Govt to slash PSDP by Rs150bn for flood relief

ISLAMABAD: The government is all set to slash the Public Sector Development Program (PSDP) by Rs150 billion and divert the resources to rehabilitation and reconstruction in the flood-affected areas.

At a time when the government had managed to revive the stalled IMF program, it will be hard for the incumbent regime to find out fiscal space for diverting huge funds towards the flood-affected areas. Initial estimates suggested that Pakistan faced a whopping economic loss in the range of $10 to $12.5 billion in the wake of catastrophic floods.

Top official sources confirmed to The News on Tuesday that the Ministry of Planning had held consultations in the last few days and was preparing its recommendations. For all practical purposes, the officials said, the government would slash the federal PSDP by Rs100 to Rs150 billion in order to bring it down from Rs800 billion allocations to Rs650 billion for the current fiscal year.

“These development funds of Rs150 billion will be diverted to flood-affected areas where there is no possibility to execute development projects in the existing circumstances,” said the official.

The Ministry of Planning has been engaged to identify projects where the allocation of funds would be cut down and the exercise would be made in consultation with relevant ministries or executing departments.

When contacted, Ministry of Planning Secretary Syed Zafar Ali Shah said they were working on relief and a damage assessment. However, the Ministry of Finance through an office memorandum recently revised its strategy for the release of development funds for the current fiscal year.

It stated that the fund release strategy shall be applied to each demand for grant and appropriation for development budget included in the schedule of authorised expenditure for FY2022-23. It shall not be applicable to an individual project or cost centre or detailed object heads in a demand for grant and appropriation. Funds shall be released and uploaded on AGPR’s server by the Ministry of Planning, Development and Special Initiatives for each demand for grant and appropriations at the maximum level of 10 percent for quarter 1, 20 percent for quarter 2, 30 percent for quarter 3 and 40 percent for quarter 4 of the approved budget.

The release of funds for each approved project in a demand for grant and appropriation shall be made by the PAO in each quarter within above limits. The PAO shall ensure availability of sufficient funds for employees related expenses for each project. Quarter wise budget allocation and release will be uploaded on the MoF and AGPR servers by the Finance Division, within the above stated release limits. No payment shall be made over and above the limits by any accounting organisation/office except with the prior written approval of the Finance Division.

Earlier, the government had released 20 percent funds for development budget for the first quarter (July-Sept) period of the current fiscal year but now the ministries/divisions and attached departments are being instructed not to utilise funds more than the revised envisaged limit of 10 percent. Out of Rs800 billion allocation for the PSDP for 2022-23, the government had earmarked Rs433 billion for infrastructure, including Rs84 billion for energy, Rs227 billion for transport and communication, Rs83 billion for water and Rs39 billion for physical planning and housing sector.

The government had envisaged an allocation of Rs144 billion for the social sector out of which it earmarked Rs23 billion for health and population, Rs45 billion for education, including the Higher Education Commission (HEC), SDGs achievement program (Rs70 billion) and others Rs16 billion.

For the provinces and special areas, AJK and GB, the government made an allocation of Rs96 billion and merged districts of KP Rs50 billion. The government allocated Rs16 billion for governance, food and agriculture (Rs13 billion) and industries (Rs5 billion).