Ministries face severe budget cuts

ISLAMABAD:

The cash-strapped government has proposed a sharp reduction in the development budget allocation for ministries in the next financial year compared to the original spending plans for the coming year, but has retained 40 billion rupees for parliamentarians’ projects despite budgetary constraints.

The Department of Planning and Development has issued indicative budget caps for dozens of federal government divisions for the 2022-23 fiscal year, along with instructions to make no allocations for various ongoing projects due to space. limited budget.

Ministries have been asked to carefully allocate the indicated resources among individual projects and submit their recommendations by Monday for approval by the Annual Plan Coordinating Committee (APCC), which will meet on June 4.

The ceilings were set against the proposed budget of 800 billion rupees for the next financial year, which is 11% lower than the initial budget for the outgoing financial year, but 60% higher than the revised development budget.

For the current financial year, the previous government had earmarked 900 billion rupees, which has now been reduced to 500 billion rupees due to the projected budget deficit of 5.6 trillion rupees.

The government has proposed 40 billion rupees for the programs of parliamentarians under the Sustainable Development Goals (SDGs) program. The allocation was capped at the revised budget of the outgoing fiscal year, but is Rs 28 billion lower than what the last PTI government originally allocated.

However, the Ministry of Planning has recommended the new government to abolish the SDG program, as the money is spent on provincial-nature projects and the federal government should not pay such bills due to limited fiscal space. .

Interestingly, the government has asked ministries that all provincial conservation programs be discouraged from next year’s Public Sector Development Program (PSDP) funding and that provincial governments be encouraged to take responsibility for these programs.

There are 326 projects that are provincial in nature, which still require Rs 97 billion more to complete.

Planning Minister Ahsan Iqbal has declared a dozen priority programs for development spending over the next year, with e-governance and the development of information technology entrepreneurs being the top priority.

Other areas that have been identified are venture capital funds, productivity improvement, metro bus project for Rawat and Baraku, port city of Gwadar and dredging of Gwadar port.

Women entrepreneurship, national police hospital, Islamabad water supply and skills development are also declared as priority projects.

The government has proposed 50 billion rupees for the Power Division, down 28% from the original budget for FY22 but above the revised estimate. The Power Division’s revised development budget for the outgoing fiscal year is Rs 46.5 billion.

The government has proposed 120 billion rupees for the National Highway Authority (NHA), down 6 billion rupees from the initial allocation for the outgoing year. But the proposed budget is 33 billion rupees, 38% more than the revised budget. The NHA had requested 500 billion rupees for the next financial year.

The Ministry of Industries has been given a ceiling of Rs 3 billion, which is the level of the initial budget for the current year.

A significant reduction has been proposed for the Ministry of Finance which mainly funds provincial nature projects, such as the Karachi programs. Against the initial allocation of 69 billion rupees, the government offered 1 billion rupees to carry out work also on the ministry’s own projects.

An additional Rs 40 billion has been proposed for development activities in the merged Khyber-Pakhtunkhwa districts and other provincial nature projects, compared to Rs 54 billion. Cumulatively, the budget of the Ministry of Finance has been reduced from 123 billion rupees to 41 billion rupees, a reduction of 82 billion rupees or two-thirds of the original allocation.

The government has proposed Rs 30 billion for the Higher Education Commission (HEC), which is only 44% of this year’s initial allocation, which may force HEC to cut many grant schemes.

The Ministry of Information and Broadcasting will receive 2 billion rupees which is more than the initial allocation for this year.

The share of the Ministry of Housing and Public Works has been reduced from Rs15 billion to Rs10 billion. Many provincial conservation and road projects fall under the Department of Housing.

The Ministry of Maritime Affairs will receive 2.3 billion rupees, half of this year’s allocation.

The Poverty Alleviation and Social Development Division could get 750 million rupees for development activities, a quarter less than the original budget for the outgoing fiscal year. The government has also ordered that new small projects with expenditures below 10% cannot receive funding in the next fiscal year.

Eighty-five PSDP projects received less than 10% funding. Their total cost is 504 billion rupees, while 266 billion rupees have already been spent on them.

Another 371 programs have an estimated value of 1.7 trillion rupees, but they have not received any funding.

He also ordered to abandon all non-performing projects that have not received any funding in the past three years.

Published in The Express Tribune, May 28e2022.

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