Pakistan’s economy has been hit by rapidly dwindling foreign exchange reserves, the International Monetary Fund (the IMF has shown little sign of recovery despite resuming an extended credit program for the country), which the UN Secretary-General Antonio Guterres was hit hard by the persistent flooding dubbed the “Monsoon on Steroids”. “
This fueled speculation that the government may have to make further cuts in the proposed annual Public Sector Development Program (PSDP).
Federal Minister for Planning and Development Ahsan Iqbal, said that despite the difficult economic situation of the country, there will be no cut in the federal development program.
The federal minister said the PSDP spending has already shrunk to Rs700 to Rs800 billion compared to around Rs1 trillion in 2018. He said the PSDP spending should have doubled in the last four years.
If the government put further cuts in the PSDP program it would mean reducing more development activities which would not suitable, the minister said adding that the government is making efforts to re-appropriate resources to provide funds for flood-affected areas and rebuild infrastructure.
The minister also promised that the annual will not fall below 3 percent.
“Despite the devastating floods, the growth rate will fall below 3%,” he assured.
Last week, the Asian Development Bank revised downwards forecasted growth rates for Pakistan due to record floods and other policy measures which would slow growth to 3.5%.
According to a revised outlook issued by the ADB, Pakistan had higher growth of 6% in the fiscal year (FY) 2021-22 due to higher private consumption and an expansion in agriculture, services, and industry — particularly large-scale manufacturing.
But in FY2022-23, the forecast said that Pakistan adopted stringent monetary policies to control inflation, fast depleting reserves, and a widening deficit but also major “climate headwinds”. All of these have contributed to lower than previously projected growth rates.
While lambasting the predecessors, Ahsan Iqbal said the Council of Common Interest (CCI) had approved National Flood Protection Program with the help of Dutch consultants in 2017.
Instead of taking this program forward, Imran Khan did not invest a single penny in it. Had the previous government invested some resources in a few projects, the scale of devastation by the floods would have been a lot less catastrophic.
