KP: high on development

After Fata’s merger with Khyber Pakhtunkhwa (KP), an already under-developed province’s development needs have increased. The provincial government has responded to that challenge with a record Rs319 billion development budget for the province – over a quarter of which will be spent on the merged tribal districts. (Total spending is budgeted at Rs855 billion, exclusive of Rs45 billion surplus).

With Rs319 billion development outlays, the province is aiming to spare a record 37 percent of its spending for development. And in that, the PTI’s KP government, which has consistently allocated a third of its overall budget in recent years to development, has outdone itself. That development share is also notably more than what Punjab (17%) and Sindh (23%) have budgeted for FY20. Even in a like-for-like comparison, Rs236 billion allocated for settled areas of KP comes to 28 percent of overall budget.

With the civil and military leaderships on the same page to develop the erstwhile tribal areas on a fast-track basis, the institutional harmony towards KP’s development as a whole has helped the provincial government in securing a significant fiscal commitment. Out of the Rs83 billion to be spent on the development of merged tribal areas, Rs24 billion is the usual development programmes, Rs48 billion is to be provided by the federal government, and Rs11 billion will be funded by the KP government.

Another highlight of the KP’s development budget is the significant decrease in throw forward – the cost of outstanding projects. This will help increase the funding level for ongoing projects so that they are completed in time. The new KP government has brought down the number of years required to fund KP’s development projects from 7 years to 4 years – rest of the provinces are said to have a throw forward of 3 years. This kind of focus can finish prior projects in time and also free up resources for new schemes.

But the effectiveness of the new funding focus depends eventually on how much of the development budget gets spent in the end. History marks KP as no different from its provincial counterparts when it comes to under-spending on development. The province spent an average of Rs123 billion on development projects between FY16 and FY18, indicating a budget utilization ratio of 70 percent.

Now, suddenly raising the bar to Rs319 billion is going to need a sustained fiscal commitment on part of the federal and provincial governments in a time of fiscal cutbacks. Moreover, given the enormity of the KP’s development budget (the FY20 figure rivals that of Punjab), the frontier is going to need a lot of improvements in its implementation, monitoring and evaluation capacities to properly fund and administer the 1,300+ projects that are part of the rationalized development portfolio.