Pakistan government to phase PSDP over 3 years to meet IMF requirements
Pakistan's Plan to Revamp Public Sector Development Programme
The Pakistani government has announced a new strategy to manage its Public Sector Development Programme (PSDP) over the next three years. This plan aims to complete high-priority projects on time and align with the International Monetary Fund (IMF) requirements.
Phased Approach and IMF Conditions
Under the USD 7 billion Extended Fund Facility (EFF) from the IMF, Pakistan plans to reduce its Rs 9 trillion development portfolio. A meeting led by Planning Minister Ahsan Iqbal highlighted that, at the current pace, the PSDP would take over 14 years to complete. The government will conduct a "one-time review" of all approved projects to focus on those that can be finished quickly.
Increased Review Frequency
The review frequency for this year's PSDP will increase from biannual to quarterly. A strategy will be developed to introduce new projects in the next fiscal year, aligning with government priorities. The government must submit a report on the PSDP review as part of the IMF agreement.
Current Project Status
This year's federal PSDP includes 1,071 projects, but only 105 are nearing completion. These projects have been allocated Rs 37 billion. The portfolio also includes 85 foreign-funded projects worth Rs 260 billion. The PSDP required Rs 2.053 trillion, but only Rs 1.1 trillion was allocated to meet IMF requirements.
Spending and Utilization
Spending has been slow, with only 9 ministries using 11-18% of their funds in the first five months. As of November 20, only Rs 92 billion of the Rs 1.1 trillion budget has been used. The Ministry of Finance has set a release mechanism to improve spending, recommending specific percentages for each quarter.
Future Project Criteria
The Planning Commission has introduced criteria for selecting future projects, focusing on economic and financial viability. The IMF has set a benchmark for January 2025, requiring the government to publish project selection criteria and limit new project sizes. Public financial management reforms are also recommended to improve budget discipline and transparency.
Doubts Revealed
IMF
IMF stands for International Monetary Fund. It is an organization that helps countries by providing financial support and advice to improve their economies.
Public Sector Development Programme (PSDP)
The Public Sector Development Programme is a plan by the government to spend money on projects that help improve the country, like building roads, schools, and hospitals.
Rs 9 trillion
Rs 9 trillion is a very large amount of money in Indian Rupees. It is used here to describe the total cost of all the projects in the development plan.
USD 7 billion Extended Fund Facility
The USD 7 billion Extended Fund Facility is a type of financial help from the IMF, where they give money to a country to support its economic plans.
Planning Minister Ahsan Iqbal
Ahsan Iqbal is a government official in Pakistan who is responsible for planning and overseeing development projects in the country.
Planning Commission
The Planning Commission is a group in the government that helps decide which projects should be done to improve the country and how to spend money on them.
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