The Federal PSDP hasn been slashed, thus far! The latest figures released by the Planning Commission show that Rs.169.8 billion had been disbursed for the Federal PSDP projects as of May 25, 2012. Five weeks till the fiscal year draws to a close, the Commission has to release just over 25 percent of the funds it is authorised to disburse, i.e., Rs.228.4 billion from the FY12 PSDP totaling Rs.300 billion.
The progress on the release of Rs.38.6 billion committed by the foreign donors through the Economic Affairs Division is not certain due to lack of public data availability. However, Rs.33 billion earmarked for "Special Programmes" have reportedly been exhausted by the cabinet and finance divisions as early as February this year.
The existing PSDP paradigm has often been criticised for a variety of reasons. Lack of a holistic development roadmap, wanting project management capacity, incidences of malpractices, susceptibility to political considerations and poor state of monitoring and evaluation are some of the key issues identified by independent economists and those who have previously overseen the programme in the past.
It appears that the government is not willing to let go of the broken development paradigm operative in Pakistan. Last week, the National Economic Council, with PM in the chair, approved a mammoth development outlay of Rs.873 billion for next budget. Counting on Rs.100 billion from foreign sources, the Federal and provincial PSDP allocations have been raised to Rs.360 billion and Rs.513 billion, respectively.
It is pertinent to note that large development allocations have done a little in the past to arrest the escalating costs of over a thousand unfinished projects which have had to compete for funding with a barrage of new projects coming in all round the year. The time and cost overruns effectively expand the completion timelines, thereby delaying the public and socio-economic benefit.
In the Federal PSDP for FY13, the Federal Government has committed to prioritise ongoing projects. By spending just over 3 percent of the funds on new projects, it expects to complete 262 projects nearing completion next year. "This is all déjà vu, because over 60 percent of these projects nearing completion were also reported near completion last year", noted an informed source.
The sectarian composition of the Federal PSDP is heavily tilted towards infrastructure. Reportedly, the energy projects will receive Rs.184 billion, road networks Rs.59 billion, water sector Rs.48 billion and Railways Rs.23 billion. The education sector will receive Rs.20 billion and health and population projects Rs.24 billion.
Perhaps it would have been better had the policymakers also added the criterion of socio-economic impact to the completion timelines for the prioritisation of ongoing projects. In the wake of clear fiscal and administrative constraints, it would be prudent to let go of projects which do not have a growth and/or pro-poor impact rather than throwing good money after bad.
The nearly Rs.3 trillion throwing forward means that even at current funding levels, the current stock of projects will take no less than ten years for completion. Such state of affairs calls for an immediate rationalisation of the PSDP projects, augmented with more funds for building the human capital and productive base for the economy.
Pakistan is a developing economy and there are large infrastructure gaps in various districts and sectors. Its need of the hour to involve the private sector in filling those gaps, which will allow the state to maintain its existing infrastructure better and make it more productive through focusing on human capital and competitive markets. Moreover, monitoring and evaluation of PSDP projects may also be improved.
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