Planning ministry sanctions Rs15.4b for PSDP

Moves comes amid less demand for budget by line ministries

Shahbaz Rana August 17, 2019
The releases were only 2.2% of the annual PSDP allocation of Rs701 billion, showed the releases status. PHOTO: FILE

ISLAMABAD: The development work in the public sector has slowed down in new fiscal year, as the planning ministry has authorised only Rs15.4 billion for spending due to less demand for budget by the line ministries.

From July through August 9, the planning ministry authorised to release Rs15.4 billion for spending under Public Sector Development Programme (PSDP) 2019-20, according to details issued by the ministry on Friday.

The releases were only 2.2% of the annual PSDP allocation of Rs701 billion, showed the releases status.

About 29% of the total budgetary releases or Rs4.5 billion has been given to Higher Education Commission, largely for paying salaries.

Govt to spend 1% of PSDP on green programme

Another sum of Rs4.3 billion or 27.6% of the releases has been sanctioned in favour of the Pakistan Atomic Energy Commission (PAEC), according to the Ministry of Planning. Out of this sum, a large chunk of Rs3.6 billion was given for construction of Karachi Coastal Power Project, which has been restored in the PSDP on demand of the International Monetary Fund (IMF). This project is funded by China.

The key ministries and entities that have large budget allocations for this fiscal year did not place major spending demands, said an official of the planning ministry. The National Highway Authority (NHA) that has annual allocation of Rs155 billion and Water Resources Division having annual budget of Rs85.7 billion did not seek funds for spending, according to the ministry official.  No releases were sanctioned to these entities last month.  The National Transmission and Dispatch Company that has an annual allocation of Rs42.5 billion also did not get releases, showed the planning ministry data.

The Ministry of Planning's approval of funds has to be cleared by the Ministry of Finance before the central bank releases funds for spending. This gives a huge leverage to the finance ministry, which uses it as a tool to compensate for higher non-development expenditures. It is not clear how much money is authorised by the finance ministry against Rs15.4 billion sanctions.

Adviser to PM on Finance Dr Abdul Hafeez Shaikh had said in the post-budget press conference that the Rs701 billion PSDP spending was linked with the ability of the Federal Board of Revenue to achieve its Rs5.550 trillion annual tax collection target.

The annual development budget for the current fiscal year is Rs701 billion and according to the budget strategy of the finance ministry the ministries can be given up to Rs140 billion budget for spending for the first three months  of this fiscal year.

According to the budget strategy, the ministries can spend 40% of the annual development budget in first half of a fiscal year, 20% in each quarter.  The planning ministry official said that the finance ministry finalised the ways and means strategy by mid of July that also affected the releases status.

Govt earmarks Rs701b for next year's development programme

But the key reason was that the line ministries including NHA did not finalise their work plans for this fiscal year due to low spending demands for the projects.

The public sector spending has remained an important component to given an impetus to economic growth. The less development spending could lead to a situation where the government's desire to increase investment for creating jobs may remain unfulfilled. This year, the economic growth is expected to be around 2% to 2.4%, even less than the 3.3% expansion in the last fiscal year.

In the last fiscal year, the planning ministry had authorised Rs629.1 billion for spending against a total downward revised budget allocation of Rs675 billion. But the Ministry of Finance authorised less than Rs615 billion for spending.

Former finance minister Asad Umar had assured lawmakers that the Pakistan Tehreek-e-Insaf (PTI) government would make sure that the development spending in the last fiscal year would not fall below last year's level. The Pakistan Muslim League-Nawaz (PML-N) government had spent Rs661 billion in 2017-18, which was 34% lower than the actual budget of that year.

The Space and Upper Atmosphere Research Commission (SUPARCO) also got Rs366 million releases, Rs300 million for establishment of Pakistan Space Centre Islamabad, Lahore and Karachi and Rs66 million for establishment of Space Applications Research Centre G-B. 

Published in The Express Tribune, August 17th, 2019.

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