ISLAMABAD, Feb 4: The government has decided to cut the Public Sector Development Programme (PSDP) by Rs70 billion because of a slowdown in the economy and huge losses suffered in the wake of the assassination of PPP leader Benazir Bhutto.

The decision was taken at a high-level meeting presided over by President Pervez Musharraf on Monday.

Sources told Dawn that Deputy Chairman Planning Commission Dr Akram Sheikh had told the meeting that the government would have to curtail development expenditure during the remaining five months of 2007-08.

The sources said the meeting had been convened by the president to determine the Planning Commission’s view about the proposed cut.

Caretaker Finance Minister Dr Salman Shah and Special Secretary Finance Dr Ashfaque Hasan Khan, the sources said, had already told the president that the size of the PSDP needed to be reduced to avoid further “haemorrhaging of the economy”.

Referring to the government’s move to keep oil prices unchanged over the past 13 months, he said the government was finding it more difficult to continue paying Rs14 billion every month in oil subsidy.

The sources said that the president was told that the current level of PSDP funding which amounted to Rs520 billion was fast becoming unsustainable.

A participant of the meeting told Dawn that priority would be given to the important projects and that no cuts would be applied during the remaining months of the current fiscal year. He said that the president had called for cutting wastage and urged timely completion of mega projects.

Dr Ashfaque said that it was necessary to make adjustments in the PSDP to avoid the piling up of problems. “We cannot call it a reduction in the PSDP as projects which have not yet been started will be added in the next PSDP,” he said.

According to a statement issued after the meeting, the president called for balanced national development covering all sectors of economy and incorporating public welfare.

During a presentation on the development of mega projects, he stressed there were no shortcuts and that national development “must be achieved with commitment and sincerity”.

He said that the country had been able to absorb the impact of global recession and soaring prices of fuel and other commodities, because of economic stability. He mentioned the huge subsidies that the government was giving for fuel, food, fertiliser and in other sectors to ease the burden of the common man.

The meeting noted that important reforms had been introduced in the planning, implementation and monitoring processes, making an overall contribution to the national economy.

It was noted that of the 732 projects, more than 90 per cent had been monitored during the current financial year.Praising the Planning Commission for improving the pace of various projects, the president directed that the commission’s role in plugging the implementation gap should be further enhanced.

Mega projects in water, energy, highways, communications, railways, ports and shipping sectors were discussed in detail.

The president directed that projects which had national consensus and significance should get special focus.

Stress was laid on programme-based approach in key sectors of economic growth and development. Projects in sectors of science and technology, education, higher education and other social sectors were also reviewed.