Pakistan’s on-again, off-again periods of macroeconomic stabilization have historically not mixed well with public sector development programs (PSDP). After all, PSDP spending is the first (and usually the only) casualty in the quest to rein in fiscal overages. While one sees the retrenchment pattern underway for federal PSDP (which is already much curtailed and derives more media spotlight), the situation in the provinces seems quite different, as there was strong growth in development spending in FY22.
As per the latest fiscal data released by the Federal Ministry of Finance, the overall development spending (PSDP) at the four provinces was a combined Rs1.21 trillion during FY22, a whopping growth of 58 percent compared to the previous fiscal. The last PTI government’s attempt to turbo-charge the economy after June 2021 budget was visible in provinces, too. Development spending share in total provincial expenditures, therefore, increased from 23 percent in FY21 to 28 percent in FY22, a solid improvement.
The two provinces where the PTI had (and still has) its government did much better than the rest vis-à-vis PSDP spending in FY22. Exactly half of the entire provincial development spending took place in Punjab. During FY22, Punjab’s PSDP spending increased by a phenomenal 71 percent year-on-year to reach Rs613 billion. Also significant is the fact that the most-populous province spent 34 percent of its total expenditures on development, which was a strong increase compared to 24 percent in FY21.
At second place in terms of PSDP spending tally among the provinces was the Khyber Pakhtunkhwa province, which accounted for 21 percent of total provincial development spending of Rs1.21 trillion. The KP spent Rs260 billion on PSDP during FY22, at an impressive growth rate of 37 percent year-on-year. In doing so, it maintained development spending’s share in overall expenditures at 28 percent. Since the inclusion of ex-FATA areas in the KP proper, the province’s development spending has enlarged.
Punching below its economic and demographic weight vis-à-vis development spending was Sindh, which had an 18 percent share in entire provincial development spending of Rs1.21 trillion. Still, the southern-most province managed to raise its PSDP spending by a staggering 83 percent year-on-year to post Rs225 billion total in FY22. Inching closer to the electoral cycle, perhaps the PPP government there thought it best to push the accelerator. As a result, development spending had an improved 19 percent share in Sindh’s total spending, as opposed to 13 percent witnessed in FY21.
Over in Balochistan, the development spending equated 10 percent of overall provincial development spending in FY22, which is proportionally higher than the province’s inhabitants but lower compared to its landmass. The provincial government in Quetta managed to spend Rs118 billion on PSDP projects in FY22, showing a growth of 19 percent year-on-year. In terms of development spending’s share in overall expenditure of the province, the ratio was maintained at 31 percent, which is a good achievement.
For all the gains seen in FY22, the ongoing fiscal may not be as remarkable for provincial PSDP spending. On one end, the federal government has reportedly obtained commitments from provinces to run significant amount of surplus throughout the year, in order to remain on the right side of the Fund. And on the other end, the rising political instability, amid no uncertainty over timeframe for next general elections, is not helpful for speedy completion of development schemes. CMs will be running a tight ship!
Comments
Comments are closed.