Development spending halts

Only Rs57b spent in Q1, leading to delay in critical projects

Shahbaz Rana October 17, 2023
Wants TDAP to explain spending on exhibitions. PHOTO: BLOOMBERG


Pakistan’s federal development spending has come to a grinding halt as a mere Rs57 billion, or equal to 6% of annual budget, was spent during the first quarter of this fiscal year, which delayed the execution of some crucial projects but compensated for fiscal slippages in other areas.

Half of the total amount, or Rs23 billion, was spent on parliamentarians’ schemes during the July-September quarter of fiscal year 2023-24, showed official statistics.

The planning ministry had authorised spending of Rs150 billion during the first quarter but the actual release of money was only Rs56.6 billion to be precise, according to details.

The federal government has slowed down development expenses to manage the primary budget balance agreed with the International Monetary Fund (IMF).

Sources said that initial data suggested that there were some fiscal slippages on the part of provinces, although final figures had not yet been compiled.

Read Minister for speeding up work on CPEC

However, the low releases had adverse implications for the country’s foreign exchange reserves due to less-than-anticipated foreign lending for development schemes. For the current fiscal year, the government has estimated the release of Rs75 billion in foreign loans but disbursements remained at only Rs19 billion in three months. The government is facing some problems in acquiring foreign commercial loans and in borrowing via Eurobonds and it is now working on a strategy to fast-track disbursements for project financing. The low foreign loan disbursement has mostly shifted the burden of budget deficit financing on to domestic banks.

As per the Ministry of Finance’s guidelines, the Public Sector Development Programme (PSDP) spending can be equal to 15% of the annual budget at Rs143 billion in the first quarter. However, the spending was Rs86 billion less than the ceiling.

Except for the Sustainable Development Goals (SDGs), an acronym used for parliamentarians’ schemes, the spending did not exceed the threshold of 15% of the respective ministry’s allocated budget, except for in one case.

The government has authorised spending of Rs61.3 billion on parliamentarians’ schemes, of which Rs23 billion was spent in three months. The finance ministry has relaxed the 15% ceiling for such schemes. Sources said that there was pressure on the Ministry of Planning to release more funds for parliamentarians’ schemes and the money allocated for the erstwhile Federally Administered Tribal Areas (Fata).

Against the allocation of Rs57 billion, only Rs1 billion was spent on the merged districts of Fata in three months. Sources said that the spending on merged districts may pick up in the coming days.

For the current fiscal year, the National Assembly has approved Rs950 billion for the PSDP, including Rs90 billion for parliamentarians’ schemes.

The development budget allocations for Azad Jammu & Kashmir and Gilgit-Baltistan also got affected in the first quarter. Against the annual allocation of Rs58 billion, only Rs1.6 billion was spent.

The spending on Pakistan Atomic Energy Commission (PAEC) projects slowed down as well. PAEC has an annual budget of Rs22.7 billion but in the first quarter only Rs500 million was spent. Similarly, Suparco spent Rs300 million against the annual allocation of Rs6.9 billion.

After parliamentarians’ schemes, the National Transmission and Despatch Company (NTDC) was the only entity that spent a significant amount. NTDC spent Rs6 billion on its projects against the annual allocation of nearly Rs30 billion.

The National Highway Authority (NHA) has an annual budget of Rs143.4 billion. The planning ministry authorised Rs38 billion spending in the first quarter but actual expenses remained at only Rs3 billion.

Published in The Express Tribune, October 17th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.


Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ