The Annual Plan Coordination Committee recommended a Rs1.221 trillion development budget for the fiscal year 2024-25, acknowledging financial constraints and IMF program requirements.
The government abolished discretionary funding for parliamentarians’ Sustainable Development Goals and ceased funding for the Earthquake Reconstruction & Rehabilitation Authority.
Utilization of the Public Sector Development Programme (PSDP) faced a significant cut, with only Rs379 billion utilized against an allocation of Rs950 billion for the current fiscal year. The APCC projected a GDP growth rate of 3.6% and inflation at 12%.
Provincial annual development plans for Punjab and Sindh were proposed at Rs700 billion and Rs763.7 billion, respectively, with no indication of plans for other regions. The proposed PSDP allocation included Rs877 billion for infrastructure, Rs83 billion for the social sector, and Rs51 billion for special areas. The size of PSDP relative to GDP has shrunk over time, from 1.7% in 2013 to 0.9% in 2023-24, impacting development investment. To achieve a primary surplus under the IMF program, the Finance Division implemented a backloaded release strategy, contrary to the NEC-approved strategy.
According to the release strategy, during the first quarter of FY2023-24, Rs131 billion was released, with Rs61.26 billion allocated to SDGs schemes, leaving only Rs69.74 billion for other PSDP projects.
Additionally, Rs20 billion was diverted to non-development purposes, and a 20% cut of Rs184 billion was implemented in the fourth quarter to maintain the primary budget balance, reducing the PSDP size to Rs746 billion.
Furthermore, Rs29 billion was deducted for CDL recovery, resulting in an effective PSDP size of Rs717 billion.
Formulating Ministry/Division wise Indicative Budget Ceilings for PSDP 2024-25 faces challenges, including a Rs186 billion liability rollover from 2023-24 due to the PSDP size cut, spread-thin PSDP allocation, rising throw-forward, additional demands for projects, demands for rupee cover against FEC/FA component, increasing new schemes, and post-flood 2022 Rehabilitation (4RF) and 5Es initiatives.
Federally funded projects under the Finance Division’s sponsorship are executed by provinces, causing delays in fund transfers and financial progress reporting.
To address this, the Finance Division/CGA, based on Planning Commission recommendations, devised the Asaan Assignment Account 2020 procedure, ensuring uninterrupted fund flow to project authorities for provincially executed projects under the Finance Division.
Compliance with this procedure is essential for all such projects.
