Finance

Pakistan’s PSDP Spending Reached Rs681 Billion During The Period July-May

The government has slashed the development budget by Rs85 billion and has allocated a spending amount of Rs681 billion during the period July-May of the current fiscal year. Against an overall allocation of Rs800 billions of Public Sector Development Program (PSDP) budget, 85% of the total amount has been disbursed during the first 11 months.

The cut in the development budget seems ironic since the foreign exchange flowing in for developmental programs has turned out to be higher than expected. In addition, the loans and grants were estimated to be Rs229 billion during last year’s budget. However, the actual flows were Rs262 billion for the whole year.

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Energy and construction are the two major domains under China-Pakistan Economic Corridor (CPEC) that have already spent their entire year budget allocations in only 11 months. According to the official figures of the Planning Commission (PC), some of the power projects and National Highway Authority (NHA) have spent Rs323.5 billion as compared to their total budget of Rs322.87 billion for the entire year.

Although NHA was allocated an amount of Rs192 billion for the construction of roads and highways under the CPEC program but the government released Rs193.7 billion. Similarly, WAPDA power has also exhausted their annual budget in 11 months reaching Rs129.8 billion against a total of Rs130.87 billion.

The financing flows from foreign countries have been significantly higher than projections specially the receipts from China. The highway authority was allocated a foreign exchange amount of Rs61.3 billion but received a total funding of Rs78 billion.

Another area where total allocations were higher than budgeted allocations was Azad Jammu and Kashmir. This region was given an amount of Rs15.65 billion versus their budget of Rs14.7 billion for the entire year.

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Additionally, allocations for FATA and Gilgit-Baltistan were also consumed significantly during the first 11 months. The former was given an amount of Rs10.8 billion against the budget of Rs11.15 billion whereas the latter received a funding of Rs21.5 billion versus the budget of Rs22.3 billion.

Inclusion of impractical projects in PSDP resulted in higher spending and delayed implementation

Due to lack of coordination between the Planning Commission and the government, numerous projects could not materialize during the outgoing year. Many projects were included in the PSDP without adequate planning, lack of feasibility analysis and absence of approvals from PC.

Many programs were included in the development program last year which lacked approvals from PC. Therefore, it was forced to include to re-allocate funds for more than 200 projects. Interestingly, Rs1.6 trillion worth of schemes have been part of the budget without any relevant paperwork.

Unfortunately, many entities received more than their due amount such as Pakistan Railways which received an allocation of Rs56 billion as compared to its budgeted amount of Rs41 billion. Similarly, many political schemes spent Rs42.5 billion way above their budget of Rs20 billion.

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Although the current government made many promises not to allow unapproved projects to enter the PSDP program in order to prevent wastage of resources but the reality was otherwise. As per official documents:

“The PSDP 2016-17 included 225 unapproved projects worth Rs1.626tr having an allocation of Rs93bn for 2016-17”

The Planning Commission said that despite sending several reminders and requests to the relevant ministries to speed up the submission of documentation, they did not receive any approvals. PC also said:

“Despite these efforts, 77 projects of 19 ministries – out of a total of 35 ministries – were still unapproved as of May 10”

Consequently, PC has made several adjustments in the PSDP and included 101 slow-moving projects into the fast-track section. Nonetheless, despite its earlier decision not to include any more projects, PC still hopes for the completion of 145 projects worth Rs68 billion by the end of this year.

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