EDITORIAL: An International Monetary Fund (IMF) report titled “Pakistan: Technical Assistance Report – Public Investment Management Assessment” has concluded that Pakistan’s Public Sector Development Programme (PSDP) is unaffordable and should be reassessed as 10.7 trillion rupees is the total cost of PSDP projects completion, more than 14 times the budgeted allocation of 727 billion rupees last fiscal year.
While every large infrastructure project’s completion is, by and large, over a number of years and therefore does not require the total cost of a project upfront, yet PSDP projects almost routinely go into cost over-runs due to delays brought on by the lack of timely disbursements by the Finance Ministry.
The report further notes that a project typically requires two to three times more than its original estimated cost due to inflation, damage to work already done, loss of materials due to inactive building sites and increased builder costs - an escalation in costs sourced to funding delays.
And yet bafflingly new projects continue to be added, the report correctly pointed out, at a significant rate especially after the extremely narrow fiscal space prompted administration after administration to support funding for only those projects nearing completion at the cost of those whose work in progress is less than a certain percentage – the actual percentage determined by the available resources.
While the IMF report argued in academic terms yet to put it more accurately the reason why the PSDP in terms of the number of projects and their scope is extremely ambitious year after year is to allow the economic team leaders to claim that the government is focused on development and not to highlight the two rather glaring ground realities: (i) the PSDP budgeted allocation, grossly insufficient as it is year after year to complete projects as noted in the Fund report, is further slashed at the end of the year to bring the budget deficit to a sustainable level, especially during the time when the country is on an IMF programme; and its corollary, (ii) current expenditure that supports elite capture of our resources has yet to be slashed in an effort to prioritise PSDP budgeted allocation.
The obvious lesson learned is that no one - not the stakeholders including the multilaterals and the general public - is beguiled any longer by the continuing attempt of Pakistani administrations to identify ambitious high cost projects year and after year, and then failing to provide the budgeted funding due to lack of resources, thereby raising the costs manifold.
This trend has not deterred many a head of government to inaugurate the same project a number of times, an absurdity that continues to this day; an example being the Diamer-Bhasha Dam, which was inaugurated by the then prime minister Nawaz Sharif, in 1998, the then President Pervez Musharraf in 2006, the then prime ministers Yousaf Raza Gilani and Imran Khan in 2011 and 2020, respectively.
One can only hope that this absurd practice is abandoned and those at the helm of affairs acknowledge that inaugurations do not raise their approval ratings or indeed are seen to reflect their commitment to the uplift of the people of the country.
While Business Recorder has always supported a large PSDP because its contribution to growth is significant in this country yet the way forward is to support PSDP through a commensurate cut in current non-development expenditure that constitutes 92 percent of the total 2023-24 budget (against the budgeted 91 percent the year before), inclusive of items that continue to support elite capture of our scarce resources as well as failure to implement structural reforms with particular reference to pension reforms that are funded entirely at the taxpayers’ expense and do not require employee contributions like in other countries.
Copyright Business Recorder, 2023
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