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Express Tribune
15-05-2025
- Business
- Express Tribune
APCC to propose uplift budget on 26th
A meeting of the Annual Plan Coordination Committee (APCC) has been scheduled for May 26, during which recommendations for the federal development budget for the next fiscal year2025-2026will be prepared. Sources said the committee will also propose the Annual Economic Plan for the upcoming fiscal year, while reviewing the current year's federal development budget and economic plan. For the next fiscal year, the Ministry of Finance has proposed a ceiling of Rs921 billion for the federal development budget. However, there is an effort to increase this allocation, subject to the prime minister's approval. According to sources, the meeting will also review the GDP growth target for the upcoming fiscal year and set sectoral targets for agriculture, industry, and services. The APCC is also expected to propose an inflation target for the next fiscal year. Its recommendations will be forwarded to the National Economic Council (NEC) for approval. The NEC meeting, chaired by the prime minister, is expected to be held on May 29 or 30. A meeting of the National Accounts Committee has been scheduled for May 20, which will review and approve the current fiscal year's economic targets. According to sources, the committee is also expected to approve revisions to last fiscal year's economic targets.
Express Tribune
09-05-2025
- Business
- Express Tribune
Development spending falls short
Listen to article The government on Thursday released a new development report, revealing that it could hardly spend Rs449 billion during the first ten months of this fiscal year, which was Rs648 billion less than the planned spending and affected projects across all the sectors. Such a low spending against an annual allocation of Rs1.1 trillion renders the entire exercise of approving large-size Public Sector Development Programme by the National Assembly to cosmetic. The Finance Ministry controls the spending as a tool to offset the negative impact of tax shortfall sustained by the Federal Board of Revenue. The development came amid Planning Minister Ahsan Iqbal's statement on Thursday that for the next fiscal year 2025-26, the Finance Ministry has indicated only Rs921 billion for the PSDP. The Rs921 billion indicative budget was only equal to 58% of the development needs of Rs1.6 trillion for the next fiscal year, he added. The minister was speaking during the launching ceremony of the new series, the monthly Development Outlook. The first of its kind monthly Development Update report has been initiated by the recently appointed chief economist of Pakistan Dr Imtiaz Ahmad in line with his earlier report of monthly economic outlook that he began in the Finance Ministry. While speaking at the occasion, Ahsan Iqbal admitted that the projects with inflated costs had been approved in the past and there were also leakages. Since 1997, Ahsan Iqbal has remained the Deputy Chairman of the Planning Commission for four times and chaired those meetings where these projects were approved. The new report does not paint a rosy picture for the government and its narration underscores that the claimed fiscal stabilisation has been mainly achieved by containing the development expenditures. The government had planned to spend the entire nearly Rs1.1 trillion development budget in the first 10 months of this fiscal year. "According to the SAP system, ministries, divisions have utilised Rs448.6 billion ie 50% of authorisation and 41% of allocation", according to the development outlook report. The report further stated that based on the quarterly release strategy of the Finance Division, the Planning Ministry authorised a total of Rs894 billion (82% so far) including Rs229.5 billion during the fourth quarter in April, 2025. Further authorisation is being made on the basis of adjusted PSDP and satisfactory pace of utilization, it added. For the sake of the International Monetary Fund (MF) programme, the Finance Ministry has squeezed the PSDP to achieve quarterly primary surplus targets. Both the Planning Ministry and the Pakistan Peoples Party have termed the next fiscal year's indicative less than Rs1 trillion budget insufficient. While launching the first report, Ahsan Iqbal said that the ministry was strengthening mechanisms to stop the leakages and corruption in the development projects. He further said that in many sectors, the projects had been approved with the inflated cost. He said that with a shrinking fiscal envelope, it was now more important to save every penny from being misused. The development report stated that during the first ten months of this fiscal year, 191 out of 240 projects have been monitored, while 27 of 32 projects have undergone formal evaluation. This project approach has contributed to notable cost savings, it added. In April 2025 alone, 20 mega projects were planned and another 20 were monitored, it added. The report disclosed that the lower than the planned spending has impacted the projects across various sectors. It added the infrastructure sector was allocated Rs656 billion in the budget. The Rs27.4 billion was utilised during April 2025. Within this, the water subsector disbursements amounted to Rs19.7 billion till April, equivalent to 15.45% of its annual allocation of Rs127.6 billion. The transport and communication sector received the largest yearly allocation of Rs271.6 billion but the expenditure remained low. Despite thin fiscal space, the government was still adding either new projects or upward revising the cost of the already approved schemes. The report showed that in April alone, a total of 19 development projects were considered worth nearly Rs2 trillion. The key reason behind higher approval cost was the multiple fold increase in the cost of Dasu hydropower project. Of these, 10 projects fell within the CDWP's financial approval authority, which is chaired by the Deputy Chairman Planning Commission. Nine projects exceeding the financial threshold were recommended to the Executive Committee of the National Economic Council (ECNEC) for final approval. The report stated that these projects would generate 20,108 direct jobs and 100,690 indirect jobs. The water sector is claimed to contribute the highest share of employment opportunities, reflecting the labour intensive nature of infrastructure development. In the domain of digital security and infrastructure, the CDWP granted in-principle approval to the "Gwadar Safe City Project", to bolster public safety and surveillance capabilities in the strategically significant Gwadar region. The CDWP granted an in-principle recommendation for the revised "Dasu Hydropower Project at a staggering cost of Rs1.74 trillion, according to the report. The Planning Ministry said that it is a strategically significant federal initiative, as the project is a cornerstone of Pakistan's energy security strategy, aimed at delivering low-cost, renewable hydroelectric power to support sustainable economic growth and reduce dependence on imported fuels.
Business Recorder
09-05-2025
- Business
- Business Recorder
Ministry seeks Rs1.6trn PSDP: FY26 budget on June 2
ISLAMABAD: The federal government Thursday announced that federal budget for fiscal year 2025-26 will be presented on June 2, with the Planning Ministry seeking a development allocation of at least Rs1,600 billion – significantly higher than the Rs921 billion ceiling proposed so far by the Finance Ministry. Speaking at a presser, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal said Finance Ministry has shared a resource envelope of just Rs921 billion for development programme for budget 2025-26 against the least requirement of Rs1,600 billion compared to estimated Rs2,900 billion by Planning Ministry for overall development programmes. 'Finance Ministry has so far declared Rs921 billion for next financial year as compared to Rs1,100 billion current fiscal year which is less Rs179 billion. It is very concern and challenging situation, we will hold held a meeting with Finance Ministry under the supervision of prime minister in regard.' PSDP 2025-26, projections for 2026-27 and 2027-28: Ministry initiates process The minister who also launched Monthly Development Update along with secretary planning and chief economist, also said: 'We will need Rs700 billion from foreign development partners, and if our budget is that low, we will not be able to cover even it.' The Ministry of Planning has objected to this low size of the resource envelope for the Public Sector Development Programme (PSDP) for the next budget, arguing that the scarcity of resources will hardly meet the rupee component requirement of Rs700 billion for donor-funded projects in the next fiscal year. He said that the budget will be presented on June 2, 2025, and meeting of Annual Plan Coordination Committee (APCC) and National Economic Council (NEC) will be convened in third and fourth week of May 2025, respectively, for approving the macroeconomic and development budget. He said that Finance Ministry shared indicative budget ceiling of Rs921 billion for the next fiscal year's PSDP against total requirements of ministries/divisions and attached departments of Rs2.9 trillion. 'At least the PSDP allocation must hover around Rs1,600 billion to meet the financing requirement of ongoing and new initiatives under the Uraan Pakistan Program,' he added. The Priorities Committee held meetings in more than one week's period and came up with total requirements close to Rs3 trillion, he said, adding now we will take up this issue with the Ministry of Finance and other relevant forums. He said the PSDP was revised downward from Rs1,400 billion to Rs1,100 billion for the current fiscal year, and the Planning Ministry has so far granted authorisation of Rs900 billion. He said that it is expected that the utilisation of development funds will go close to Rs750 to Rs800 billion by the end of June 2025. The utilisation of development funds stood at over Rs448 billion in the first 10 months of the current fiscal year. He also said that the government abolished 200 projects from the PSDP, adding the scarcity of resources resulted in cost and time overruns of the developmental schemes. 'Without jacking up the tax-to-GDP ratio from 16 to 18 percent, the resource constraints cannot be overcome, so every segment of the society will have to contribute in taxes for improving the fiscal situation,' he added. 'We have to increase the tax to GDP in next budget for increasing development budget and investment. We'll authorise maximum funds in May and June to utilise for development projects. In the past, we repay 52 percent of tax collection in the term of loan. If we do not increase tax-to-GDP ratio, then we could not increase development budget and we have to get more loans.' Citing examples of Bhasha and Dasu dams where the cost overruns was ranging from Rs480 billion to Rs1,500 billion and Rs500 billion to Rs1,700 billion, respectively, he said there was no project director of Dasu and no permanent CFO. A road construction for Dasu, he added, was contracted in dollars, so the depreciation benefited the contractor. As of the first 10 months of FY2024- 25, 191 out of 240 projects have been monitored, while 27 of 32 projects have undergone formal evaluation, he added. He said in April 2025 alone, 20 mega projects were planned and another 20 were monitored. He said the monitoring strategy prioritises mega projects, special government initiatives, donor-funded intervention, projects under revision, and those facing implementation delays or specifically assigned by competent authorities. He said that the development projects resulted in the creation of 20,000 direct and 100,000 indirect jobs in the country. He said that the government has decided to include only those development projects in its annual development programme for the next fiscal year, which would be aligned with Uraan Pakistan Programme. He said that the process of strict scrutiny for the developmental projects was initiated in order to ensure the use of resources on such developmental projects, which would help create more job opportunities for sustainable economic growth and social prosperity. He said that for maintaining transparency and judicious use of national resources to avoid the cost escalation of developmental projects, adding that a hotline, and an effective evolution and monitoring unit has been established within the Planning Ministry for effective monitoring of developmental projects as well as tapping the leakages. 'We've also established an effective coordination mechanism with our development partners and shared our priorities with them to align them with these priorities to carry forward the development goals of the government,' he added. Iqbal said that government was also working with provincial governments on Uraan Pakistan Programme and different workshops were also held, to ensure appropriate use of national resources to attain sustainable economic growth and development. Highlighting the economic achievements of the incumbent government during the 10 months of on-going fiscal year, according to him was the year of economic turnaround as inflation went down from 38 per cent to 2 per cent, adding that the headline inflation was recorded at 0.3 per cent during the month of April 2025. Meanwhile, the current account surplus during the period under review stood at $1.86 billion as compared to the deficit of $1.65 billion of the corresponding period of the last year, he said adding that remittances grew by 33 per cent and reached to $33 billion against the same period of the last year. The fiscal deficit also came down from 3.1 per cent to 2.2 per cent during the period under review, he said, adding that revenue collection witnessed about 26 per cent growth in first 10 months of the current fiscal year, which was historic. The minister stressed the need for further enhancing the tax-to-GDP ratio in order to ensure resource generation for initiating mega developmental projects of social prosperity. About the developmental expenditure during on-going fiscal year, he said that an amount of Rs900 billion was authorised during 10 months of current fiscal year and it was expected that the remaining allocated amount would be utilised by the end to the year. The minister said that we are making sure the provinces increase the tax-to-GDP ratio and for this purpose we have conducted workshops. He said that the provinces have 60 per cent of resources under the 18th Constitutional Amendment. He also condemned the Indian aggression and killings of innocent civilians. He stated the international community has recognised Pakistan's superiority in conventional warfare, emphasising that this capability is crucial for maintaining the regional balance of power. Copyright Business Recorder, 2025
