News
Thursday, May 19, 2011
Limited fiscal space to lower allocation for critical projects
By Sajid Chaudhry
ISLAMABAD: Due to the limited fiscal space available with the federal government for the next financial year, 2011-12, many critical projects of national importance, including the Diamer-Bhasha Dam and Mangla Upraising projects, would not be getting proper allocations.
It is learnt that demands of the FATA, Gilgit-Baltistan and Azad Jammu and Kashmir are also not being fully entertained due to the financial constraints. Due to the non-availability of counterpart funding by the federal government, the country would remain unable to utilise foreign assistance of Rs 40 billion for the power projects as well as flood reconstruction projects. Details of the resource constraints were presented to the Annual Plan Coordination Committee (APCC). In the details, it was informed that against the indicative Public Sector Development Programme (PSDP) size of Rs 280 billion for 2011-12, ministries and divisions had demanded Rs 486 billion. Owing to the tight fiscal space, ministries and divisions have not been able to allocate sufficient funds for several projects.
A sum of Rs 18 billion is required in 2011-12 for land acquisition for the Diamer-Bhasha Dam project. To complete the Mangla Upraising project and impound water during the next rainy season, Rs 13 billion is required. Owing to the limited fiscal space, credit requirements for projects like Chashma Nuclear (C3C4), satellite programme of the Suparco cannot be met fully. Adequate rupee cover cannot be provided to utilise estimated foreign assistance for the fiscal year 2011-12, which include increasing volume of flood reconstruction project assistance. Inadequate funds are available for the Ministry of Interior's important security related projects like Safe City. Funds demanded by FATA, Gilgit-Baltistan and Azad Jammu and Kashmir cannot be met fully.
For the power sector projects the indicated foreign aid of about Rs 40 billion cannot be budgeted fully because of the non-availability of fiscal space. Insufficient funds have been provided for water and national trade corridor projects. The government also lacks adequate funds for its initiatives, especially in the area of water and power. Critical transport sector projects for providing up-country link to Gwadar Port have not been fully funded.
Informed sources said that the National Economic Council (NEC), which is expected to meet on May 23, would look into these factors and authorities strongly feel that the projects identified might get additional allocation for the next fiscal year.
Courtesy www.dailytimes.com.pk