By Samia Khalid ISLAMABAD, May 31 (INP-WealthPK): The Ministry of Planning (MoP) is to preferably fund projects of national importance under the Public Sector Development Programme (PSDP) in view of fiscal constraints, reports WealthPK. According to the MoP, the government may allocate Rs800 billion for the PSDP, including Rs100 billion in foreign financing for the schemes in the fiscal year (FY) 2022-23, but a final decision depends on the talks with the International Monetary Fund (IMF). PSDP is being examined and rationalized due to fiscal restrictions. As a result, the MoP is considering allocating PSDP funds only for the mega projects of national importance for FY 2022-23. It has also been decided that provincial nature initiatives are delegated to the local governments. Furthermore, more projects would be added to the PSDP depending on availability of funds. The government may seek an additional Rs300 billion in funding via a public-private partnership model, bringing total spending for the FY 2022–23 to Rs1.1 trillion. The Ministry of Finance has already cut the ongoing FY2021-22 PSDP to just Rs500 billion, as the country is heading fast on a path that could take it economically down. The MoP is considering a cut in federal development spending because the focus of the government has shifted towards macroeconomic stability due to the rising fiscal and current account deficits. Moreover, access to the IMF credit facility with its attached conditions has become a necessity. Similarly, it has also been decided that in cases where foreign funding is not available or delayed, all such schemes should be dropped from the PSDP. The MoP has also presented a report to the National Economic Council (NEC) requesting that no new federally supported provincial projects be approved unless they are in the designated underdeveloped areas of the country. Currently, it is unclear if these abandoned projects will be handed over to the federating units this time. To guarantee that the money spent on these initiatives is not wasted, provinces can pick and choose from the plans and define their own implementation priorities based on local socioeconomic requirements. It is also under consideration that instead of implementing federal projects in underdeveloped areas, the National Finance Commission (NFC) could be engaged to update the horizontal distribution of resources and distribute financial resources from the NFC divisible pool to underdeveloped areas. It is a standard practice that development investment is cut first whenever macroeconomic imbalances become untenable. One of the negative impacts of this practice is that it causes delays in project completion, increases project expenses, and compromises their financial sustainability. It also generates inconsistencies and holes in an integrated economic growth strategy.