Govt envisages ‘robust’ PSDP plus to stimulate growth

Updated 15 Dec 2019


Girls share contact details at a career fair in Lahore. An economic growth rate of over 6.6pc is needed to accommodate 1.3 million new job seekers annually, State Bank of Pakistan estimates.—File photo
Girls share contact details at a career fair in Lahore. An economic growth rate of over 6.6pc is needed to accommodate 1.3 million new job seekers annually, State Bank of Pakistan estimates.—File photo

ISLAMABAD: The government has evolved a robust three-year PSDP plus development plan involving 53 mega projects with an approximate Rs5.2 trillion investment in an effort to stimulate economic growth and create greater job opportunities for the youth.

The development plan, which is over and above the Public Sector Development Programme (PSDP), will be implemented between FY2020-23. Prime Minister Imran Khan on Nov 27 had approved the plan in principle. He also directed ministries and provinces to come up with more projects.

According to the State Bank of Pakistan estimates, the country needs to achieve a growth rate of more than 6.6 per cent to accommodate 1.3 million new job seekers annually.

To achieve this level of growth, the government has introduced the concept of the PSDP plus plan to enhance development spending with an aim to achieve a sustainable GDP growth rate of 6.7pc at the end of the programme from the current fiscal year projected growth rate of 3.3pc.

The 2020-23 plan aims to create more jobs with focus on infrastructure

It seems that government is following the Turkish model in which Turkey invested $138bn other than the government funding during 2013-18 in critical areas to attain a sustained economic growth of over 6pc during these years.

Documents seen by Dawn show that the premier also asked the relevant departments to identify other potential areas where amendments in the existing rules and regulation could lead to a robust public-private partnership (PPP) in the development sector.

The PSDP plus projects will be implemented throughout Pakistan and are divided into two broad categories. Firstly, there are 29 projects in 11 sectors with zero government investment that are expected to inject direct investment of Rs2.9tr into the economy. Furthermore, it is estimated that this investment will fetch Rs1.02tr per annum in the form of non-tax revenue and Rs69bn per annum in the form of tax revenue.

The second category pertains to 24 projects with limited government investment in the form of Viability Gap Funding (VGF). These projects in seven sectors are expected to fetch Rs2.3tr in the form of direct investment and an estimated Rs12bn per annum as taxes.

Through multiplier-accelerator effects, these projects can provide a much needed boost to the economy without putting any kind of internal or external borrowing pressure on Pakistan’s public kitty.

The main projects identified under the PSDP plus plan include establishment of Ship Refueling Facility at Gwadar, grant of licence to operate floating hotels and restaurants, operating cruise and development of resorts at different coastal areas of Balochistan.

Operation of Air Safari Service, Airport Operator Concession for main airports like Karachi, Lahore and Islamabad, grant of special licences for tourist airlines and allowing landing strips at key tourist destinations have been identified as potential areas in PSDP plus.

Moreover, installation of fibre optic network, introduction of 5-G services, allowing private sector to operate rail services and develop new infrastructure, development of resorts in Takht-e-Suleman in D.I. Khan on government land, tourist resorts at Garam Chashma (Chitral), Shaikh Badin D. I. Khan, Chapri, Sholozan (Kurram), Takht Bhai, Moola Village (Khuzdar) and Khwra (Jhelum) are also part of the plan. The projects also include setting up of waste-to-energy plant or waste to urea plants in Karachi, Lahore and Peshawar, respectively.

In the domain of infrastructure development, some of the projects include construction of Sukkur-Hyderabad Motorway which can be developed in PPP on build-operate-transfer (BOT) basis. The grant of operating concessions of N-5 (1021) Karachi-Torkham GT road is expected to increase NHA’s revenue significantly.

Construction of Tarnol, Fateh Jang, Talagang, Mianwali, Muzaffargarh Highway stretching over 527 km is another important project that will be the shortest route connecting Karachi with Peshawar.

The PSDP plus project also includes optimum utilisation of state lands to serve as a catalyst for boosting economic activity through promoting entrepreneurship and undertaking profitable business ventures.

In energy sector, a proposal has been made to allow captive power generation on renewable energy for industry, industrial estates and Special Economic Zones and its transmission through wheeling arrangements.

The identified projects also include generating hydel power to be used for industrial zones in the areas.

Similarly, a range of projects have been identified in railways, minerals and mining, transport sector, agriculture and other areas of economy where limited government financing could help in implementation of critically important projects.

Due to various economic factors and constraints, including financial mismanagement of past, flight of capital, de-industrialisation and perpetual imbalance in trade, public sector development programme outlays have remained far below the required level to ensure sustained upward economic growth trajectory.

With greater ease of doing business, pro-business policies and the commitment of the Government to facilitate business community in every possible manner, there is a huge potential for the private sector to capitalise on the existing opportunities.

PPP in implementation of critical projects will not only provide boost to the economy but would help private sector to realise its potential in a vibrant market of over 216 million people.

Published in Dawn, December 15th, 2019