NEC approves Rs160bn PSDP: •5.3pc GDP target set for 2003-04: •fiscal deficit at 4pc
By Khaleeq Kiani
ISLAMABAD, May 29: The National Economic Council on Thursday approved a Rs160 billion Public Sector Development Programme for 2003-04, including national and provincial schemes worth Rs113 billion and Rs47 billion, respectively.
The NEC, presided over by Prime Minister Mir Zafarullah Khan Jamali, also approved ambitious macroeconomic performance targets for the current year, including a GDP growth rate of 5.1 per cent in addition to the next year’s GDP target of 5.3 per cent besides setting the fiscal deficit target at four per cent.
After the meeting, Finance Minister Shaukat Aziz told reporters that the NEC had also decided to hold biannual meetings and quarterly meetings of the Executive Committee of the National Economic Council to review the pace of implementation, resolve funding problems and if required, make reallocations.
He said the income generation and social sectors would consume 31 per cent of the PSDP, followed by water, power and agriculture with 23 per cent and 22 per cent being spent on infrastructure development, adding that the new PSDP was 3.6 per cent of the GDP.
He said the planning commission and the finance ministry would now make readjustments in the light of NEC deliberations, accommodating previous decisions within the new PSDP as earlier allocations had been made at an estimated Rs157 billion programme.
Terming the current interest rates lowest in the region, he said that there would be no further reduction in this regard while no decision had been made to raise the salaries.
He said there would be no further reduction in interest rates which were already lowest in the region, there was no decision as yet on the increase in the salaries while funding under PRSP could be increased further from Rs185 billion target.
Expressing the hope that budget 2003-04 would be presented before the parliament soon, he said that June 7 had not yet been finalised in this regard. Sources expressed the fear that the budget announcement could be delayed due government-opposition deadlock on the LFO issue.
Shaukat Aziz said that based on latest figures after the meeting of national accounts committee on Wednesday, the GDP growth rate for the current year has been projected at 5.1 per cent against a target of 4.5 per cent.
He said the country’s GDP rate was highest among the Saarc countries and Pakistan would rank among the top five nations in the entire Asia this year.
Sources said the increase in growth rate had been made possible by the upward revision in the wheat production in Punjab, which had been enhanced by the National Accounts Committee to 19.2 million tonnes against earlier reports of 18.4 million tonnes.
They said that foreign investment had amounted to $694.2 million during the first 10 months of the current year. The direct foreign investment, they said, had amounted to $695.6 million but there was an outflow of portfolio investment worth $1.4 million.
They also said that the last year’s GDP rate had also been revised from 3.4 per cent to 3.6 per cent by the National Accounts Committee.
Taking credit for the success of economic policies, Mr Aziz said, the agriculture sector had grown by 4.2 per cent, the large-scale manufacturing by 8.7 per cent while the services sector had grown by 5.3 per cent during the current year.
Without being specific, he said that the per capita income was also expected to increase, adding that figures in this context would be publicised later.
The country, Mr Aziz, was now on the road to economic stability and poverty reduction and there would be a 25 per cent reduction in poverty rate during the next five years as the rise in the growth rate had given more fiscal space to spend on social sectors.
He said the coastal highways, Gwadar port, lining of canals in the provinces, raising of the Mangla dam and hydro-electric projects had been given special consideration during the PSDP allocations in addition to new initiatives in the health and education sectors.
Defining the basic philosophy behind the PSDP, he said it was aimed at continuing with the momentum of growth, which may increase further, to generate economic activity.
In response to a question, the minister said the GDP and fiscal deficit targets were “very much realistic” but quickly adding that “one-timers are not included in it”. By saying this, he left the room for money injections in Wapda and KESC during the next year. The two utilities had been given Rs54 billion during the current year to meet their losses.
Asked about the absorbing capacity of the government machinery to utilise Rs160 billion keeping in mind the previous record of three years, the minister said funds had also been allocated for capacity-building, adding that the biannual meetings of NEC and quarterly meetings of ECNEC would address these problems.
Asked as to why the allocations for national projects had been increased and there had been no increase in the provincial share despite demands from provinces, the minister said the federal development programme was not only meant for Islamabad as the projects involved were to be built all over the country.
Mr Aziz said allocations under the education sector reforms, hepatitis vaccination, Mekran coastal highway, Islamabad-Peshawar motorway, Faisalabad-Pindi Bhattian road, Sehwan-Dadu-Larkana- Rajanpur-D.G. Khan-Sarai Ghambrila road and Khuzdar-Gwadar road were all national projects, which had been given importance in the next year’s PSDP.
He said Khuzdar-Gwadar and Gwadar-Turbat-Khushab-Awaran- Khuzdar roads costing Rs11 billion were of critical importance as these roads would link the Mekran coastal highway with Afghanistan, Iran and other Central Asian republics. Some friendly countries were also funding these projects, he added.
The NEC documents, which had been obtained by Dawn, showed that Rs40.6 billion had been allocated for public works, human resource development and poverty reduction, Rs17 billion for sustainable development projects, Rs46.3 billion for infrastructure development, Rs6.1 billion for the governance sector while Rs47 billion had been allocated for provincial projects.
Three new programmes, worth Rs6.920 billion, would be launched next year under the poverty reduction programme, public works and human resource development projects. These include Rs4.42 billion Tameer-i-Pakistan Programme, Rs500 million Sasti Basti Programme and Rs2 billion federal priority projects.
The water and power sector would consume the highest share of the PSDP 2003-04 with allocations of Rs30.65 billion against previous allocations of Rs22.4 billion in 2002-03. Of this, water sector projects would get Rs13.64 billion against Rs10.9 billion spent during the current year.
The power sector, documents showed, would get Rs17.302 billion against Rs11.5 billion allocated during the current year. Of this, . During the current year, Wapda’s allocation had amounted to Rs11.5 billion while no allocation had been made for the KESC by the federal government allocation.
About Rs19.8 billion have been earmarked for the communication ministry for the next year against Rs18.6 billion spent during the current year. Of this, Rs17.3 billion would go to National Highway Authority against its current year’s share of Rs14.6 billion. Railways development programme for 2003-04 had also been enhanced to Rs8 billion against the current year’s allocation of Rs6.9 billion.
The education sector allocations had been raised from Rs5.5 billion in 2002-03 to Rs7.5 billion in 2003-04. This include Rs3 billion for the education ministry and Rs4.5 billion for the higher education commission.
According to the document, the health division would get Rs4.4 billion next year against Rs3.3 billion allocated during 2002-03. The allocations for the IT sector and the telecom division had been reduced by 50 per cent from Rs3.3 billion during current year to Rs1.75 billion next year.
Similarly, allocation for science and technology had been increased nominally from Rs953 million this year to Rs1.25 billion next year. The PSDP 2003-04 for Kana and Safron regions would be increased to Rs8.85 billion by comparison with Rs7.7 billion during current year.
The population welfare, women welfare and sports division would get Rs3.1 billion, Rs1.03 billion and Rs379 million, respectively, next year.
The PSDP for defence division had been slightly increased from Rs499 million to RS593 million while the food and agriculture sector would get Rs2.1 billion next year in contrast to this year’s allocation of Rs797 million.
Allocations for environment, local government and industries ministries had been kept at Rs555 million, Rs276 million and Rs468 million, respectively.
The interior divisions’ share would slightly reduce to Rs2.53 billion against Rs2.7 billion allocated this year while law ministry’s allocation would almost double to RS2.2 billion from the current year’s allocation of Rs1.1 billion. Allocations for the establishment, commerce and cabinet divisions as well as narcotics control would be Rs76 million, Rs58 million, Rs44 million and Rs172 million, respectively.
The share of the planning commission had been increased to Rs509 million against Rs60 million allocated during the current year while allocation for the statistics division had been reduced to Rs51 million against the current year’s allocation of Rs183 million.
