Development: ‘No strong relationship between PSDP and economic growth’

Stagnant tax to GDP ratio; rapid growth of current expenditure as major reasons for the contraction of the PSDP


Express August 23, 2011



The Public Sector Development Programme (PSDP) can only be beneficial if implementation processes are put in place through reforms and the planning mechanism in the country. This was said by Planning Commission of Pakistan National Institutional Advisor Dr Vaqar Ahmed, according to a press release issued by the Sustainable Development Policy Institute (SDPI) on Monday.


Addressing a seminar on “Reforms Agenda for PSDP Pakistan” at the Sustainable Development Policy (SDPI) Institute here on Monday, Vaqar presented the outline of the PSDP featuring sector priorities, reasons for contractions in PSDP, post-18th amendment scenario and the reforms agenda for the PSDP in Pakistan.

He said Pakistan’s PSDP fund is Rs300 billion, of which 57 per cent is spent on infrastructure, while 42 per cent is invested in social sector development. Debating the heavy reliance of PSDP on foreign assistance, he mentioned that 82 per cent of foreign aid is related to projects on infrastructure development involving nuclear energy, power, railways and communication, while only 13 per cent is aimed at social development.

Citing various researchers and experts, he added that there has been no strong relationship between PSDP and economic growth observed in Pakistan. He identified government’s efforts to lower the fiscal deficit, low and stagnant tax to GDP ratio and rapid growth of current expenditure as major reasons for the contraction of the PSDP. He mentioned that for every Rs100 allocated in PSDP, Rs38 do not reach the beneficiaries.

SDPI Executive Director Dr Abid Q Suleri said PSDP is a base for the country’s economic growth. He lamented that in Pakistan, PSDP relies heavily on foreign assistance and suffers drastically due to uncertainties whenever the flow of funding is stalled.

Published in The Express Tribune, August 23rd, 2011.

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