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PSDP approval

The Chief Ministers of three small provinces boycotted the meeting of the National Economic Council (NEC) chaired by the Prime Minster Shahid Khaqan Abbasi on Tuesday, which approved Rs. 1.o3o trillion federal development budget for the next fiscal year. However a top official of the ministry of finance made a counter claim after the NEC meeting the ministry would not fund such an ambitious Public Sector Development program. The ministry can marginally increase the federal cabinet approved development budget worth Rs. 800 billion by raising its ceiling to Rs.830 billion.

It was the most chaotic NEC meeting held in the country’s recent history in which three provinces took a hard stance against the federal government, while the finance and planning ministries were also not on the same paged over the total outlay of PSDP. Sindh Chief Minister Syed Murad Ali Shah, KP Chief Minister Pervaiz Khattak and Baluchistan Chief Minister Abdul Qudus Bizenjo took a unanimous stance that federal government did not have the mandate to present next year budget when its term is ending on May 31. The Sindh Chief Minister opined that the approval of PSDP without the consensus of all federating units is unconstitutional. They also objected to the federal government decision to include new schemes in PSDP for the financial year 2018-19. Their other objection was against initiating new projects in those areas of Sindh and KP wherefrom members of PML-N and its allied parties were elected in the last general elections.

After boycotting the NEC meeting the provincial Chief Ministers addressed a hurriedly- called  press conference and put a question mark on the constitutional authority of the NEC to approve PSDP in the absence of majority of its members. They were of the view that majority of 13 NEC members were absent from the meeting. Even Federal Minister for Industries Ghulam Murtaza Jatoi did not attend the meeting to the embarrassment of the federal government.

The Chief Executive of the country should have abided  by the constitutional legality and accepted the point of view of the finance ministry about the financial constraints and have not bulldozed the approval of politically motivated development budget by conceding the contention of the planning minster. The finance ministry has rightly opposed the size of the PSDP worth Rs. 1.030 trillion for the next year. The federal cabinet has already approved Rs. 800 billion ceiling for development budget for the next year the greater part of which will have to be financed from external sources. The outlay of federal PSDP should have been approved within in the same parameters.

Debt servicing has become the top most major head of expenditure as it consumes 45 percent of the annual budget. In 2016, the debt servicing liability was Rs. 10.3 trillion which rose to Rs. 15 billion in 2017 and it will tremendously rise at the closing of current year. In the past 10 years the previous and the present government substantially slashed the allocations of PSDP because of emerging financial constraints. Advisor to the Prime Minster on Finance has attended the meeting of World Bank and International Monetary Fund (IMF) but it is not clear wheather he has got any firm commitment of fresh bail out package to meet the external payment liabilities. Pakistan’s public debt in terms of the total size of the economy has jumped to 15 years high and stands 70.1 percent of the GDP. The high ratio of public debt violates the limit of 60 percent set by the Fiscal Responsibility and Debt Limitation Act, 2005. The burden of the public debt has become unsustainable and the size of PSDP should have been planned in anticipation of resources that can be arranged from domestic and external sources on concessional terms and conditions.

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