Waiver given to include projects in PSDP

ISLAMABAD: At the time of scarcity of resources for allocating sufficient funds for development projects in the coming budget, Prime Minister Shehbaz Sharif has granted a one-time exemption from the deadline for submitting PC-1 and PC-II of new projects for inclusion in the Public Sector Development Programme (PSDP) for 2022-23. It clearly indicates that the government will insert unapproved development schemes to the PSDP for the next budget.

There are over 1,168 development schemes in the PSDP list for the outgoing fiscal year with an estimated cost of over Rs8 trillion that is required for the completion of all existing schemes in the list. The cost and time overrun for completion of the development schemes will worsen the prevailing situation when the government does not have the financial resources but is now going to insert more development schemes into the PSDP list.

The Office Memorandum (OM) issued by the government disclosed on Tuesday that the government would now be able to insert unapproved development projects worth billions of rupees into part of PSDP for the next budget 2022-23.

The OM issued on May 31, 2022, states that the Prime Minister of Pakistan being the Chairman National Economic Council (NEC) has been pleased to grant a one-time special dispensation for relaxation in the deadline set by NEC i.e. March 31, 2022, for facilitating the submission of PC-1, PC-II of new projects to the Planning Commission for inclusion in the PSDP for 2022-23.

Federal sponsoring ministries/ divisions can upload new projects on Intelligent Project Automation System (IPAS) for the next fiscal year. This may be disseminated to all attached administrative departments under relevant controlling ministries/ divisions.

Top official sources said that the Ministry of Finance had initially indicated development budget of Rs500 billion to the Ministry of Planning, which was later jacked up to Rs800 billion. But when the Ministry of Finance held parleys with the IMF, this PSDP funding was slashed down to Rs700 billion. Now it is under consideration to slash it down further and reduce it to Rs600 billion for the next fiscal year 2022-23.

On the other hand, Pakistan requires execution of nationally important development schemes such as building up water storages and constructing hydropower projects. For instance, the construction of Diamer-Bhasha Dam has come to a stage where the government will have to make allocation for its construction. In the wake of rampant depreciation of exchange rate, its cost had already crossed $24 billion mark and might escalate up to $27-28 billion.

Without distributing its construction into phases of construction of storage facilities and then building power houses, the construction of Bhasha Dam cannot be completed. For achieving this objective, the government would have to place Special Purpose Vehicles (SPVs). The scarcity of resources could be imagined from the fact that the Ministry of Finance did not have money for making releases in the ongoing fourth quarter of the current financial year. The PSDP allocation was already slashed down from Rs900 billion to less than Rs500 billion for the outgoing fiscal year. The Ministry of Finance and Planning also instructed other relevant ministries/ divisions to surrender the unutilised funds on immediate basis.