The cement sector is looking forward higher allocation of PSDP in FY23-24

The Annual Plan Coordination Committee (APCC) of Pakistan's government has recommended PKR2.659trn (US$9.27bn) of national development outlay for the next budget 2023-24, including a federal Public Sector Development Programme (PSDP) of PKR1.1trn and a provincial allocation of PKR1.559trn. 

Minister for Planning Ahsan Iqbal told journalists that Prime Minister Shehbaz Sharif directed the Ministry of Finance to increase the PSDP size from PKR700bn to PKR950bn for the upcoming budget and PKR150bn funds for the execution of projects under Public Private Partnership (PPP) so total size of the PSDP was proposed to be increased up to PKR1100bn. 

Likewise, according to Topline Research, the government is expected to set a PSDP target of PKR1trn for FY23-24. To recall, the government, in the last budget, had set a PSDP target of PKR727bn for FY22-23. Actual disbursement in 9MFY23 has stood at around PKR428bn to date. 

However, experts believe that actual disbursement this year could also be lower than the budgeted amount. The research house expects that contained PSDP allocation and other fiscal tightening measures will keep sector demand in check and cement sales to remain flat YoY in FY23-24.

Federal Excise Duty (FED) on cement will likely remain unchanged. The analyst hoped and said the government would not change the FED in this budget, given slow demand and already high cement prices. The current FED on cement is PKR2/kg.