ISLAMABAD: The Pakistan Muslim League-Nawaz (PML-N)-led federal government has put on hold its mega initiatives of Metro Bus projects for Islamabad and Karachi and the much-touted bullet train in order the meet the IMF’s conditions.
“The first victim of fiscal consolidation under the IMF’s conditionalities has again been the Public Sector Development Programme (PSDP) which might be slashed to the tune of Rs115 billion by putting on hold new initiatives envisioned by the government at the time of budget 2013-14,” official sources confirmed.
According to one top official of the Planning Commission, nothing was clear yet on this account as these mega development schemes under new initiatives would only be undertaken by the government if the FBR achieved its desired tax collection target of Rs2,475 billion.
“The new initiatives of Rs115 billion into PSDP have been linked with the performance of FBR’s tax collection as in case of a shortfall these schemes will be shelved at least for the current fiscal year,” said the official.
The federal government had increased the PSDP by 50 percent, jacking it up from Rs350 billion in last financial year to Rs540 billion in the current fiscal year under which Rs115 billion were allocated with tag of new initiatives without mentioning any projects.
At time of approving annual development outlay of Rs1,115 billion for federal and provincial governments, the National Economic Council (NEC) had approved indicative allocation of Rs115 billion without specifying any projects.
It was believed at that time that the government wanted to implement its manifesto by putting aside money for undertaking mega schemes such as metro bus in twin cities of Rawalpindi/Islamabad and Karachi as well as kick-starting work on bullet train.
In the aftermath of agreement with the IMF staff, this new initiative with allocated amount of Rs115 billion was put on hold for the time being as the government wanted to curtail its consolidated budget deficit within the desired range of 6 percent of GDP.
On other hand, the provinces have also agreed to generate cash balance of Rs117 billion in the current fiscal year.
“This fiscal consolidation means that the growth is being compromised for the sake of stabilisation,” said an independent economic expert.
When contacted, renowned economist, Dr Hafeez A Pasha, who is also former minister for finance and development, said the cash balance of provinces to the tune of Rs117 billion means that they were going to reduce their development budgets.
The provinces, he said, posted deficit budgets of Rs50 to 60 billion in the current fiscal year which increased to Rs92 billion after incorporation of salary increases in the range of 10 to 15 percent by the provincial governments.
Pasha said that the government increased federal development budget by 50 percent in order to stimulate sluggish economic activities and it was the right approach but fiscal framework might witness slashing down public sector expenditures that would result into compromising growth prospects of the country over the next few years.
