ISLAMABAD, March 14: Funding problems have forced the government to immediately take Rs50 billion out of the Rs335-billion Public Sector Development Programme to manage its day to day affairs.
Informed sources told Dawn on Friday that except for a few strategically important development projects, including Mangla Dam raising and Chashma-2 nuclear power plant, no funding would be available for projects during the remaining four months of the current financial year.
The government is using the word “withdrawal” or “extraction” for the cut in PSDP. “If we use the word “cut”, it will send a wrong signal. Therefore better call it “taking out” funds or “extraction” from the current PSDP,” a source said.
He said that due to a slowdown in the economy and a reduction in revenue collection, the government was facing difficulties in meeting its growing financial needs.
The Rs50 billion funding, he said, could be used by the incoming government for providing some relief to the people in the shape of subsidy on essential food items, including wheat, edible oil and sugar. But it would be difficult for the government to ensure financial discipline, he added.
However, Planning Commission’s Deputy Chairman, Dr Mohammad Akram Sheikh, told Dawn that “no formal cut” had been proposed to overcome the financial constraints currently being faced by the government.
He said that several projects of national importance would have to be continued without any interruption. “But those projects which have not yet been started are being deferred and no funding will be available for them during the current financial year.”
He said that funding for the purchase of land for Diamer-Bhasha dam would be provided as promised in the budget. Similarly Kurrum Tangi and Munda dams will continue to receive uninterrupted funds till June 30. “But the projects which are lined up for funding in May and June will not be started to avoid more financial problems,” Dr Skeikh said.
In reply to a question whether the Rs50 billion proposed to be withdrawn from the PSDP could be used by the new government for offering relief to the consumer, he said: “Yes, this is possible. Somebody may suggest this to the new government.”
Dr Sheikh said the president and the caretaker prime minister had been taken into confidence and they agreed not to undertake a number of projects scheduled to commence in 2007-08.
He said the increasing oil prices would demand a “professional approach” on the part of the new economic managers.
