PSDP’s remarkable run

It is one thing to budget big billions for development, but quite another to spend most of that. The just-concluded fiscal, FY17, was remarkable in that the federal Public Sector Development Programme (PSDP) had a really healthy utilization rate. As of June 30, PSDP releases stood at Rs744 billion, against a revised budget of Rs715 billion and original budget of Rs800 billion, Planning Commission data show.

That’s a 93 percent utilization rate of the original budget. Interestingly, it is the foreign funding component that really shone bright last fiscal. The federal government was supposed to fund 82 percent of the original budget. It met only 83 percent of the Rs657 billion obligations. Foreign aid/loan component had an 18 percent share in the original budget, but it far exceeded its Rs143 billion obligation, gathering a 27 percent share in the overall disbursements last fiscal.

As the foreign aid/loan disbursement figure of some Rs199 billion is as of May 31, 2017, it is expected that the final PSDP spending for FY17 would amount to more than the existing Rs744 billion figure when the June figures are tallied later on. The real figure of consequence would be the finance ministry’s fiscal operations datasheet, which will list the amount actually spent on PSDP, not just disbursed or sanctioned.

Most of the foreign funding came in for projects under the National Highways Authority (NHA) – Rs102 billion – and Wapda’s power sector projects – Rs80 billion. Those disbursements far exceed the earmarks. It’s mostly the CPEC effect. Loans and grants have been coming in from China in the areas of transport and energy projects – two of the major and early-harvest pillars of the CPEC, on which the federal government is also spending heavily from its pocket.

Now in an election year that is FY18, the PML-N led federal government has budgeted an Rs1.001 trillion PSDP. A staggering Rs320 billion, or one-third of the budget, will go towards building highways, roads and bridges under the NHA. Down in Punjab, the ruling party’s provincial government is looking to spend over 60 percent of its Rs635-billion Annual Development Plan on brick and mortar projects, mostly roads, bridges and mass transit schemes.

Will the PSDP juggernaut, which has sustained its momentum in the first four years of PML-N at the center, continue in the final year of their electoral term? Infrastructure development is the central pillar of the party’s development narrative, which has previously sold well in Punjab. With the ruling party in disarray amid growing political instability, it will be interesting to see whether, and by how much, the government will stick to its populist development priorities in a chaotic election year?