ISLAMABAD, May 24: A 2-day meeting of the Annual Plan Coordination Committee (APCC) on Saturday failed to firm up the size of the new federal Public Sector Development Programme (PSDP) due to the conflicting views of the participants and decided to hold another meeting next week to finalise the issue.
Sources in the ministry and the Planning Commission told Dawn that the meeting, presided over by the new deputy chairman of the commission Salman Farooqi, however, tentatively agreed to keep the new PSDP size at Rs300 billion.
“It looks that some of the important issues, including the size of the PSDP for 2008-09 would eventually be decided at the meeting of National Economic Council (NEC) on May 30,” a source said. He feared that there would be at least 10 per cent cut in the size of the new PSDP against Rs435 billion of 2007-08.
He said most of the participants were “extremely unhappy” over what he termed as the “incapability” of the presiding officer for not having finalised the size of the PSDP.
“I have been attending these meetings for many years but I never saw such indecisiveness,” he added.
After long deliberations, the APCC meeting constituted six committees to further look into the issue keeping in view the acute financial crunch being experienced by the new political government. These committees were asked to give their recommendations within two days.
The priority committee of the ministry of finance is believed to have finally recommended Rs287 billion federal PSDP saying that since the government does not see enough new resource mobilisation, development budget has to be drastically cut across the board.
However, the meeting expressed the hope that the federal PSDP would be stretched to Rs400-435 billion having contained all the subsidies, including for pro-poor segments and fertilisers.
This also included a number of new development initiatives of the prime minister for undertaking development projects, besides the ‘Khushal Pakistan Programme’.
But the APCC did not curtail funding for health, education and poverty related expenditure due to the strong resistance put up by prime minister’s Special Assistant on social sectors Begum Shahnaz Wazir Ali.
However, the sources said that the higher education budget might face cut in the PSDP to be formally approved by the NEC, the highest body on economic decision-making.
The meeting decided to withdraw funds from the slow moving development projects and put them in the fast moving projects to be completed in three years period.
The financial and deputy financial advisers of the ministries and divisions were told that the government could not accept all their financial demands sought for the next financial year and that they have to give their minimum funding requirements.
The meeting decided that only viable and very essential development projects will be approved for the financial year 2008-09.
The PML-Q and the caretaker governments had cut the original size of Rs435 billion current PSDP twice, first by Rs70 billion and then by another Rs30 billion.
Sources said that a lower ceiling for the new PSDP has been proposed in an effort to bring fiscal deficit down to 5.5 per cent of the GDP in the next financial year.
It is believed that without considerably cutting the development budget and minimising the government’s expenditure, achieving 5.5 per cent fiscal deficit would be a difficult task.
For the current financial year, sources said, efforts were being made to bring down the fiscal deficit from 9.5 per cent to 6.5 per cent by June 30 this year.
The total original size of the current PSDP was to the tune of Rs724 billion, which included Rs435 billion federal PSDP, Rs85 billion for provinces and Rs204 billion for public sector corporations.
The sources said the APCC meeting also proposed the building of new vocational training centres in all the four provinces to help prepare skilled workers during the next financial year.
These centres will be set up in the “open” in case there was no funding available for making buildings for this purpose.