Islamabad: Pakistan has approved an ambitious national development plan worth Rs 3.79 trillion (USD 13.6 billion) for the next fiscal year as authorities in the cash-strapped country try to use expansionary public investment to boost growth.
The decision, taken at the high-level meeting of the National Economic Council (NEC) on Monday, comes just two days before the unveiling of the budget 2024-25 Wednesday.
Prime Minister Shehbaz Sharif chaired the meeting while chief ministers of all four provinces participated in the four-hour-long meeting, the Dawn newspaper reported.
The meeting approved a more than 47 per cent increase in the federal Public Sector Development Programme (PSDP) to Rs 1.4 trillion compared to the current year’s Rs 950 billion.
The Rs 1.4 trillion total federal PSDP would also include foreign financing of Rs 316 billion.
The federal development programme goes up by 58 per cent or Rs 1.5 trillion if other Rs 100 billion public-private partnership (PPP) projects are included.
Another Rs 197 billion investment would be made by state-owned entities in development activities, taking the total size to Rs 1.697 trillion.
The NEC also approved provinces’ cumulative annual development plans worth Rs 2.095 trillion and agreed to continue funding the ongoing high-priority provincial projects with over 80 per cent completion status with a reciprocal view to discourage such projects from reaching the federal budget in future.
The federal PSDP is even 15-23 per cent higher than Rs 1.221 trillion approved by the Annual Plan Coordination Committee (APCC), led by Deputy Chairman of Planning Commission Jehanzeb Khan, a few days ago.
The NEC also made a fresh allocation of Rs 75 billion for the controversial parliamentarians’ schemes called the “Sustainable Development Goals Achievement Programme” almost 23 per cent higher than the revised expenditure of Rs 61 billion under this head during the current year.
These constituency-based schemes are considered a bane of development as local lawmakers are authorised to allocate funds for development projects and successive governments promised to abolish them but without any success.
The expansionary public investment stance will come under tight scrutiny by the International Monetary Fund (IMF) as the authorities continue negotiations for a USD 6-8 billion bailout for over three years.
The NEC also agreed to increase the economic growth rate to 3.6 per cent from the current 2.4 per cent. The growth target would be supported by 2 per cent growth in agriculture, 4.4 per cent in the industrial sector and 4.1 per cent in services.
The growth prospects are subject to “political stability, exchange rate stability on the back of improvement in external account and external inflows, macroeconomic stabilisation under IMF’s programme and expected fall in global oil and commodity prices”, the Planning Commission said.
The scheduled repayments of external debt will pressure forex reserves and exchange rates. However, a positive outlook of remittances, exports and external inflows will mitigate these pressures, it said.
