If all goes well, Pakistan would have spent a little more than Rs1,200 billion as combined Federal and provincial development expenditure by the end of June 2015. The exact figure isn't known as yet, since Balochistan's budget documents weren't available at the time of writing this. But the number would likely be north of Rs1,200 billion or about 15 percent higher than the combined revised estimates of last year.
The trouble is that all might not go well. Sharing his recent experiences as a member of national assembly, Asad Umar of PTI said he was shocked to see the planning behind the disbursements for development expenditure.
Defying every notion of project finance, said Asad, 20 percent of disbursement is planned for each of the first three quarters, whereas 40 percent is kept for the last quarter--just so that the government has the room to slash development spending, as and when their revenue falls short of target, which it does almost religiously.
Speaking at SDPIs post-budget national consultation conference earlier this week, Asad added that development projects brought to the table lack even basic project evaluation metrics such as the projects Internal Rate of Return.
But, even if all goes well, and by some miracle revenues don't fall short of target, leading to complete utilisation of development budgets, the impact of that spending would still be far from desired levels. And thats because what former government adviser Sakib Sherani calls the declining efficiency of capital.
In his presentation at the SDPI conference this week, Sakib pointed out ten years ago it took Rs21.5 billion of development spending to achieve one percentage point of GDP growth. Today, in 2013 specifically, it took Rs115.3 billion in inflated adjusted terms to achieve the same quantum of growth. "The pipes are clearly broken," he said, referring to the institutional weakness that leads to lower efficiency of capital.
The kind of institutional weakness Sakib is neither talking just about the elements of corruption or theft, etc., nor about a handful of inefficient government institutions, reforming which all would become hunky dory. Its about inefficiency across the board.
Take for instance, the case of Alternate Energy Development Board. The AEDB isn't exactly the poster child of corrupt government bodies of Pakistan. Yet, there are number of alternate power projects for which the AEDB has delayed the signing of the implementation agreement for more than a year.
The delay comes despite the fact that the private investors behind those projects chose the box standard versions of the implementation agreement, just so to avoid negotiation delays. Reportedly, the AEDB is just sitting on it for one excuse or another, leaving the investors and financiers behind those projects quite jittery.
When the PML-N was wooing its voters in spring last year, better governance was one of the most touted slogans. Yet, so far the government has nothing to show for it.
The government's mandarins and other political faces boasting about steps in the right direction at every opportunity they get. But little do they explain why those steps are being taken at a snail's pace. A country at war needs a government that can take actions at a war footing. Mere steps in the right direction won't cut it as government; it would be called misgovernment.
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