No matter if Nawaz is not around. Spend it like it’s an election year. Two months into the new fiscal, the federal government’s spending on the trillion-rupee Public Sector Development Programme (PSDP) is off to a strong start.
As per the Planning Commission (PC) data, the PSDP releases have totaled Rs130 billion as of August 31, 2017. That amounts to 13 percent of the budgeted amount of Rs1.001 trillion PSDP budget in FY18. In the first quarter (Jul-Sep), the spending ceiling is 20 percent. With a month still to go, the spending so far reflects healthy disbursements early on.
The federal government is supposed to fund about 84 percent of the mammoth budget, with the remaining money expected to pour in from foreign sources (loans and grants). Interestingly, all the Rs130.3 billion of funds released until August-end has come from the federal kitty. In effect, the federal government has fulfilled 16 percent of its Rs839 billion PSDP commitment. This is speedy work.
As for foreign aid, whose disbursements are shown at none thus far in the PC data, it will pick up, as is typical, in the coming months as bureaucratic approvals in and out of Pakistan pick pace in ensuing months. Recall that back in FY17, PSDP’s foreign component had exceeded the budgeted figures, thanks mostly to CPEC funds from China flowing into NHA’s transport projects and Wapda’s power projects.
Based on the reading this far, the ongoing fiscal also looks set to have a high disbursement level for PSDP projects. As per latest finance ministry data, the federal government had spent Rs733 billion on PSDP in FY17. That figure, which includes the foreign component, comes at 92 percent of the original budget (Rs800 bn) and 103 percent of the revised budget (Rs715 bn).
Heavy on brick and mortar, the spending playbook this fiscal seems similar to last fiscal. More than a quarter of the federal PSDP spending thus far has been pumped into NHA’s highways and motorways projects. Nearly a quarter of funding – unspecified – has been released to PM’s ‘Global SDGs Achievement Programme’. About one-tenth has been disbursed to Special Areas (AJK, GB, and Fata regions). While water and railways projects have received some billion, power projects got none thus far.
It must be noted that CPEC’s footprint is on the decline in PSDP. Calculations based on PC data show that back in FY17, CPEC-related PSDP budget equated 16 percent of the total Rs800 billion PSDP budget. Now in FY18, CPEC has about 7 percent share in the trillion-rupee PSDP budget. In the spending thus far, CPEC projects had a 12 percent share. As CPEC is government’s priority, and as funding from China starts arriving in coming months, CPEC’s share in PSDP spending is expected to rise.