The federal spending on the Rs800 billion public sector development programme (PSDP) has picked pace in last couple of months. Data from the Planning Commission show that as of January 20, Rs311.68 billion had been disbursed, or 39 percent of the overall PSDP budget.
As per the official release mechanism, quarterly spending ceilings are fixed at 20 percent each for the first and second quarters and 30 percent each for the third and final quarters. By that measure, maximum PSDP spending should have been roughly 47 percent by the third week of January. The current spending ratio of 39 percent is off the mark, but perhaps not by a lot in the context of Pakistans laggard public sector spending.
Thus far, about 78 percent of the spending so far (Rs242 bn) has come from the federal government, which has an 82 percent (Rs675 bn) obligation in the Rs800 billion PSDP budget. Whereas the remaining 22 percent of the spending as of January 20, originated from foreign aid, which is to fund 18 percent (Rs143 bn) of the FY17 PSDP. The federal government has spent 37 percent of its allocated PSDP budget; lower than the foreign component, which had served a higher, 49 percent of its commitment.
Among the major segments funded thus far include the usual big-ticket recipients. These are the National Highway Authority (Rs83 bn), Wapda (power projects: Rs47.6 bn; water projects: Rs6.89 bn), Special Development Programme for TDPs and Security Enhancement (Rs49.2 bn), Special Areas: AJK, GB and Fata (Rs24.2 bn), PMs Global SDGs Achievement Programme (Rs20 bn), Railways division (Rs13.9 bn) and the Pakistan Atomic Energy Commission (Rs12.6 bn).
On the flip side, despite such massive spending, many of these recipients have received less than fifty percent of their budgeted PSDP funds so far. There are many small-ticket ministries and divisions which havent received even a quarter of their budgeted PSDP funds thus far. Eight out of a total of 38 federal ministries and divisions had received less than 10 percent of their funds as of January 20.
However, moving forward, as the fiscal year starts closing in and as infrastructure projects move further along under CPEC-related activities and also due to political headwinds, the PSDP budget utilization will further increase.
Already, the pro-infrastructure PML-N government has been spending big on brick and mortar stuff. Back in FY16, the PML-N government had spent 15.4 percent of its total expenditures on PSDP (about 2% of GDP), a ratio that inched up from 13.4 percent in FY15 and 11.7 percent in FY14, which was the partys first full fiscal year after returning to power at the center. At current pace, these quantitative spending indicators are expected to further improve this fiscal.