ISLAMABAD: The National Economic Council (NEC) on Monday formally decided to bar financing to provincial development projects from federal resources from coming fiscal year, except for merged districts of Khyber Pakhtunkhwa and 20 least developed districts (LDDs) of other provinces.

A meeting of the NEC, presided over by caretaker Prime Minister Anwaarul Haq Kakar, was attended by the chief ministers of Sindh, Balochistan and Khyber Pakhtunkhwa and federal ministers for finance, planning and communications. Punjab Chief Minister Mohsin Naqvi and federal Minister for Petroleum and Power Muhammad Ali — both NEC members — were conspicuous by their absence.

An official statement said the NEC set priorities and guidelines for the Public Sector Development Programme (PSDP) under which projects of national importance on which 80 per cent progress had been made so far should be given priority financing and only 10pc funds of the development programme be allocated for fresh projects. The NEC also decided that no development projects without detailed feasibility studies should be included in the next year budget.

On the issue of financing provincial projects through federal PSDP, the ongoing projects at advanced stages of implementation should continue with federal funding during the current fiscal year but no more funding would flow from the centre next year. Also, no new project of provincial nature would be included in the next year PSDP, except 20 selected LDDs through a previous survey on multi-dimensional development criteria and merged tribal districts of KP.

Rs53bn projects will stand dropped from PSDP

The meeting was informed that many poor districts of KP like Chitral and Kohistan and others in Balochistan had been left out in the previous survey. The meeting directed that the criteria for development index be reviewed and improved so that all the LDDs in the country would be brought under the development focus so as to meet their development objectives on priority and create employment opportunities to the population.

Sources said the caretaker provincial leadership earlier conveyed their reservations over withdrawing federal financing to provincial projects in future but did not press in view of candid instructions from the all-powerful Special Investment Facilitation Council (SIFC). They were told that their role was limited to current fiscal year.

The official statement said that while reviewing the PSDP 2023-24 progress, the NEC was presented with the recommendations of the apex committee of the SIFC. “While approving recommendations of the apex committee, the council (NEC) directed that prime minister’s initiatives for youth development, particularly skill development programme and youth endowment scholarship for talented students should be fully continued through PSDP and their funding should be ensured,” the statement said.

As per the decision, about 76 projects of provincial nature worth Rs120bn would stand transferred to the provinces for financing. These mostly fall in the category zero financial progress at this stage.

Five-year plan

The NEC also took up the 13th five-year plan envisaging broad contours of development, climate change and environment, tourism, agriculture, industry, energy sector, governance reforms, foreign investment, small and medium enterprises, and better service delivery through use of technology. The meeting decided that the draft five-year plan should be finalised and presented to the NEC for approval in the next meeting ahead of the 2024-25 federal budget.

The NEC also approved Public Investment Management Assessment, Climate-Public Investment Manage­ment Assessment (C-PIMA) and their action plan as required under the structural benchmarks of the IMF.

As required by the IMF programme, the government has already developed a handbook for climate screening in the project appraisal process besides the development of a green building code for Pakistan.

The climate risks have been included in fiscal risk statement, which had been published on the finance ministry’s website as part of the budget for 2023-24.

Published in Dawn, January 30th, 2024