EDITORIAL: The declining trend witnessed in the funds allocated towards the Public Sector Development Programme (PSDP) over the last decade looks set to continue, with the Senate Standing Committee on Planning and Development being told by Planning Ministry officials on September 5 that the PSDP, which was originally approved to the tune of Rs1.4 trillion is being revised downwards to Rs1.1 trillion following instructions from the IMF.
The measure is being taken to enable Pakistan to meet the terms of the new loan programme by the IMF, following which the axe will be falling on federal funding for provincial projects, and what the ministry has termed “non-essential projects”.
A case could be made for the federal government’s decision to scale back its contribution towards provincial schemes, given that it is faced by an extremely constrained fiscal space while these projects involve massive sums running into billions of rupees.
Additionally, after the 18th Amendment devolved numerous areas to the provinces, it is reasonable for the federal government to limit spending on projects under provincial jurisdiction, especially since legally it is only required to allocate development funds to the federal capital.
At the same time, however, policymakers must recognise that the federal government just cannot afford to neglect Balochistan or the erstwhile tribal areas where a paucity of resources and funding, combined with militancy, terrorism and armed action, have left these areas devastated and have severely hindered development. It is crucial, then, that an exception be made for these regions and the federal government continues financing development projects here.
Such initiatives will be essential for progress in the spheres of education, healthcare, and infrastructure development, and if executed wisely, can also help local communities break free from the shackles of militancy and address their sense of exclusion from the national conversation and economy.
For the federal government to continue funding development in Balochistan and the former tribal regions while adhering to IMF conditions, it must adopt a more judicious approach to its development outlay by reducing excessive spending in other areas and doing away with the inclination to waste precious resources on populist projects that only serve short-term political interests.
What is even more important though is the empowerment of local governments in the country. It is an empowered local government system that would be best positioned to understand and address the development needs of communities at the grassroots level, ensuring that resources are allocated effectively and tailored to the specific needs of the people.
While our Constitution consists of entire chapters pertaining to the workings of the federal and provincial governments, it is farcical that there are no similarly detailed delineations on the functioning and powers of local governments.
The fact that in the 78th year of our independence, we are still floundering when it comes to truly devolving authority to the grass roots is shameful, underscoring the reluctance at the federal and provincial levels to transfer powers and resources further down the line.
Our ruling elite and economic managers must realise that effectively and transparently empowering local governments can go a long way in extracting Pakistan out of its economic difficulties, freeing up fiscal space at the centre, and in the process, also genuinely democratising the country.
While some of the IMF’s concerns regarding how the PSDP is allocated may be understandable, it is up to our policymakers to come up with sustainable solutions that don’t compromise the country’s vital development needs, and also ensure that the fiscal space isn’t squandered away on gratuitous spending.
Empowering local governments could play a key role in this strategy, as it would allow for more effective and targeted use of resources, enhancing overall development outcomes.
Copyright Business Recorder, 2024
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