Govt plans to cut PSDP by Rs380bln, shelve 400 unapproved schemes

[Azog]

Govt plans to cut PSDP by Rs380bln, shelve 400 unapproved schemes

ISLAMABAD: The government is planning to abolish over 400 unapproved schemes, and also slash the current fiscal year’s Public Sector Development Program (PSDP) to Rs600-Rs650 billion from Rs1,030 billion, sources said on Tuesday.

Prime Minister Imran Khan has asked the Planning Commission to present the revised PSDP document before the Parliament in the next few days for approval.

The Ministry of Finance would propose slashing down the development budget, as all budgetary targets would be revised in a major way to bring down the budget deficit, which peaked to Rs2,260 billon or 6.6 percent of GDP in the last fiscal ended June 30, 2018.

In the PSDP for 2018-19 approved by the National Economic Council (NEC) during the last Pakistan Muslim League-Nawaz (PML-N) led regime, the Planning Commission inserted around 400 to 450 unapproved schemes as part of the PSDP.

It was argued at that time that with approval of NEC it was made part of rules in 2004 that no projects would be approved without securing its resources, after which the Planning Commission used to entertain PC-1 of only those projects which were already made part of the PSDP list.

In a unique but rare episode, it was admitted at the highest levels that there was difference between Finance Ministry’s allocated amount for PSDP in pink book and green book of PSDP published by the Planning Commission.

The Finance Ministry mentioned allocation of Rs800 billion in the Pink Book of Budget for 2018/19, but the Planning Ministry showed allocation of Rs1,030 billion in the Green Book of PSDP. “Now the allocation amount will be further slashed down into fresh PSDP and it will stand at Rs600 to Rs650 billion maximum,” added the sources.

The development schemes of National Highway Authority (NHA) would be abolished in a big way. The exact list was under preparation, and would be forwarded to the PM office in the next couple of days, the sources said.

“The Planning Ministry is working on various scenarios, but the government may cut down the list of PSDP projects, where the spending stood at less than 20 percent,” sources informed. There was also a proposal under consideration to bring down the number of infrastructure projects, and insert some projects related to the social sector, as well as vocational training and capacity building.

“The Planning Commission has kick-started exercise to make fresh PSDP in consultations with chiefs of respective wings and line ministries. It was decided that all unapproved projects will be considered critically and then detailed working will be tabled before the federal minister for planning and federal cabinet for slashing down number of projects as well as allocated amount,” sources said.

There are 38 projects being executed by the Planning Ministry itself, and all kinds of projects were made part of its domain so there was need to abolish all such unnecessary projects which did not make any sense to insert into the domain of the Planning Commission.

“We need to slash down the PSDP list from over 1,200 projects to 500 to 600 important projects in areas of water sector, human resource development, and social sector,” the official said.

The centre should also abandon projects of provincial nature in the aftermath of the 18th Constitutional Amendments and NFC Award “because the provinces possessed sufficient fiscal resources to execute projects from their own kitty instead of relying upon the centre,” the official added.

Thenews

 

[Azog]

The ecnomic growth will slow down

 

[The Accountant]

The ecnomic growth will slow down

YEs but there is no sense of unnecessary and fency project on the back of loan ... For example we could have invested lahore metro amount into a steel manufacturing plant would be a much better invenstment ...

 

[Azog]

YEs but there is no sense of unnecessary and fency project on the back of loan ... For example we could have invested lahore metro amount into a steel manufacturing plant would be a much better invenstment ...

Goverment should stay away from such ideas, all the other public sectors are in losses. They are simply incapable of running any of such ventures.

The real issue is of low tax net base ,billions of dollar of losses from public sector, and poor performance of exports. Asad Umar should quickly come up with plans, I haven't seen single plan of theirs. All the task forces means they had no plan whatsover before coming to goverment.

 

[volatile]

The Govt is now officially following PPP model ,Forget about GDP growth .

 

[The Accountant]

Goverment should stay away from such ideas, all the other public sectors are in losses. They are simply incapable of running any of such ventures.

The real issue is of low tax net base, billions of dollar of losses from the public sector, and poor performance of exports. Asad Umar should quickly come up with plans, I haven't seen the single plan of theirs. All the task forces mean they had no plan whatsoever before coming to government.

This is a stupid claim ... What will you say about an organization like PPL, SSGC, SNGPL, PSO, GHP ... Our oil sector is surviving as the government is directly running them.

There are some sectors which involve huge investment and high risk and the private sector cannot take the risk ... Steel industry is one of them (unless you have investors like tata, birla or have corporate giants like Lockheed Martin, Thales and BP.

Otherwise government need to stepin and follow PTCL, KESC model i.e. take the intial risk. Setup the industry and then exit by selling the management stake to the private sector .

 

[Azog]

This is a stupid claim ... What will you say about an organization like PPL, SSGC, SNGPL, PSO, GHP ... Our oil sector is surviving as the government is directly running them.

There are some sectors which involve huge investment and high risk and the private sector cannot take the risk ... Steel industry is one of them (unless you have investors like tata, birla or have corporate giants like Lockheed Martin, Thales and BP.

Otherwise government need to stepin and follow PTCL, KESC model i.e. take the intial risk. Setup the industry and then exit by selling the management stake to the private sector .

Gas companies are almost bankcrupt, there are 50 billion rupees of gas theft every year. Gas companies wanted 86% increase for them not to go default. I don't see them doing well

I don't know how austerity measures of infrastructure project helps any country and cutting the budget by that much is worrying . It stunts the growth. Rationalize the budget, rather than cutting the budget by so much.

 

[xyxmt]

The ecnomic growth will slow down

but where was 1000 billion spent last year can anyone spot it

 

[Azog]

but where was 1000 billion spent last year can anyone spot it

That's PTI goverment to find out if there are any frauds.

 

[xyxmt]

That's PTI goverment to find out if there are any frauds.

Its already been spotted in the form of discretionary funds, question is if PTI govt can recover that money if it wasnt spent

 

[Winchester]

Goverment should stay away from such ideas, all the other public sectors are in losses. They are simply incapable of running any of such ventures.

The real issue is of low tax net base ,billions of dollar of losses from public sector, and poor performance of exports. Asad Umar should quickly come up with plans, I haven't seen single plan of theirs. All the task forces means they had no plan whatsover before coming to goverment.

High economic growth during the Musharraf years as well as PML as always resulted in Pakistan getting into a deficit trap.

The real problem is growth in Pakistan is fueled by spending and a developing country can't afford that.

Unless our growth sustained by more productive sectors we will continue getting into this deficit trap after every 3-4 years of this spending fueled growth.

There was an article about this in Dawn last month, I will try to find it out and post here.

 

[Menace2Society]

What is the vietnam model?

 

[Quwa]

High economic growth during the Musharraf years as well as PML as always resulted in Pakistan getting into a deficit trap.

The real problem is growth in Pakistan is fueled by spending and a developing country can't afford that.

Unless our growth sustained by more productive sectors we will continue getting into this deficit trap after every 3-4 years of this spending fueled growth.

There was an article about this in Dawn last month, I will try to find it out and post here.

Indeed. Moreover, a lot of this PDSP funding appears to be for infrastructure, not targeted investments in fostering high-value industry growth. If I could I'd trim spending from $5 bn to $1 bn if it means spending 80% of the total budget on STEM, bringing a turn-key solution that'll help manufacturing (e.g. full ToT on a machining tool), etc over 8% while spending much more overall. Why? Because next year, that $800 m in STEM will help generate $2.4 bn in net-new exports we didn't have earlier and actually produce returns which we can use to increase the budget.

 

[Hakikat ve Hikmet]

With a corruption rate of ~40%, basically the effect on development will be the same!!! Given the circumstances, a prudent decision!!! Once financial discipline, taxation, top-most level corruption etc. are fixed, you can go Keynesian...

 

[Kabira]

Looks like PTI is already doing what IMF have demanded before going to them officially.