ISLAMABAD: The National Economic Council (NEC) which is scheduled to meet on Tuesday (today) with Prime Minister Shahid Khaqan Abbasi in the chair. The council is to approve national development outlay of Rs 2.043 trillion including Rs 1.013 trillion provincial Annual Development Plans (ADPs) for 2018-19.
The highest economic decision making body will also approve federal PSDP of Rs 1.030 billion including foreign aid of Rs 180 billion and Rs 100 billion on Public Private Participation (PPP) mode.
According to the Ministry of Planning, Development and Reforms, Finance Division, under Medium-Term Budgetary Framework conveyed Indicative Budget Ceiling (IBC) for development program for 2018-19 at Rs 750 billion against the demand of Rs 1.9 trillion. This amount is grossly insufficient to meet the demand particularly for CPEC projects awarded on Engineering Procurement and Construction (EPC) mode and fast moving schemes. Accordingly, the Ministry of Planning and Development approached the Finance Division to enhance the size of development budget to at least Rs 1.3 trillion. Subsequently, Finance Division conveyed IBC at Rs 800 billion including Rs 105 billion for rehabilitation of TDPs etc. However, despite best efforts the demand still stands at Rs 825 billion excluding requirement of TDPs which Finance Division may meet over and above this size.
The proposed National Development outlay (2018-19) is as follows: (i) Total federal PSDP Rs 930 billion of which local resources of Rs 750 billion and Rs 180 billion foreign aid, total Provincial ADPs proposed at Rs 1.013 trillion (Rs 854 billion local funding + Rs 159 foreign aid) and Rs 100 billion PPP mode. The total national development outlay is proposed at Rs 2.043 billion of which Rs 1.704 trillion is local funding and Rs 339 billion foreign aid.
The PSDP size by including innovative (including PPP) mode of financing has increased from Rs 1.001 trillion to Rs 1.030 billion including Rs 105 billion for rehabilitation of TDPs etc. compared to the FY 2017-18. Provincial ADPs would be Rs 1.013 trillion. Federal government would continue support provinces even after 18th amendment in the area of health, education; infrastructure will also boost provincial growth trajectory.
The Ministry of Planning, Development and Reform after detailed discussions in meetings distributed the available resources among Ministries/Divisions keeping in view respective ongoing portfolio and future programs.
Ministries/Divisions were advised to prepare their development portfolio for 2018-19 in the light of following guidelines: (i) ensure that the proposed projects fall under sectoral priorities and contribute to achieving high level goals set under Vision 2025 and 11th Five Year Plan; (ii ) identify projects that my be undertaken on innovative modes of financing (PPP, community participation, cost sharing by NGOs); (iii) include projects having identifiable and tangible outcome for achieving STDs by 2030; (iv) provide full rupee cover to foreign aided project ;(v) allocate appropriate funds to on-going projects which are at a fairly advanced stage of completion; (vi) the projects initiated under CPEC and supporting schemes may be allocated required funds to ensure on time completion. Projects awarded on EPC contract should be financed as per requirements of the contract within the indicative ceiling for 2018-19; (vii) to follow provisions of 18th amendment in terms of division of subjects between the federal and provincial governments; (viii) allocate at least 20-25 per cent of the total cost of new projects in the PSDP 2018-19 for taking a felt start; and (ix) in case of lesser allocation, executing agencies would not start work without prior approval of the Ministry of Planning, Development and Reform.
A major portion of the federal PSDP 2018-19 about 63 per cent of the size has been earmarked for on-going projects. The Ministries/Divisions and the executing agencies would be required to process PC-I’s of un-approved projects for approval of the competent forum by August 31, 2018 for efficient use of allocated funds. Total number of schemes during 2018-19 would be 1235 including 726 ongoing and 509 new schemes.
Sector-wise allocation of the proposed PSDP 2018-19 is as follows: (i) infrastructure Rs 575 billion (62 per cent share); (ii) power - Rs 80 billion (9 per cent); (iii) transport & communication - Rs 400 billion (43 per cent); (iv) physical planning & housing, Rs 30 billion (3 per cent share); (v) social sector - Rs 135 billion (14 per cent), ie, education including higher education- Rs 57 billion (6 per cent), health and population welfare Rs 37 billion (4 per cent share), others Rs 5 billion ( 1 per cent) ;(vi) science and information technology Rs 12 billion (1 per cent);(vii) governance, Rs 12 billion (1 per cent);(viii) special areas (AJ&K, GB, FATA), Rs 72 billion (8 per cent); (ix) production Rs 5 billion (1 per cent); (x) ERRA Rs 8 billion (1 per cent); (x) TDPs and security enhancement etc (managed by Finance Division) Rs 105 billion (11 per cent share). This makes the total outlay at Rs 930 billion, however, after adding Rs 100 billion projects on PPP mode financing, it reaches Rs 1.030 trillion.
Following facts will also be brought to the notice of NEC: (i) infrastructure is very important not only to attract foreign investment but also to reduce the cost of doing business. Accordingly, infrastructure sector has been allocated 62 per cent of the total development budget. Highest priority has been accorded to transport and communication sector with an allocation of Rs 400 billion. This includes Rs 310 billion for national highways, Rs 39 billion for Railways and Rs 44 billion for other projects including Aviation schemes likes Gwadar International Airport; (ii) in the transport sector, projects like Multan, Sukkur and Lahore- Abdul Hakeem sections of Lahore-Karachi Motorways are at a fairly advanced stage of implementation, Thakot-Havelian, dualisation of Yarik-Zhob section of N-50, Jaglot-Skardu road, Eastbay Express Gwadar and Mirpur- Mangla. Railway which remained neglected for decades was given boost during the last 4-5 years whereby allocations (2013-2018) increased from Rs.16 billion to Rs.43 billion. During 2018-19, government despite fiscal difficulties has financed Railway main line, commonly known as ML-I with modest allocation. This would not only modernize railways network but would also give boost to CPEC trade.
To increase railway capability and modernize its infrastructure, new projects namely Establishment of Dry port near Havelian (2018-22) (CPEC) (Rs.380.8 billion), Improvement of Infrastructure Maintenance Services (Rs.06 billion) and Acquisition of Land for Gwadar Connectivity (Rs.10.7 billion) will be initiated during 2018-19.
Energy was the hardest hit sector of the economy before 2013. The menace of load shedding had brought about a collapse of all activities in trade, manufacturing and social life of the nation. This was really a gigantic challenge for the government in 2013 and subsequent years. During the period 2013-18 an allocation of Rs.1.5 trillion in this sector added up to 10,000 MW units of electricity to the national grid.
CPEC offers a ‘game-changer’ opportunity for economic growth and employment for Pakistan and future generations. It would be a source of regional and national integration boosting trade opportunities and changing socio-economic fabric of the country. Special security requirement of CPEC projects are met by providing 1% cost of CPEC projects. CPEC related projects would enter into their third year of implementation during 2018-19. In FY 2018-19 new projects costing Rs.835 billion will be added within CPEC and its supporting projects. Thirty one projects for development of Gwadar are part of the proposed PSDP 2018-19 with an estimated cost of Rs.137 billion.
Pakistan is facing acute water scarcity requiring special interventions. To conserve water and its augmentation during FY 2018-19, water sector allocation is proposed to be enhanced from Rs.36 billion in CFY to Rs.65 billion during 2018-19. Government has made special allocation to start construction of Bhasha Dam and Mohmand Dam (Rs23 billion and Rs.2 billion, respectively). Others water sector projects includes 7 new schemes at a cost of Rs.849 billion to begin in FY 2018-19 to conserve and augment water resources. These new sachems are National Flood Protection Plan-IV, Diamer Basha Dam Project (Dam Part), CRBC 1st lift cum Gravity Project DI Khan, Mohmand Dam Hydropower Project (Dam Part), Lining of K.B Feeder Upper Canal for Water Supply to Karachi City, Rehabilitation and Modernization of Sukkur Barrage (90% WB, 10% federal) and Construction of Feeding Canal to Manchar Lake to eradicate contamination.
For fast track development of Special Areas, Rs.62 billion (AJK Rs.22 billion, GB Rs.15 billion and FATA Rs.25 billion), have been allocated. Special Areas have been authorized to ensure that fruit of development reach the common man. The government assigns high priority to human resource development in the country. An amount of Rs.57 billion has been allocated for Education Programmes including Higher Education. A few initiatives in the Higher Education Sector include Enterprise Resource Planning System and IT Training for 100,000 Youth, modernization and up-gradation of Labs in Engineering Universities, Establishment of Center of Excellence in Cyber Security, Robotics & Automation, and Establishment of Center of Cooperation of Civilizations.
Availability of power has encouraged entrepreneurs to expand production thus creating surplus for export. To display export items and attract importers holding expos is very important. Beside construction of expo centers in Peshawar, Islamabad and Quetta, expo center of Karachi costing Rs.8 billion is proposed to be upgraded.
The health and population subjects are the responsibilities of provincial governments after 18th amendment. However, in view of its importance, the federal government continued supplementing the efforts of the Provincial Governments to improve quality of life through financing major programmes of health and population with an allocation of Rs.37 billion, Expanded Programme of Immunization, control of Hepatitis, malaria and Blindness programs. Resources have been earmarked to finance Prime Minister National Health Programme Phase-II, Construction of Federal Medical College, Islamabad, establishment of the Centre for Neurosciences at PIMS, Islamabad and Cancer Hospital, Islamabad.
Capacity issue in civil services needs attention. Therefore, to resolve capacity issues, a program costing Rs.500 million is being initiated for training of senior and middle level officers in international institutions of repute.
PSDP 2018-19 has been proposed in line with the overall agenda set under the vision 2025 for achieving higher, sustainable and inclusive growth, with the aim to reduce poverty, build up human capital, modernize infrastructure, support balanced development, better food, water and energy security.—MUSHTAQ GHUMMAN
