Govt approves Rs1.1trn for development projects amid Rs2.9trn request by ministries

The federal government has sanctioned Rs1.1 trillion for the Public Sector Development Programme (PSDP) for the fiscal year 2024-25, against a demand of Rs2.9 trillion put forward by various ministries. 

This decision emerged from a session of the Prime Minister’s Committee for Planning and Execution of Foreign-Funded Development Projects, led by Planning Minister Ahsan Iqbal.

During the committee meeting, Iqbal directed the Economic Affairs Division (EAD) to refine budget requests in collaboration with the respective ministries. This revised proposal will be reviewed in conjunction with the Ministry of Finance to secure the necessary funding for development projects.

Currently, the PSDP is allocated Rs1,100 billion, including Rs220 billion in foreign funding to cover local currency needs. However, financial limitations have led to a tenfold increase in pending projects, exacerbating administrative and implementation challenges.

The discussion also covered the execution of foreign-funded projects and adjusting policy guidelines following the Economic Coordination Committee (ECC)’s recent decisions. It was noted that the disparity between limited resources and the growing demand for development projects poses significant challenges.

Minister Iqbal stressed the need for rigorous economic and financial justifications for all projects, particularly in light of current balance of payments difficulties. He also highlighted the necessity for a mechanism to mitigate financial strains and ensure effective implementation of projects.

Iqbal called for strict adherence to project timelines and clear project ownership to prevent cost and time escalations. He also emphasized managing the economic and financial risks linked to foreign-funded projects, as exchange rate fluctuations could significantly affect loan repayments and increase the fiscal burden.

The meeting was attended by Secretary Planning Awais Manzur Sumra, Secretary EAD, Member Infrastructure Waqas Anwar, and other senior officials. Federal Minister for EAD Ahad Cheema participated via video link.