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• NEC to meet on May 26 or 27 to approve development programme
• 200 ongoing uplift projects likely to be closed
• Ahsan says proper allocations cannot be made for key schemes
ISLAMABAD: The federal government will present the next fiscal year’s budget on June 2, with a 16 per cent lower development allocation of Rs921 billion, resulting in the likely closure of about 200 ongoing development projects.
This was announced at a press conference by Planning Minister Ahsan Iqbal, who disclosed that an indicative budget ceiling (IBC) of Rs921bn for the next year provided by the Ministry of Finance was over three times lower than Rs2.9 trillion demanded by the Planning Commission based on requirements of various ministries for development projects.
The figure is also around 16pc lower than the current year’s revised allocation of Rs1.1tr, slashed on the instructions of the International Monetary Fund (IMF) from Rs1.4tr approved by the parliament as part of the federal budget 2024-25.
The minister said he would contest the IBC provided by the finance ministry and request the prime minister for higher allocations of at least Rs1.6tr to provide the rupee cover for foreign-funded projects.
The minister also launched the Planning Ministry’s Monthly Development Update for May 2025 during the press conference, a new initiative on the pattern of finance ministry’s monthly economic outlook.
Responding to a question, Mr Iqbal said authorisation for the disbursement had been issued for about Rs900bn out of Rs1.1tr PSDP for the current year.
He hoped the authorisation would increase during May and June. However, he hastened to add that the finance division had its own constraints, as resources were needed to increase the development budget, which required an increase in the tax-to-GDP ratio.
He said the Annual Plan Coordination Committee would meet on May 23 to finalise the next year’s development programme in consultations with provinces, Azad Jammu and Kashmir and Gilgit-Baltistan.
Meanwhile, the National Economic Council (NEC) is expected to meet on May 26 or 27 to approve the development programme and macroeconomic targets for the next fiscal year. The federal budget would be presented on June 2, he said.
For the next fiscal year’s development budget, the minister bemoaned that Rs2.9tr was requested from the Ministry of Finance, which provided an IBC of only Rs 921bn, about Rs178bn lower than the current year.
“This is a cause of concern for us,” he said. “This will affect even the inflow of foreign exchange. We will need Rs700bn to provide rupee cover to foreign-funded projects during the next development budget. If we do not have enough rupee cover, we cannot utilise all the allocated foreign exchange component.”
Mr Iqbal said that with such a meagre IBC, proper allocations could not be made to the important projects, which would result in delays and cost escalations of such schemes. He said that the number of provincial projects in the PSDP would be reduced, while about 200 slow-moving projects would be closed.
Irregularities in key projects
He said the cost of Diamer-Bhasha Dam has escalated from Rs480bn to Rs1.5tr due to delays. Likewise, the cost of the Dasu Hydropower Project has increased from Rs500bn to Rs1.7tr.
The minister said there were several lapses in the implementation of the Dasu Hydropower Project. No project director or CFO was hired for such a huge project, and it was operated by Wapda’s own people.
He said that even the contracts for the construction of roads in the project area were allotted in dollars. “There are irregularities in the Dasu project and we want that responsibility to be fixed,” he emphasised, regretting that the financial viability of these projects had diminished due to rising costs.
Similarly, the minister said that there were shocking irregularities in the Neelum-Jhelum Hydropower Project. The plan was started in such a hurry that the contractor was mobilised prior to the consultant, which the minister said was a serious irregularity.
“Interestingly, once in a meeting I asked the CFO of Neelum-Jhelum regarding his qualification, and I was stunned to know that he had a Master’s in Geography,” he said.
Mr Iqbal said the report of the International Marine Corps regarding the failure in the Neelum-Jhelum Hydropower Project was awaited.
In reply to a question as to why a civilian could not be appointed as Wapda chairman, the minister said: “In my opinion, a civilian should be appointed as Wapda chairman and he should be a hydrology expert of international repute. I will recommend this to the prime minister.”
He reiterated that funding priorities under the next PSDP would align with the government’s Uraan Pakistan programme, aimed at job creation and economic uplift. “Projects approved under Uraan are expected to generate 120,000 direct and indirect jobs,” he said.
Published in Dawn, May 9th, 2025
