Contrary to suspicions of a slowdown in development spending, the federal government’s development ledger seems is still punching the digits. It’s all thanks to April, which turned out to be a surprisingly strong month in terms of funds cleared for spending on the Rs675 billion Public Sector Development Programme (PSDP). Last month, close to Rs150 billion worth of development funds were sanctioned for release.
April’s haul was the highest monthly tally this fiscal. To put it in perspective, these funds equated to over a third of total sanctioned funds in the nine months before April; and over a fifth of the PSDP budget. The April surge took the cumulative PSDP releases to Rs564 billion as of May 3, 2019 – which is 84 percent of the budget. It leaves just over a hundred billion rupees for release authorization in May and June.
Yet, not all of the sanctioned releases by the Planning Commission might be utilized by the end of the fiscal. For a Q-block could become a roadblock. Being the PSDP custodian, the Ministry of Planning, Development and Reforms is naturally focused on utilizing the PSDP budgets to the maximum, to get the stalled projects moving and to finish off the projects nearing the finish line.
Their fiscally-strapped cousins at the Ministry of Finance, however, may be unable to entertain all the requests, to stop the fiscal deficit from getting out of hand. How much of the PSDP budget is actually utilized this fiscal will become known by August 2019, when the FinMin would release its year-end fiscal numbers. If the past is any guide, expect a significant difference from the PlanCom release numbers.
Meanwhile, there is some comfort in the fact that PlanCom is mindful of the need for development spending in a sagging economy that is yet to take the long road to recovery. For PlanCom, achieving at least 90 percent+ fund utilization level, in actual, may offer a degree of solace after the PSDP budget was revised downwards twice from the PML-N’s lofty earmark of over one trillion rupees for this fiscal.
Under a fiscal cloud, it will be interesting to see what development priorities the PTI government sets for its first budget. The Planning Minister is reportedly setting “realistic targets” for next fiscal. If a realistic budget is in the environs of Rs500 billion, then it will be taking the funding level five years back. But if PSDP is budgeted more than Rs700 billion next fiscal, it will be challenging to fund it. Quite a bind!
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