The Annual Plan Coordination Committee (APCC) has greenlit a substantial National Development Plan (NAP) exceeding Rs3 trillion for 2024-25. This ambitious plan aims to propel economic growth to 3.6 percent, a significant leap from the previous year’s 2.38 percent. The federal Public Sector Development Programme (PSDP) has been bolstered with an allocation of Rs1.221 trillion, a robust 30 per cent increase compared to the current year’s Rs950 billion. This surge in development spending is a strategic move to invigorate economic growth and tackle fiscal constraints head-on.
In addition to the PSDP allocation, the power sector is set to receive an additional Rs185 billion, bringing the federal development spending to Rs1.406 trillion. The NAP also includes provincial Annual Development Plans (ADP), with Punjab allocated Rs700 billion and Sindh allocated Rs763 billion. Khyber Pakhtunkhwa has separately announced a Rs627 billion ADP, while Balochistan’s ADP was not addressed during the APCC meeting, indicating a total estimated national development spending of over Rs3.5 trillion.
However, the federal government has made notable changes in its allocations, with a significant reduction in social sector funding by 59 per cent to Rs83 billion. This reduction reflects a shift in responsibilities to the provinces, while federal investments in infrastructure and Science & Technology have been increased by 60 percent and 148 percent, respectively.
The federal PSDP has earmarked the largest share, Rs378 billion, for the energy sector, a staggering 212 per cent increase from the previous year. The water sector has also received a significant boost with an allocation of Rs284 billion, a 92 per cent surge. However, the transport and communication sector will see a decrease in funding, with an allocation of only Rs173 billion, a 29 per cent drop from the current year.
Furthermore, the federal government has reduced funding for the health and education sectors, with allocations slashed by 35 per cent and almost 62 per cent, respectively. The allocation for Sustainable Development Goals (SDG) has been abolished for the next year, while governance funding has seen an increase of 38 per cent.
The growth target for 2024-25 has been set at 3.6 per cent, supported by growth in agriculture, industrial, and services sectors. However, the agriculture sector’s growth is expected to contract by 2 per cent due to dry weather and inadequate water availability. The industrial sector is projected to grow by 4.4 per cent, while the services sector is expected to grow by 4.1 per cent.
The government’s strategic goals for 2024-25 are to increase the investment-to-GDP ratio and national savings, while implementing fiscal consolidation measures to narrow the fiscal deficit. Monetary policy will be calibrated to align with inflationary expectations and growth revival, with an anticipated moderation of domestic average inflation to 12 per cent next year.
Despite expected challenges such as a widening current account deficit and pressure on forex reserves and the exchange rate, the government remains optimistic about mitigating these pressures through positive outlooks for remittances, exports, and external inflows.
