ISLAMABAD, Oct 24: The government has decided to make some adjustments in the budget for 2005-6 in the wake of damage caused by the October 8 earthquake and the Public Sector Development programme (PSDP) is being revised, says an official.

He told Dawn that although growth projections were unlikely to be changed, certain adjustments and re-allocations in the budget would have to be made to meet the unprecedented challenge.

He said only important and highly viable development projects of the PSDP would be undertaken and funds allocated for less important projects would be diverted for rehabilitation and reconstruction work in Azad Kashmir and affected areas of the NWFP.

The official said some funds from the Rs270 billion PSDP would be diverted for relief and rehabilitation, in addition to the Rs10 billion assistance announced by the government for mitigating the sufferings of quake victims.

However, he said, no change of basic nature would be made in the budget and there would be no reduction in defence expenditure.

The official said: “The government cannot take the risk of cutting the Rs223.5 billion defence budget.”

He said the situation might warrant some adjustments to meet the fiscal deficit target of 3.8 per cent of the Gross Domestic Product and to keep a watch on unnecessary monetary expansion during the current fiscal year.

Nevertheless, he said, the GDP growth momentum in the range of seven to eight per cent was not likely to be affected by the earthquake, taking into account the proposed massive reconstruction activities.

He said the housing and construction sector would get a boost which would help the government achieve its GDP growth target.

He said the international community was promising to increase foreign investments and there were signs of that, especially in the oil and gas, telecommunication, infrastructure and services sectors.