EDITORIAL: It is strange that it has taken the finance ministry this long – more than a quarter into the fiscal year – to realise that it does not have the money to fund provincial projects that have seeped into the federal PSDP (Public Sector Development Plan). And because of “resource constraints” proper funding is not being provided to projects of “national strategic importance”, forcing the ministry to axe hundreds of development projects/schemes, including non-starter projects.
The finance secretary has conveyed this message quite clearly to provincial secretaries, reminding them that the 18th constitutional amendment and 7th NFC award gave provinces greater autonomy and financial strength to undertake initiatives in devolved subjects through their respective ADPs (annual development plans). Presently, about 33 percent of financial resources in the federal PSDP 2023-24 are claimed by provincial projects, with an allocation of Rs314bn.
Therefore, the centre intends to shake things up, starting with scrapping 137 non-starter projects with zero financial progress, which will save it approximately Rs116bn. It’s also decided to stop further releases to the SDG achievement programme (SAP), saving another Rs29bn.
A number of other initiatives like projects that have started, or those that have made substantial progress, are left for the provinces to complete for themselves. Of these, the more prominent are BISP (Benazir Income Support Programme) and subsidies to fertiliser sector, including subsidised supply of natural gas to fertiliser plants, subsidised supply of gas and RLNG to Agritech and Fatimafert (SNGPL-based plants) and subsidy on supply of imported urea.
BISP’s operations are currently funded by the federal government. But since its budget allocation has been steadily increasing, – doubling during the last two fiscal years – there is a “growing risk” that this level of funding may not be sustainable for the federal government. And now the best it can do is offer a 50-50 co-financing deal between the federal and four provincial governments for BISP’s beneficiary programmes. And since agriculture is a provincial subject, the finance ministry wants provincial governments to “assume full responsibility for provision of subsidy”.
All this makes sense on paper, but there’s still a few things to consider before the federal government can give complete attention to strategically crucial national projects. One, why has this realisation come so late? The “financial constraints” didn’t just pop out of thin air, so why weren’t they factored in when the PSDP was being prepared ahead of the budget?
Two, if the centre is facing problems, the provinces aren’t exactly flush with cash either. Simply dumping the problems onto them almost half-way through the year isn’t going to make it go away, even if it can be justified by the rules. Three, what is the contingency plan if the provinces fail to deliver? Will BISP and fertiliser subsidies, and a whole host of other issues and schemes, simply be allowed to freeze till the provinces have the money for them?
And four, why is the PSDP always riddled with non-starter programs? Why make the budget allocation when nobody is going to follow through on them? This problem, too, is not new. It is a standard feature in many areas of the annual budget, which shows poor planning and poorer coordination.
So, is there ever going to be an effort to identify and sort out departments within the finance ministry that are unable to do their basic day job? The resource crunch is understandable, though still unforgivable, but imbecilic incompetence is simply unacceptable. As the finance ministry dusts off extra financial burden, it must also look inward and improve its own poor functioning.
Copyright Business Recorder, 2023