ISLAMABAD: The government has formally called the meeting of the Annual Planning Coordination Committee (APCC) on Friday (May 31) to set next year’s macroeconomic and development agenda amid hints that budget 2024-25 may be delayed to the second week of June.

The meeting of the APCC is normally presided over by the federal planning minister and attended by provincial ministers for development besides the federal secretaries and provincial chief secretaries and representations of agencies dealing with development projects. However, notices sent to the relevant agencies, ministries and provinces suggest Planning Commission Deputy Chairman Dr Jehanzeb Khan will preside over the APCC meeting.

According to sources, even the public sector development programme settled at the APCC level may keep changing given the peculiar nature of coalition partners amid the planning commission’s bid to strip provincial nature projects from federal financing.

These sources said the planning ministry had demanded about Rs200 billion increase in PSDP for next year based on the current year’s Rs940bn, although the ministry of finance was in no mood to allocate more than Rs800-850bn.

The indicative budget ceiling was, nevertheless, enhanced by Rs260bn to Rs1.2tr following the intervention of the Special Investment Facilitation Council (SIFC), the sources said.

This is despite the fact that various ministries, divisions and related agencies, departments, and corporations miserably failed to utilise even half of the allocated funds in 10 months of the current year. The proposed allocations apparently would attract further explanations from the IMF amid fiscal consolidation and stabilisation efforts.

Proposed PSDP allocation

The proposed Rs1.2 trillion worth of PSDP for the next fiscal year is almost 27pc higher than the Rs940bn allocation during the current fiscal year; although, total spending in the first 10 months (July-April) amounted to just 37.5 per cent of the annual budget allocation. The latest data on development expenditure released by the planning commission put the total 10-month PSDP expenditure at Rs353bn against the budgetary allocation of Rs940bn.

This comes at a time when the government is seeking the 24th bailout package from the International Monetary Fund believed to be the continuation of the recently concluded fiscal and monetary tightening.

The finance ministry has made it clear that the government would be putting all efforts “into enhancing revenue collection, controlling expenditures, and maintaining fiscal discipline” to deal with the challenges.

Under the disbursement mechanism announced by the planning division, the development funds allocated in the federal budget should be released at the rate of 20pc in the first quarter (July-September), followed by 30pc each in the second (October-December) and third quarter (January-March), and remaining 20pc in the last quarter (April-June) of each fiscal year.

Under this principle, the overall PSDP projects should have spent about 87pc (around Rs820bn) in the first 10 months against only 37.5pc (Rs353bn) actually spent on development projects as they also involved dams, roads, health, education and so on.

Likewise, the special areas’ development activities should have consumed about Rs147bn (87pc) in 10 months instead of just Rs55bn actual consumption.

Therefore, instead of making lower allocations in line with the spending capacity of the relevant agencies, the next year’s development allocations are set to be at least 27pc higher than the current year’s budget.

On the other hand, the current fiscal year is the third year in a row that the country’s under-funded infrastructure development was constrained by drastic cuts even in funds allocated by parliament.

Published in Dawn, May 30th, 2024