The National Economic Council (NEC) meeting today will not only be limited to approving development projects but will also outline the key features of Pakistan’s future economic strategy. The government has to take fiscal decisions at a time when development needs, political demands and the IMF’s stringent fiscal targets appear to be at odds with each other.
According to sources, the meeting will review the overall federal and provincial development programme of Rs Rs4.715 trillion. Although the Annual Plan Coordination Committee (APCC) has already approved the development proposals, there is a possibility of significant changes in these figures in the National Economic Council meeting.
According to economists, the biggest question is how the government will control the fiscal deficit while increasing development spending. Pakistan has committed to maintaining a primary budget surplus of about 2 per cent of the gross domestic product with the IMF, for which both the federation and the provinces will have to demonstrate fiscal discipline.
Sources say that the federal government is trying to get more resources for the public sector development programme. For this reason, a proposal to increase the initially approved PSDP of Rs 1.126 trillion to Rs 1.3 trillion or more is under consideration. On the other hand, reports of a possible reduction in the development budget of the provinces are also emerging.
The latest monitoring report of the Planning Commission highlights another important aspect of the situation. According to the report, a large number of ongoing development projects in the country could not be completed within the stipulated period. About 79 per cent of the projects are delayed, while the cost of one in every four projects has increased from the original estimate. This trend not only puts an additional burden on the government exchequer but also delays the development benefits reaching the people.
The government has set a GDP growth target of 4 per cent for the next fiscal year. To achieve this target, 3.8 per cent growth has been expected in the agricultural sector, 4 per cent in the industrial sector and 4.2 per cent in the services sector. However, experts warn that these targets are linked to the global economic situation, energy prices and the stability of the external sector.
The Planning Commission has also expressed concern in its forecast that the easing of import restrictions and repayment of external debts may increase pressure on the current account in the coming fiscal year. If exports and remittances do not grow at the desired pace, the external sector may face new challenges.
According to economic analysts, today’s NEC meeting is not just a forum for approving development projects but is also a test of how well Pakistan is able to balance growth, fiscal discipline and political priorities. The decisions of the meeting will determine the economic direction of the coming fiscal year.
