After four months of sluggish releases, PSDP spending has finally picked up. Planning Commission’s data shows that PSDP disbursements had reached Rs143 billion as of December 6. Nearly Rs45 billion have been released by the government in five weeks since November 1. Nearly 77 percent of the funds were sourced from the Federal Government and the rest from foreign project aid.
But, even with this late push, disbursements are falling short of targets. As per the official funds release mechanism, up to 40 percent of the Rs540 billion PSDP have to be disbursed by December end. With a little over 3 weeks left till the half-year closes, just over 26 percent of the FY14 portfolio stood funded.
Major chunk of the released funding made its way to the regular, heavily-funded recipients like the WAPDA, National Highway Authority, special areas (FATA, AJK and GB), Pakistan Atomic Energy Commission, Railways, National Health Services division, Higher Education Commission and the ERRA.
That has left the rest of ministries and divisions under-funded. About 22 of the 39 Federal ministries and divisions have so far received less than 20 percent of their FY14 PSDP allocations, with some of them receiving even less than 10 percent of their allocations.
If the funds release process maintains this pace in next few weeks, over 30 percent of the PSDP portfolio can be expected to get funded by December end. Of course, that will still be below the 40 percent mark. But that depends on the government’s fiscal position.
In a recent interview with BR Research, Rana Assad Amin, the advisor to the Ministry of Finance maintained that the government had no intention to slash the PSDP budget. He attributed the funding slowdown (till start of November) to a hastily put together development budget that is being reprioritized by provincial governments, and a usually slow spending pace in early quarters by ministries and divisions.
He, however, pointed out that the government “had announced in the budget that Rs115 billion worth of (PSDP) disbursements in the final quarter will depend on FBR’s revenue collections. They are both linked.”
Interestingly, exactly Rs115 billion worth of funds happen to be allocated under the category of “New Development Initiatives” in the PSDP budget. These initiatives, which are assigned to the Planning and Development division for the Federal Government’s promised infrastructure projects, still remain unspecified in the official documents.
If that revenue-spending caveat holds (and it likely will, given FBR’s chronic underperformance), PSDP budget will be reduced by over 20 percent. In that context, the pace of PSDP spending so far does not look so bad!
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STATUS OF PSDP RELEASES IN FY14
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Rs (bn) Budgeted Released*
Foreign Foreign
Rupee Aid Rupee Aid
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Federal Ministries and Divisions 323.5 38.9 72.2 8.3
Corporations (NHA, Wapda (power) 49.9 64.6 19.1 21.1
Special Areas (Fata, AJK, GB, etc.) 44.8 3.3 15.6 2.2
ERRA 7.5 2.5 3.0 1.5
Tameer-e-Pakistan Programme 5.0 0 - -
Sub-total 430.7 109.3 109.9 33.1
Total 540.0 143.0
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Data source: Planning Commission * as on 06-12-2013
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