EDITORIAL: Data uploaded on the website of Ministry of Planning, Development and Special Initiatives reveals that it authorised 376.186 billion rupees under the Public Sector Development Programme (PSDP) during the first six months of the current year but only 148 billion rupees was cited as expenditure as per SAP (Sustainable Goals Achievement Programme) against the budgeted 1.4 trillion rupees for the entire year which was slashed to 1.1 trillion rupees in the uploaded data.
In other words, PSDP has been slashed by 300 billion rupees from what was budgeted for the year and the disbursed amount is nearly 14 percent of the downsized total and 10.5 percent of the budgeted PSDP. What is not clear is whether the expenditure under SAP was actually disbursed and if so was it from government sources or foreign loans, which were cited at 220 billion rupees for the first half of the current fiscal year.
Under the prevailing mechanism, the government disburses 15 percent of the budgeted amount in the first three months of the year, another 20 percent in the second quarter, 25 percent in the third and the remaining 40 percent in the last quarter.
While critics would no doubt argue that the timing of disbursements allows the government to adjust any increase in the current outlay, a usual practice, and a decrease in the budgeted revenue collection, again not unusual especially during times when the government pledges an unrealistic target under an International Monetary Fund (IMF) programme as was the case this year, in the last quarter by slashing the remaining 40 percent of the budgeted PSDP.
In addition, historic data confirms that Pakistani administrations routinely overstate the PSDP in an attempt to claim that it is more dedicated to social uplift projects than its predecessor. And while the Ministry of Planning may engage in the arduous exercise each year formulating the PSDP and the associated costs, which is then approved by the Cabinet and included in the budget documents, yet the actual release of funds by the Ministry of Finance is premised on the deficit and its sustainability which, again if the country is on an IMF programme, will require the Fund’s approval.
Current expenditure as per the first three months of the current year for which data is available surpassed last year’s allocation by 13 percent compared to the same period the year before (data for the first six months compared to the year before is not available) with the total annual rise for the current year budgeted at 21 percent higher than last year and the 386 billion rupees revenue shortfall for the first six months of the current year as per the Federal Board of Revenue (FBR) against the target agreed with the IMF is explanation enough as to why the PSDP received so little disbursements.
With only 14 percent disbursed during the first half of the current year, PSDP has been subjected to a significant shortfall. Considering that private sector activity remains in the negative realm, with claims by the government of an uptick in sales largely attributable to a decline in inventories rather than a surge in output, any decline in PSDP will have negative repercussion on the growth rate.
In all likelihood the budgeted growth rate of 3.5 percent and the 16 December 2024 Monetary Policy Statement’s projection that the Monetary Policy Committee “expects the real GDP growth in FY25 to remain in the upper half of the projected range of 2.5 – 3.5 percent” as too optimistic a projection.
To conclude, this newspaper again urges the government to slash current expenditure as opposed to PSDP because any decline in GDP growth would have further negative socio-economic implications.
Copyright Business Recorder, 2025
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