ISLAMABAD: The federal government slashed development budget spending by 15 per cent to Rs442 billion during the financial year 2014-15.
Despite Finance Minister Ishaq Dar’s promise to protect development spending, the Ministry of Planning and Development did not release Rs83 billion from the Public Sector Development Programme (PSDP) budget of Rs525 billion approved by the Parliament.
The PSDP budget was slashed to offset the impact of shortfall in tax revenues after the Federal Board of Revenue missed its annual target by Rs229 billion. To counterbalance the impact on budget, the government also sold its remaining 42.5% shares in Habib Bank Limited for Rs102 billion as against its original plan to sell only 20% stakes.
The squeeze on releases came to meet the key condition of the $6.6-billion programme, which is to restrict the budget deficit to 4.9% of gross domestic product in fiscal year 2014-15. However, the government is set to miss the budget deficit ceiling target despite scaling back development spending.
The releases were even less than projected by the IMF that had estimated the development spending at Rs467 billion for the last fiscal year.
