ISLAMABAD: The Annual Planning Coordination Committee (APCC) on Saturday finalized Rs 800 billion worth of Public Sector Development Program (PSDP) to achieve an economic growth rate of 5 per cent in 2022-23.
The PSDP for next year is Rs 100 billion less than the current year’s allocation of Rs 900 billion, while the economic growth target of 5 per cent is also slightly lower than the current year’s provisional output estimate of 5.97 per cent.
The APCC also recommended Rs 2.184 trillion, including foreign aid of Rs 346 billion, as next year’s consolidated development budget for 2022-23 of the federal and provincial governments. This national development outlay will include a federal PSDP of Rs 800 billion. The National Economic Council (NEC) to be headed by Prime Minister Shahbaz Sharif will approve these figures before the budget.
The APCC meeting was chaired by Planning and Development Minister Ahsan Iqbal, who also holds the portfolio of Deputy Chairman of the Planning Commission.
APCC 2.18tr . Recommended National Development Outlay of
The targeted 5 per cent growth for 2022-23 rests on ensuring quality growth without triggering financial and external sector imbalances. Both the SBP and the Ministry of Finance supported this development approach.
Briefing media persons after the meeting, Shri Ahsan said that under PSDP federation Rs 26 billion, Punjab Rs 58 billion, Sindh Rs 62 billion, Khyber Pakhtunkhwa Rs 48 billion, Balochistan Rs 112 billion, Azad Jammu and Kashmir will get Rs 34 billion, Gilgit-Baltistan will get Rs 33 billion and then FATA will get Rs 50 billion.
The proposed ratio of allocation for ongoing (171) and new (902) projects is 89:11 indicating that the projects have been given priority for completion.
He said that 90 percent allocation would be made for the ongoing projects to bring continuity in the development of the country. He said that the government is giving priority to underdeveloped areas in the next year’s plan.
Mr Ahsan said that the government is allocating funds to solve water and electricity issues in Gwadar. He said that various schemes would be launched to bring the youth of Balochistan at par with the rest of the country.
The minister said that the government is paying special attention to the protection of water resources and the work on the under-construction dams will be expedited.
The minister said that the Higher Education Commission is also the top priority of the government and its allocation will be preserved and increased gradually. He further said that the information technology and science sectors are also being given attention. He said that 250 techno-vocational institutes would be set up to impart technical education to the youth.
He further said that youth will be trained to deal with the challenges of cyber security and various schemes will be announced in the upcoming budget for their welfare.
PSDP Main Features
In order to maintain the pace of physical progress of ongoing projects, a PSDP of Rs 800 billion was approved by the Finance Department against an indicative amount of Rs 700 billion. Under these, projects with 80 per cent expenditure have been fully funded for completion by June 2023, while 55 per cent of the total allocation has been proposed for the infrastructure sector to attract foreign investment.
Within infrastructure, the T&C proposed allocation is Rs 227 billion or 29 pc of the total size, as per the commitment made under the National Water Policy, the water sector allocation is Rs 83 billion or 11 pc, the proposed allocation of energy sector is of the total size. 84 billion or 11 pc, in addition, an amount of Rs 84bn will be raised by a power division as self-financing.
Physical plan and housing The proposed allocation is Rs 39 billion or 5 pc of the total size. The proposed allocation for PP&H is Rs 39 billion as the construction sector not only helps in generating employment but also contributes to the development of allied industries. Within the social sectors, health and population the proposed allocation is Rs 23 billion and Rs 45 billion has been proposed for the education sector and Rs 60 billion has been allocated to achieve the Sustainable Development Goals and ensure grassroots development.
In addition, Rs 50 billion has been allocated to bring the merged districts of Khyber Pakhtunkhwa at par with other regions of the country. The proposed outlay for science and IT is Rs 25 billion and the production sector-industry, food and agriculture is Rs 18 billion and Rs 90 billion earmarked for financing the viability gap to encourage private sector investment in infrastructure Huh.
challenges
The APCC pointed out that projects worth over Rs 6.3 crore posed a challenge for the PSDP 2022-23 with the demand for Rs 250 billion cover for foreign aided projects worth over Rs 250 billion.
Other challenges are the infiltration of projects of a provincial nature into the federal PSDP, the implementation of policy guidelines on funding of provincial projects by the federal government approved by the NEC, and many other factors.
The Finance Department, with the approval of the Federal Cabinet, increased the revised size of the PSDP 2021-22 from Rs 900 billion to Rs 700 billion. Accordingly, the rupee component was rationalized and the rupee revised from Rs 800 to 600 billion following certain guidelines to accommodate the deduction of Rs 200 billion, while retaining the foreign aid component of Rs 100 billion. .
economic outlook
The Joint Chief Economist apprised the meeting about the growth on economic indicators against the targets envisaged in the Annual Plan 2021-22, an official announcement said.
Overall demand pressures remained strong during 2021-22, reflected through increased sales of durable goods, higher imports of consumables and credit growth to the private sector. Credit to the private sector reached its highest level. This increase in demand was mainly due to good financial terms offered by the banks and rising earnings during the period.
The Economist highlighted that with a possible resumption of the IMF programme, the economic outlook for the next fiscal year 2022-23 expects a systematic rebalancing between the imperatives of economic growth and addressing external sector vulnerabilities; Particularly in the light of the extent of the global recession and the expected reduction of global inflation in commodity prices and the stability of exchange rate movements.
He further said that fiscal adjustment efforts, addressing the deteriorating trade balance and easing political and economic uncertainty will lead to a slowdown in economic growth.
Published in Dawn, June 5, 2022