Islamabad:
The federal government spent only Rs 76 billion on development projects in the first four months of this fiscal year, equivalent to a quarter of the funds approved by the Ministry of Planning.
Development expenditure remained at Rs 76 billion, against the authorization of Rs 301 billion under the Public Sector Development Program (PSDP) 2023-24, the Ministry of Planning said on Wednesday.
The significant gap between approval and actual spending highlights challenges in the process of releasing funds, the slow progress of programs and the ability to spend allocated funds. The deliberate slowdown in development spending aims to offset higher current spending.
The Rs76 billion in spending represented 8% of the annual budget, causing delays in critical projects but offsetting budget slippages in other sectors. During recent review talks, the International Monetary Fund (IMF) cut its forecast for Pakistan’s development expenditure to Rs782 billion, Rs168 billion short of the National Assembly’s approved allocation.
The sources said that according to the IMF’s projections current expenditure for the financial year may reach around Rs 14.6 trillion, an increase of Rs 1.24 trillion. The global lender kept its overall primary balance target at 0.4 percent of GDP, or Rs401 billion, calling for significant revenue efforts and subsidy cuts. Overall, the IMF projected a fiscal deficit of Rs 1.23 trillion against the plan approved by the National Assembly in June.
The IMF has deemed Pakistan’s PSDP “unaffordable” due to limited fiscal space, noting a total cost of Rs12 trillion to complete approved projects, taking more than 14 years.
The Planning Ministry report showed that 36% of the total expenditure in four months, or Rs 27.2 billion, was allocated to programs of MPs. The last PDM government approved an expenditure of Rs 61.3 billion on these programmes, but the caretaker government slowed down the process. The annual budget is Rs 90 billion.
The interim government has also set up a steering committee to approve MPs’ plans, a move that may raise many eyebrows.
Finance Minister Imdadullah Bosal said last week that funding for MPs’ programs will be aligned with Election Commission of Pakistan (ECP) guidelines.
Reading: LG members urge ECP to lift ban on development projects
Low disbursements adversely affected the country’s foreign exchange reserves due to less than expected foreign borrowing for development schemes. For the current fiscal year, the government estimated to release 75 billion rupees in foreign loans, but disbursements reached only Rs 26.2 billion in four months.
As per Finance Ministry guidelines, PSDP expenditure can be equal to 35% of the annual budget of Rs 333 billion in the first half of the financial year. At the current rate, the government would hardly reach even Rs 200 billion.
A Planning Ministry official said the spending figure improved to over Rs 100 billion as of this week, but still did not match the pace required to spend the entire development budget.
Apart from the Sustainable Development Goals (SDGs), an acronym used for MPs’ programmes, spending did not exceed the limit in almost all ministries.
Development budget appropriations for provinces, special areas, Azad Jammu & Kashmir and Gilgit-Baltistan were affected in the first four months. Against the annual allocation of Rs 170 billion, only Rs 26 billion was spent, the second largest expenditure item after MPs’ schemes.
Spending on Pakistan Atomic Energy Commission (PAEC) projects slowed. The National Transmission and Distribution Corporation (NTDC) and PEPCO spent Rs 2.3 billion on its projects against the annual allocation of nearly Rs 56 billion.
Read more : Sindh, Balochistan get 15 new schemes in PSDP
The National Highways Authority (NHA) has an annual budget of Rs 157 billion. The planning ministry approved expenditure of Rs 42 billion, but actual expenditure remained only Rs 9.3 billion.
There was only Rs250 million in expenditure against the Rs80 billion special program for the Prime Minister’s initiatives. The interim government has stopped these publications, which former prime minister Shehbaz Sharif had set aside for projects of his liking.
Published in The Express Tribune, November 23rd2023.
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