Hounded left and right, the premier has been in a campaign mode for much of the fiscal thus far. And the numbers reflect that. Calculations based on data taken from the Planning Commission website show that the massive Rs800 billion public sector development programme (PSDP) remains adequately funded, two months out from the fiscal’s close.
As per the official release mechanism, the federal government would release up to 70 percent of the PSDP budget in the first three quarters, leaving 30 percent for the final quarter. Data show that as of April 28, about Rs598 billion – or 75 percent of the total PSDP outlays for FY17 – had been released. Naturally, spending will accelerate in the final weeks.
Three quarter of the nearly Rs600 billion PSDP spending thus far had come from federal government, and the remaining quarter came from the foreign aid component. The PML-N government has demonstrated in its term so far the ability to fund PSDP projects to the maximum. It appears the ongoing fiscal won’t be different.
As per the budgetary breakdown, the federal government has an 82 percent obligation in the Rs800-billion budget, with the remaining 18 percent to be funded by the foreign aid component. As of April 28, the federal government had spent 68 percent of its Rs657 billion obligation.
Curiously, foreign aid component equated 105 percent of its Rs143 billion obligation in the PSDP budget. Nearly 90 percent of the foreign development aid thus far has gone to PML-N’s priority areas of transportation infrastructure development (via the National Highway Authority) and the power sector projects (via the Wapda). It is the Chinese muscle that shows through in those foreign disbursements.
Latest data from the Economic Affairs Division (EAD) breaks it down how the foreign aid component was dominated by China. The ‘iron brother’ disbursed to the Pakistani government over Rs108 billion as project aid (loans) in the Jul-Mar period this fiscal. Out of that, over Rs90 billion directly went into CPEC-related projects, mainly in power projects (Neelum-Jehlum) and transport corridors (Havelian-Thakot KKH; Sukkur-Multan, Peshawar-Karachi motorway; Orange Line, Lahore).
Though not reflected in specific projects at this stage, the EAD data show that during this period Pakistan also received two heavy loans from China. One of them is a project loan worth $300 million from Industrial and Commercial Bank of China. The country also received a $700 million loan from China Development Bank, for BOP support as well as CPEC financing.
Back to PSDP spending, major beneficiaries thus far include National Highway Authority (Rs166 bn), Wapda (power: Rs121 bn; water: Rs24 bn), Special Development Programme for temporarily-displaced persons and security enhancement (Rs52 bn), Special Areas (AJK, GB and Fata: Rs49 bn), Railways (Rs34 bn), Pakistan Atomic Energy Commission (Rs23 bn), National Health Services (Rs21 bn), PM’s SDG’s Achievement Programme (Rs20 bn), and Higher Education Commission (Rs19 bn).
Economists are divided on the quantum of adequate development spending in Pakistan. However, it ranges from 20 percent to 30 percent of total budgetary expenditures. Calculations based on the finance ministry’s fiscal data show that the PML-N government started off its current term by spending on PSDP 11.7 percent of its total budget in FY14. It raised the percentage to 13.4 percent in FY15, and further up to 15.4 percent in FY16. The Rs602 billion PSDP spending in FY16 totaled 2 percent of GDP.
This fiscal, too, the percentage is headed for amelioration. But that is no comment on the quality of spending. Nor is a public review available on efficacy of PSDP spending. But one can bet, with the election chatter resembling a din, and with more CPEC-related moneys pouring in, brick-and-mortar spending will continue to accelerate. Its socioeconomic impact, however, is one that independent economists must figure out how to gauge.