Govt releases Rs280b for development spending
Two-thirds of the amount given to four priority sectors, compromising other critical areas like water security
Telecom Tower & Islamabad Stock Exchange. PHOTO: WIKIPEDIA
ISLAMABAD:
The government sanctioned Rs279.5 billion for development spending in the first half of this fiscal year and two-thirds of the amount was given for four priority sectors by compromising on other critical areas like water security.
The releases were made for different development projects under the Public Sector Development Programme (PSDP) 2016-17 from July through December of this fiscal year, according to the Ministry of Planning, Development and Reform.
Government slashes project spending by Rs50b
The sanctioned amount was 35% of the annual allocation of Rs800 billion for the PSDP, which was Rs45 billion below the threshold set by National Economic Council (NEC) - the country’s highest economic decision making body. The less-than-sanctioned release of funds was contrary to the directives of NEC that authorised 40% of development budget spending in the first half.
Prime Minister Nawaz Sharif chairs the NEC meeting while chief ministers of all provinces and special areas are its members.
The massive shortfall in government’s revenues coupled with the capacity constraints of the executing agencies were said to be among the reasons for the slowdown in release of funds, according to officials of the Planning Ministry. The office memorandum of the finance ministry restricts current and development expenditures to 20% each in the first and second quarters and 30% each in the third and fourth quarters.
However, compared with the previous year, the releases were far better, primarily because of the culmination of International Monetary Fund (IMF) programme that ended in September last year.
In the last fiscal year, the government had cut PSDP spending by Rs107 billion, according to finance ministry documents.
About 66% of the total sanctioned development budget has been given for four priority areas - roads, power projects, parliamentarians’ schemes and security related expenditures. These four areas cumulatively got Rs184 billion out of total releases of Rs279.5 billion, showed the Planning Ministry documents.
An amount of Rs79 billion has been sanctioned to the National Highway Authority - which is 42% of its annual allocation and even slightly more than the half-year ceiling. The power sector got Rs41.3 billion during the first half, which was just 31.6% of its annual allocation and below the half-year threshold.
However, the government released 100% budget of parliamentarians schemes amounting to Rs20 billion.
Govt scales down development spending by 43%
An amount of Rs42.6 billion was given for the rehabilitation of temporarily displaced persons (TDP) affected by the on-going Operation Zarb-e-Azb. Technically, this is not development spending but the finance ministry treats it as part of the PSDP for political mileage.
The planning ministry also does not treat it as development spending; although an allocation of Rs100 billion for the TDPs was part of the annual Rs800billion allocated to PSDP. After excluding funds for the TDPs, the money given for development spending in the first half was Rs238 billion or about 30% of total annual PSDP.
Due to the government’s focus on these priorities areas, there was very little for development activities and in many cases the money was only sufficient to pay salaries to staff of the projects, according to sources in the Ministry of Planning.
The government gave only Rs6.8 billion to the Ministry of Water and Power for water projects, which was just 21.5% of the annual allocation. Since the PML-N government has come to power, the allocation for water sector projects has drastically reduced. The Minister for Planning and Development, Ahsan Iqbal has recently stated that Pakistan may face very serious water crisis in the coming years.
The Aviation Division was given only 1.8% of its annual allocation, the Climate Change Division got just 1% of its annual allocation and the Ports and Shipping Division got 6.6% of its annual allocation. The government did not release a penny against the Rs27.6 billion annual allocation made for the development of the country’s underdeveloped areas.
It also did not sanction any budget against Rs25 billion allocation of Gas Infrastructure Development Fund.
According to the planning ministry, Rs9 billion was released for different projects of the Pakistan Atomic Energy Commission, which was one-third of its annual allocation of Rs27.7 billion. The government released Rs14 billion for the Pakistan Railways against its total allocation of Rs41 billion and sanctioned Rs7.6 billion for the National Health Services, Regulation and Coordination Division.
Published in The Express Tribune, January 4th, 2017.
The government sanctioned Rs279.5 billion for development spending in the first half of this fiscal year and two-thirds of the amount was given for four priority sectors by compromising on other critical areas like water security.
The releases were made for different development projects under the Public Sector Development Programme (PSDP) 2016-17 from July through December of this fiscal year, according to the Ministry of Planning, Development and Reform.
Government slashes project spending by Rs50b
The sanctioned amount was 35% of the annual allocation of Rs800 billion for the PSDP, which was Rs45 billion below the threshold set by National Economic Council (NEC) - the country’s highest economic decision making body. The less-than-sanctioned release of funds was contrary to the directives of NEC that authorised 40% of development budget spending in the first half.
Prime Minister Nawaz Sharif chairs the NEC meeting while chief ministers of all provinces and special areas are its members.
The massive shortfall in government’s revenues coupled with the capacity constraints of the executing agencies were said to be among the reasons for the slowdown in release of funds, according to officials of the Planning Ministry. The office memorandum of the finance ministry restricts current and development expenditures to 20% each in the first and second quarters and 30% each in the third and fourth quarters.
However, compared with the previous year, the releases were far better, primarily because of the culmination of International Monetary Fund (IMF) programme that ended in September last year.
In the last fiscal year, the government had cut PSDP spending by Rs107 billion, according to finance ministry documents.
About 66% of the total sanctioned development budget has been given for four priority areas - roads, power projects, parliamentarians’ schemes and security related expenditures. These four areas cumulatively got Rs184 billion out of total releases of Rs279.5 billion, showed the Planning Ministry documents.
An amount of Rs79 billion has been sanctioned to the National Highway Authority - which is 42% of its annual allocation and even slightly more than the half-year ceiling. The power sector got Rs41.3 billion during the first half, which was just 31.6% of its annual allocation and below the half-year threshold.
However, the government released 100% budget of parliamentarians schemes amounting to Rs20 billion.
Govt scales down development spending by 43%
An amount of Rs42.6 billion was given for the rehabilitation of temporarily displaced persons (TDP) affected by the on-going Operation Zarb-e-Azb. Technically, this is not development spending but the finance ministry treats it as part of the PSDP for political mileage.
The planning ministry also does not treat it as development spending; although an allocation of Rs100 billion for the TDPs was part of the annual Rs800billion allocated to PSDP. After excluding funds for the TDPs, the money given for development spending in the first half was Rs238 billion or about 30% of total annual PSDP.
Due to the government’s focus on these priorities areas, there was very little for development activities and in many cases the money was only sufficient to pay salaries to staff of the projects, according to sources in the Ministry of Planning.
The government gave only Rs6.8 billion to the Ministry of Water and Power for water projects, which was just 21.5% of the annual allocation. Since the PML-N government has come to power, the allocation for water sector projects has drastically reduced. The Minister for Planning and Development, Ahsan Iqbal has recently stated that Pakistan may face very serious water crisis in the coming years.
The Aviation Division was given only 1.8% of its annual allocation, the Climate Change Division got just 1% of its annual allocation and the Ports and Shipping Division got 6.6% of its annual allocation. The government did not release a penny against the Rs27.6 billion annual allocation made for the development of the country’s underdeveloped areas.
It also did not sanction any budget against Rs25 billion allocation of Gas Infrastructure Development Fund.
According to the planning ministry, Rs9 billion was released for different projects of the Pakistan Atomic Energy Commission, which was one-third of its annual allocation of Rs27.7 billion. The government released Rs14 billion for the Pakistan Railways against its total allocation of Rs41 billion and sanctioned Rs7.6 billion for the National Health Services, Regulation and Coordination Division.
Published in The Express Tribune, January 4th, 2017.