The Public Sector Development Progra-mme appears to have survived, uptil now, the fiscal axe that has ruthlessly been slicing the development pie in recent years. The continuation of PSDP funding, however, would be a function of the materialization of expected inflows in the ongoing quarter.
The latest figures released by the Planning Commission show that Rs145.5 billion had been disbursed for the federal PSDP projects as on April 13, 2012. It must be noted that the Planning and Development Division is authorized to release upto Rs228.4 billion from the FY12 PSDP totaling Rs300 billion.
Of the remaining allocations, Rs38.6 billion committed by the foreign donors has to be materialized through the Economic Affairs Division. The rest of Rs33 billion, earmarked for "Special Programmes", had to be released by the cabinet and finance divisions. The special allocations have, reportedly, been exhausted by February this year.
The funds release mechanism for FY12 necessitated that the Commission released 65 percent of the funds during the first three quarters ending March 31. Nearly 64 percent of the allocations had been paid out as on April 13, 2012. The disbursals are expected to be expedited in the last quarter, as is the case every year, if the development budget is not curtailed.
The Pakistan Secretariat in Islamabad is buzzing with budget preparation exercises these days. A plethora of divisions and ministries are currently in the process of sending their wish lists to the finance ministry. The NECs approval of the FY13 federal PSDP is just a month away, and there are strong indications that the development spending would be significantly increased, by Rs50 billion or even more.
Perhaps the thing to actually worry about is the stock of unfinished projects accumulated by various ministries and divisions. The throw forward of almost Rs3 trillion is predominantly due to large infrastructure projects, which have had to compete for funding with new projects. No wonder the average completion period of an infrastructure project has escalated to 17 years due to time and cost overruns.
There might be some easing on this front as the projects nearing completion are being given priority. Moreover, the government is looking to significantly reduce its involvement in fresh social sector development projects come FY13. However, even at current funding levels, the current stock of projects may take upto ten years for completion, at the cost of the intended public benefits.
This scenario is a manifestation of serious issues in the governments paradigm of public sector development, e.g. lack of holistic development roadmap and project management capacity, incidences of malpractices and susceptibility to political considerations. This calls for an immediate rationalisation of the PSDP projects, based on their socioeconomic impact and completion timelines.
Moreover, the concept of zero-based budgeting must be implemented, wherein every ministry, division and department would have to justify each expense item line by line, rather than seeking approvals for just the fresh expenditures. The finance ministry needs to pursue this, more seriously than it did a couple of years back.