Prime Minister Anwaarul Haq Kakar on Monday asked provinces to take responsibility of 75 projects to save the centre from a financial burden of Rs200 billion amid reservations expressed by the federating units about the mandate of an interim government to make such decisions.
Despite the transfer of 75 schemes, the federal government will keep the ownership of 282 provincial-nature projects that will require Rs800 billion more to complete work on them. The federal government has already spent a huge sum of Rs366 billion on these projects.
The interim prime minister chaired a meeting of the National Economic Council (NEC) – the constitutional forum responsible for making decisions on macroeconomic and development plans, which was also attended by three provincial chief ministers except for Punjab.
The NEC asked provinces to take over 68 projects costing Rs121 billion and placed a ban on further spending on parliamentarians’ schemes and the prime minister’s initiatives. These three steps will save the centre a cost of Rs202 billion, including Rs112 billion during the current fiscal year.
Nonetheless, the chief ministers of Sindh and Khyber-Pakhtunkhwa (K-P) raised questions over the mandate of the caretaker government to make financial decisions having long-term implications, said the government officials who attended the meeting. They said that the chief minister of Sindh also cited Section 230 of the Election Act that limited the role of the caretaker government.
The NEC, however, approved guidelines for the preparation of fiscal year 2024-25 development budget, barring any allocation for provincial-nature projects and placing a moratorium on approving projects having operational and maintenance costs.
An official statement from the PM Office stated that the NEC approved the recommendations of the Special Investment Facilitation Council (SIFC) for the closure and transfer of provincial projects funded by the federal government. The SIFC had recommended that the provincial projects where so far no money had been spent should be either closed or transferred to the provinces. Similarly, the SIFC also banned further spending on parliamentarians’ schemes and PM’s initiatives.
The NEC endorsed the recommendations except for two education-sector projects, said the PM Office.
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During the meeting, the interim PM questioned the financial integrity of government officials involved in project processing, approval, and release of funds and award of contracts, according to the sources.
Despite the reservations expressed by the provincial governments, the PM, being the NEC chairman, decided that the federal government would not implement all provincial projects with zero financial progress. There was an allocation of Rs32.5 billion for 68 projects having total cost of Rs118 billion. The NEC decided that the remaining Rs28.8 billion would not be released for the parliamentarians’ schemes out of the annual allocation of Rs90 billion for the current fiscal year. Savings of Rs28.8 billion will be diverted to other important projects, especially where additional foreign components are required. The spending under the PM’s initiatives will be capped, which will save another Rs53 billion.
It was decided that the federal government would complete 282 ongoing projects to avoid the wastage of investment already made and due to possible legal and contractual issues.
Sources said that the government of Balochistan was of the view that the federal funding of all ongoing projects should continue. The K-P government insisted that the decisions on closure and transfer of projects should be taken by the elected government.
The Sindh government also expressed similar views and opposed the transfer of projects except the parliamentarians’ schemes. But the SIFC and the federal government were of the view that due to the shrinking fiscal space of the federal government and to free up resources for critical needs, the federal funding had to be choked for provincial projects.
The NEC approved new guidelines for the inclusion of new projects and allocations under the Public Sector Development Programme (PSDP) 2024-25, starting July. It agreed that funding priority should be given to strategic and core ongoing projects, with particular focus on water resources, transport, railways, communications, and energy sectors. It also approved that the funding priority should be accorded to projects with over 80% expenditure in all sectors with the aim of completing them during FY 2024-25.
