechanism. The authority has over 40 projects in pipeline covering Railways, roads, bridges, real estate, Science and Technology, Water, Aviation and Health. The estimated cost of these projects is about Rs2000 billion. Of this pipeline projects, authority is actively working on 4 projects with tentative cost of Rs300 billion with NHA, Pakistan Railways, NUST and Foreign Office. It is estimated that Rs50 billion investment will be made during 2020-21. Limited government equity investment would be required for such projects. The PPP framework has been revisited to make it more facilitative and attracts private investment.
Covid-19 responsive and other Natural Calamities Control Programme : The PD&SI has developed a programme proposal to initiate labour intensive, short gestation projects primarily to improve quality of life of common man and generate employment. The proposal would cover but not restricted to initiatives in the following core areas:
i. National disaster management, natural calamities, locust control etc. ii. Health: Covid-19 impact mitigation projects by upgrading depleted health facilities, undertaking research to mitigate impact of Covid-19, strengthening promotive and preventive health care, public health and hygiene system, intervention for prevention and control of infectious diseases
iii. Agriculture: Interventions to ensure food security iv. Education: Provision of missing facilities in educational institutions such as clean drinking water, toilets and boundary walls (especially in girls schools)
v. Sewerage: Improvement of hygiene conditions in rural and less developed areas.
vi. Solid Waste Management: Collection of solid waste and its disposal especially in the urban areas.
vii. Cleaning Drinking Water: Provision of clean drinking water at union council level where such facility is not available.
The PSDP 2020-21 has been formulated based on following guidelines: i. Provisions of PFM Act 2019 have been fully complied with. No un-approved project has been recommended for financing during FY 2020-21. However, projects recommended by the Central Development Working Party (CDWP) for consideration of Executive Committee of the National Economic Council (ECNEC) have been made part of the PSDP 2020-21.
ii. Financing of on-going projects:
viii a) Projects having 80% plus expenditure have been fully funded
b) Projects having expenditure over 50% of the cost have been provided resources for scheduled completion
c) Foreign funded projects provided required rupee cover
d) CPEC and its supporting projects protected for funding during
FY 2020-21 as per available fiscal space
e) Projects related to knowledge economy funded adequately
iii. Financing of New Projects:
a) Covid-19 responsive projects have been financed on priority for combating the adverse impact of the Covid-19 on the economy and society
b) Projects having one-year gestation period with high impact on employment generation were given due priority to generate employment and quick benefits to the society.
c) Projects related to public health services maintained and expanded to Covid-19 response given priority for funding during FY 2020-21
d) Only approved projects have been budgeted
17. As per above financing criteria, it is likely that by June 2021, 300 number of projects costing Rs237 billion would be completed.
