PSDP spending: Gathering pace

As the final months of this fiscal approach, the Rs800 billion public sector development programme (PSDP) has picked up spending momentum. Data taken from the Planning Commission website show that as of March 3, Rs479 billion had been disbursed by the federal government on this years earmarked PSDP projects. Thats about 60 percent of the overall PSDP budget this fiscal.

The official release mechanism necessitates that by March end, the government can release a maximum 70 percent of the PSDP budget. At this pace, PSDP disbursements look set to reach that ceiling by the time the Jan-Mar quarter closes. As far as numbers go quality of spending is a different matter this looks fine for budget utilization.

Until March 3, some 75 percent of the Rs479 billion PSDP spending had come from the federal government, and the remaining 25 percent from foreign aid. The federal government is required to fund 82 percent (Rs656 bn) of the Rs800 billion PSDP budget. Foreign aid is to cover 18 percent (Rs143 bn) of the FY17 PSDP.

As of March 3, the federal government had disbursed 55 percent of its PSDP commitments. The foreign aid, received in the Economic Affairs Division, had covered 83 percent of its budgeted component.

Except for Textile Industry Division and the Foreign Affairs Division, the 40 odd government divisions and corporations received funding, with a few big guns receiving way more than the other.

The PML-N seems to believe, and perhaps there is some merit to it, that it is roads and electricity that will return the Punjab-based party to power in the 2018 elections. So, the bulk of the PSDP funding thus far had gone to big divisions such as the National Highway Authority (Rs149 bn), Wapda (power: Rs104 bn; water: Rs9 bn), and Railways (Rs24 bn).

Also receiving significant funds were the Pakistan Atomic Energy Commission (Rs17 bn), and the Earthquake Relief and Rehabilitation Authority (Rs10 bn). Major funds were also disbursed to special areas (AJK, GB and Fata: Rs33 bn), for temporarily-displaced persons and security enhancement (Rs52 bn), and PMs SDGs Achievement Programme (Rs20 bn), and PMs Youth Programme (Rs8 bn).

The PML-N federal government has spent slightly higher proportion of its yearly expenditures on PSDP since it came back to power in 2013. Of the total expenditures, PSDP spending was 11.7 percent in FY14, 13.4 percent in FY15, and 15.4 percent in FY16.

This fiscal also seems headed that way. CPEC-linked infrastructure investments and populist tendencies in an uncertain political climate may explain the pattern this year.