Why Development Budget Needs A Raise
Why Development Budget Needs A Raise: The planning ministry has demand for development budget to Rs.1.3 trillion which is almost double the amount the government is ready to give for the next financial year.
Under Public Sector Development Program
“The Rs750 billion initial indicative development budget ceiling for fiscal year 2018-19 is not sufficient to meet needs of CPEC projects, water schemes and other strategic initiatives,” said Planning ministry official.
Lower budget will effect the ongoing development schemes and the planning ministry is not in a position to allocate funds for new projects. The planning ministry, however, wanted that at least Rs.200 billion should be reserved in the new budget so that the next government may finance projects of its choice. Initially the planning ministry had requested the finance ministry to allocate Rs.1.1 trillion. In order to keep the momentum of development activities, the allocation must match with demand.
An official of the ministry stated that out of the initially indicated Rs.750 billion, the net development budget was only Rs.640 billion. The remaining around Rs.105 billion was proposed for other programs, mainly for temporarily displaced persons (IDPs) affected by military’s operation against terrorists.
What Finance Ministry Has To Say
Keeping in view that “the planning ministry has now requested the finance ministry to earmark Rs1.3 trillion for the next fiscal year,” ministry of finance has proposed that the leaving government should not allocate funds for new development schemes and that should be left to the next government.
CPEC Financing Needs Stability
In recent years, Pakistan has become the largest recipient of Chinese concessionary financing including grants and cheap loans.
- issues related to financing of $2-billion Karachi Circular Railway (KCR) project and Mainline (ML-I) project had to be resolved by the executing agencies.
The Central Development Working Party (CDWP) delayed approval of the first phase of the ML-I project. Chinese consultants have estimated the cost of the first phase at $4.1 billion while Pakistan puts it at $3.4 billion.
Pakistan had to activate the diplomatic channels in order to resolve financing issues of CPEC projects.