The government working reveals Rs 50 billion cut in Public Sector Development Programme (PSDP), in addition to the Rs200 billion cut from the budgeted Rs 900 billion already agreed with the International Monetary Fund (IMF), for a cut in petrol, diesel and electricity prices announced by the Prime Minister.

An official on condition of anonymity said that prime minister’s relief package for slash in petrol and diesel prices by Rs10 per litre and electricity per unit price by Rs5 till next budget is estimated to cost between Rs 250-300 billion.

Spokesman of the finance ministry confirmed to this correspondent that a complete working was done by the economic team in this regard.

Another official stated that the package would be financed from Rs 40-50 billion slash in PSDP, reallocation of part of the Rs 120 billion envisaged for the ration card programme, the unspent amount of Covid stimulus package and a higher than budgeted provincial surplus.

He further contended that the provincial government of Punjab, Khyber Pakhtunkhwa and Baluchistan are not expected to fully utilize the development budget for the current fiscal year therefore the provincial surplus is expected to be more than budgeted for the current fiscal year.

Additionally, he said rebasing would provide some cushion on fiscal side that would help the government to achieve the fiscal deficit to the level agreed with the Fund.

In reply to a question whether the IMF would support these measures, he said that “we expect that the Fund would understand the emergency situation after the Ukraine war.”

The story was originally published in Business Recorder on March 2, 2022.