The government is considering increasing Public Sector Development Programme budget up to 20 per cent as the ruling coalition is aggressively spending on parliamentarians’ schemes apparently in an effort to lure voters.
The proposal comes on the back of strong flows of project-based external loans that have started picking up, said sources in the Finance Ministry. They said the government was contemplating raising the PSDP size from Rs290 billon to Rs350 billion.
“The inflows are better than expected and we are reviewing various options but no final decision has yet been taken”, said Dr Waqar Masood, the Finance Secretary. During the first seven months the net overall foreign loans remained at $350 million. An amount of Rs36.5 billion is expected from international lenders for various projects.
For the current fiscal year the government has earmarked Rs290 billion under the PSDP. An amount of Rs220.5 billion is at the disposal of the Planning Commission, of which it has so far released Rs108.3 billion. Rs33 billion is earmarked for parliamentarians’ proposed schemes which will be released by the Finance Ministry. According to sources Rs28 billion of this amount has so far been released. Sources said in seven months inflows have already crossed the target, providing an opportunity to the government to exploit this as there are indications about the possibility of early elections.
An official of the Planning Commission said that the Finance Ministry has floated the proposal to increase the PSDP size due to better than expected foreign loans for projects. However, there are some in the Planning Commission who feel that excessive spending on bricks and mortar will not be enough to boost growth. In first seven months of the fiscal year 2012 the government has released Rs64 billion for infrastructure projects, according the Planning Commission.
Any decision to increase the development budget is likely to further burden the government which is struggling to achieve the revised budget deficit target of 4.7 per cent of Gross Domestic Product or Rs985 billion. An official of the Finance Ministry said that any decision to increase the development budget will be taken in view of the available fiscal space and overall expenditures will remain within the set parameters.
The source also said that government was recklessly releasing parliamentarians’ budget to appease voters. Most of the releases are made against schemes of Pakistan Peoples Party parliamentarians, the source added.
Pakistan Peoples Party Secretary Information Qamar Zaman Kaira was not available for comments.
Published in The Express Tribune, February 5th, 2012.
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