According to a Business Recorder exclusive, the federal government may be forced to slash public sector development programme (PSDP) by around 200 billion rupees, around 31 percent of its total budgetary allocation. If the Friends of Democratic Pakistan (FoDP) come through, this cut would be adjusted accordingly.
There is, however, little optimism in the Ministry of Finance with respect to any major inflow of pledges made by the FoDP in Tokyo, in April, this year. Be that as it may, two facts need to be emphasised. First and foremost, the federal government had announced a whopping 54 percent rise in the PSDP in the budget for the fiscal year 2009/10, a rise much touted by the government as reflective of its commitment, as a democratically elected government, to the development and uplift of the people.
Critics at the time had insisted that this unprecedented rise was indicative of the government's inherent dishonesty as it was fully aware that it would have insufficient resources to fund the PSDP. And, second, the total budgetary PSDP outlay for the current year was 646 billion rupees, around 200 billion rupees more than the revised figures for the fiscal year 2008/09. It is perhaps not coincidental that the cut in PSDP is to be exactly identical to the budgetary increase. Such obvious duplicity in the budget-making exercise has not been quite as blatant in the past.
Government supporters would, no doubt, identify a myriad factors responsible for the failure to adhere to the budgetary PSDP targets, including the failure of the FoDP to convert pledges to disbursement, global recession that has impacted on the country's productivity and exports, high inflationary pressures that led to a high cost of borrowing, with its negative impact on the large-scale manufacturing sector and political constraints that have slowed down the pace of reforms connected to the failure to adhere to a time-bound action plan to eliminate subsidies to the energy sector. There is some merit in this argument.
However, two questions are now uppermost in the minds of the general public. Why does not the government begin to be realistic? And which projects would be shelved? There is no simple answer to the first question. Repeatedly, this government has over-estimated its capacity to generate assistance from abroad and, unfortunately, continues to do so.
Additionally, it has no indigenous plan to either raise tax to the GDP ratio significantly or indeed, proactively support efforts to improve governance. Ironically, to forestall charges of corruption and poor governance, the Federal Finance Minister has supported the appointment of an international financial institution as a third party auditor whose own internal accountability procedures are being challenged by their Board of Directors and the commitment of its staff to the development of Pakistan is poor to say the least.
Shaukat Tarin, however, recently mentioned that the government is in the process of establishing a committee, charged with the responsibility of restructuring state and autonomous organisations. This must be lauded, however, he failed to provide any time frame for the committee to end its deliberations, a failure that is a source of concern to the people of this country.
The response to the question which PSDP projects would be slashed is easy. All one has to do is look at what the present government did last year: slashed all those projects that had not begun and within those being implemented, slashed those which had not yet achieved 50 percent of project completion. In this context, one would hope that the projects had been prioritised, for example the government cannot afford to delay energy projects and those must be preferred over other projects in other sectors.