ISLAMABAD: Clearing Rs71.4 billion worth of development projects, the government on Wednesday decided in principle to stop funding of provincial development schemes out of the federal budget from this year due to a serious resource crunch.

The decisions were taken at a meeting of the Central Development Working Party (CDWP) presided over by Deputy Chairman Planning Commission (DCPC) Jehanzeb Khan. The authorities are currently in the process of making a budget for the next fiscal year.

“The CDWP is considering resource constraints for the development budget following a rigid approach towards the National Development Framework (NDF),” said an official announcement following the meeting.

The CDWP also cleared four development projects at an estimated cost of Rs71.4bn. The meeting again deferred a Rs60bn, World Bank-funded solar project on the Ghazi Barotha Canal. The authorities have serious reservations over the project costs pushed by the lender.

Informed sources said that financing for provincial development projects, particularly those relating to 16 devolved subjects, would no longer be allocated in the upcoming budget and instead its financial responsibility would be transferred to the provinces. The financial burden of such schemes currently is more than Rs300bn.

This is part of a new NDF under which the federal government wants to restrict its investment priorities to the areas of federal responsibilities and ensure that the provinces take full fiscal responsibility for all devolved subjects. Sixteen federal ministries have been devolved along with development projects to the respective provinces following the 18th Constitutional Amendment and the abolition of the Concurrent List.

“Due to fiscal constraints and a huge throw-forward, the Public Sector Development Programme (PSDP) is being reviewed and rationalisation is in process. Hence, provincial nature projects are being shifted to respective governments,” said Mr Khan. He added that new projects will be included in the PSDP subject to the availability of funds and requested the provincial members to create space in their Annual Development Plans (ADPs).

The CDWP cleared on technical grounds the World Bank-funded Rs58.815bn project ‘Punjab Resilient & Inclusive Agriculture Transformation (PRIAT)’.

Published in Dawn, May 19th, 2022