ISLAMABAD: The Annual Plan Coordination Committee (APCC) on Monday approved a developmental portfolio of Rs1.763 trillion for next fiscal year with a request for its enhancement to Rs2.313tr by National Economic Council (NEC) to achieve economic growth rate of 6.2pc.

The meeting presided over by Minister for Planning and Development Ahsan Iqbal was attended by ministers for planning from the provinces and special areas like Azad Kashmir and Gilgit-Baltistan.

Mr Iqbal, in a brief interaction with media, said he hoped to increase development budget for next year beyond Rs2tr, including a minimum of Rs1tr for federal programme to ensure GDP growth rate of 6.2pc next year and 6.6pc the year after. He said he had told the prime minister funds indicated by the finance ministry would affect the growth momentum and requested for the increase.

The overall indicative development budget of Rs1.763tr includes provincial Annual Development Plans (ADPs) of Rs1.013tr and federal Public Sector Development Programme (PSDP) of Rs750bn.

Because of final year of the current assemblies, a clear effort appeared to have been made by the centre and the provinces to announce reduced development size than last year. For example, the size of the federal PSDP was set at Rs750bn for next year against Rs1.001tr of current year, down 25pc. Likewise, the provincial portfolio was put at Rs1.013tr for next year against Rs1.112tr of current year, down 9pc.

An official said the meeting approved development projects for federal PSDP within an indicative ceiling of Rs750bn of the Ministry of Finance but decided to request the NEC led by the prime minister to enhance it to Rs1.3tr.

Proposes lesser allocations for power, CPEC-related projects

In case of NEC’s approval, the Planning Commission would include more projects in the next year’s development budget.

The meeting also approved macroeconomic framework for the next year envisaging 6.2pc growth rate supported by 3.8pc growth in agriculture, 7.6pc in industry and 6.5pc increase in services sector.

Most of the macroeconomic indicators for next year were set slightly higher than current year performance. For example, the current year growth rate was put at 5.8pc, that included 3.8pc improvement shown by agriculture, 5.8pc of industry and 6.4pc of services. The target for large-scale manufacturing was set at 8.1pc compared to 6.1pc growth achieved during current year.

The target for rate of inflation was set at 6pc for next year compared to 4pc of this year. Total investments for next year target to reach 17.2pc of GDP compared to 16.4pc of current year while national savings are estimated to increase to 13.3pc next year from current year’s 12.1pc of GDP.

Exports are projected to go up to $27.3bn compared to $24.5bn of current year while imports would increase to $56.5bn from $53.1bn this year. That would mean the trade deficit increasing to $29.2bn against $28.6bn this year. The current account deficit, on the other hand, is projected to come down to $12.5bn (3.8pc of GDP) next year from $13.7bn (4.4pc of GDP) this year.

Since the indicated amount was not sufficient to meet the requirement of funds especially of CPEC projects, some of them awarded on Engineering Procurements Contract (EPC) mode and at advance stage of completion, the Planning Commission recommended increasing federal PSDP to Rs1.3tr.

The meeting was told that the Planning Commission had received total demands of Rs1.9tr from ministries, divisions and agencies for ongoing and new schemes for PSDP 2018-19. Through consultative meetings with ministries/divisions, the total demand was rationalised at Rs1.5tr.

Finally, the meeting decided to exclude all the unapproved projects from the PSDP when informed that 332 such schemes were allowed in the development portfolio of last year, resulting in slow utilisation of funds.

The next year PSDP was based on principle of fully financing the ongoing projects having more than 70pc expenditure already made while foreign-funded projects should be provided required rupee cover.

The CPEC-related projects would also get maximum funds required while “security-related projects be allocated demanded funds”.

The allocations for special areas administered directly by the centre like AJK, Fata and GB would remain unchanged at Rs61.5bn while special federal projects that were used to be provided funds on the directives of the prime minister would not be given funds next year against Rs100bn this fiscal year.

Water sector would be given Rs41bn next year, including Rs18bn for Diamer-Bhasha dam and Rs8bn for Right-Bank Outfall Drain. National Highway Authority would get Rs233bn next year compared to Rs320bn during this fiscal year while power sector would get Rs33bn next year against Rs61bn this year, showing reduced requirement for CPEC-related infrastructure and energy projects.

Ministries and Divisions have been allocated Rs305bn which includes Rs274bn local component and Rs31bn Foreign Exchange Component.

Published in Dawn, April 17th, 2018