Completion of CPEC Projects Top Priority for Regional Connectivity: Ministry

By Karim Madad

ISLAMABAD, June 22, (INP-WealthPK): The government will give priority to the completion of the road, railway, aviation and port projects, especially those under the China-Pakistan Economic Corridor (CPEC), to ensure regional connectivity and smooth logistic movement, according to the medium-term budget strategy paper 2022-23 released by the Ministry of Finance.

The strategy paper, available with WealthPK, says that substantial funding will be ensured for the timely completion of important projects. The government also gives equal importance to the social sector including health and higher education.

To promote the culture of innovation and research, the government has initiated a number of programmes in the information technology and science and technology sectors under the knowledge economy initiative for which substantial funds will be required in the next fiscal year.

The paper says that the private sector will be encouraged to invest in potential disciplines. To ensure self-sufficiency in food and productivity enhancement in the country, programmes involving agriculture emergency input and special economic zones have been initiated.

The medium-term indicative budgetary spending levels are based on the policy priorities of the government. The government has been following the medium-term budgetary framework for performance-based budgeting to ensure service delivery outcomes.

The medium-term spending levels will be finalised keeping in view the targets achieved as outlined in “Green Book” as per the Public Finance Management Act, 2019. Over the years, spending on civil government and pension has increased. To break this trend, the government is working to reduce non-development expenditures as a proportion of the budget and bringing reforms in the pension payment system.

Since the pension bill is becoming unsustainable, the government has to revisit the pension policy as a whole, particularly the family pension, to control the leakages and misappropriation of public money. The government has introduced various reforms including biometric for proof of life and conversion to direct credit system (DCS) for all the civil and military pensioners.

Regarding subsidies, particularly in the power and petroleum sectors, the paper says that government has to review the whole scheme and offer targeted subsidies to the vulnerable segments of society. The government has to control the circular debt issues in the power and petroleum sectors.

Similarly, regarding grants-in-aid to various organisations and entities, the government is framing rules and procedures to control and manage the increasing recurring allocation of funds.

Indicative spending level for public sector development programme during the medium-term period would range between Rs700 to Rs900 billion, says the paper. It adds that provisions of the Public Finance Management Act will be followed to approve development projects.

Highlighting major expenditure priorities of the government, the paper says that vulnerable segments of society will be protected through the Benazir Income Support Programme, reduction of inflation and price control mechanism, financing of circular debt and energy subsidies.

The paper says that the debt to GDP ratio will increase to around 72.4 percent at the end of the ongoing fiscal year owing to the higher federal fiscal deficit and depreciation of the rupee against the dollar. However, the ratio is expected to reduce to 69.1 percent at the end of the next financial year owing to the fiscal consolidation efforts of the government.

Regarding the medium-term objectives, the paper says that government will bring its public debt to GDP ratio to a sustainable level through a combination of greater revenue mobilisation, rationalisation of current expenditures and efficient utilisation of debt.

It says that the government also intends to reduce its Gross Financing Needs (GFN) through various measures. The measures include better cash flow management through a treasury single account, lengthening of maturities in the domestic market keeping in view cost and risks trade-off, developing regular Islamic-based lending programme, and availing maximum available concessional external financing from bilateral and multilateral development partners to benefit from concessional terms and conditions, WealthPK has learnt.