Growth multiplier for PSDP termed very small as compared to neighbour countries

The Pakistan Institute of Development Economics (PIDE) vice chancellor and former deputy chairman Planning Commission Dr Nadeemul Haq on Thursday said that growth multiplier for the Public Sector Development Programme (PSDP) was very small as compared to the neighboring, India and Bangladesh, as well as the private sector within Pakistan.

Speaking at a day-long conference "Doing Development Better: Analyzing the PSDP" organized by the PIDE, he stated that the planning had been on the back foot under austerity regimes and there was no overarching strategy or plan.

Haq regretted that agriculture and social sectors had remained neglected for the last 20 years.

He said that besides there are no sectoral plans and we have only fragmented, small independent projects, and cost-benefit analysis by the donors as well as the government has been downplayed along with critical issues in the planning cycle.

Haq added that the PSDP is the main instrument for improving the socio-economic condition in the country and achieving economic development objectives set by the government.

The PSDP process involves multi-organs of the state, he said, adding that these include five stages-life cycle approach starting from; identification and preparation; appraisal and approval; execution; completion, and evaluation.

Haq pointed out that the PSDP projects faced numerous challenges including delays in implementation, cash flow issue as well as throw forward, budget cuts, duplication of the projects at federal and provincial levels and massive leakages due to weak monitoring and evaluation both at the Planning Commission level, and at the level of executing agency, besides weak governance structure. The former deputy chairman, Planning Commission, added that all stages of the PSDP projects needed to be carefully analyzed to achieve optimal intended outcomes of growth and social development.

Haq added that there was a need to calculate growth strategy and for this purpose it was necessary to strengthen coordination at federal and provincial government level. He suggested that the Inter-Provincial Coordination Ministry must play due role to strengthen the coordination between the federal and provincial governments.

On energy sector, Nadeemul Haq stated that there was no official study or strategy with regard to energy sector, which he added were fundamental problems that needed to be addressed.

Deputy Chairman Planning Commission Muhammad Jehanzeb Khan said that there was a need of comprehensive and integrated policy for all sectors, as policy and planning were necessary for development projects. With the new RBM approach of the government we should have a single budget for each ministry to manage outputs (KPIs) in an efficient manner.

Role of Planning Commission in this regards is very important and dynamic as it can play the central role for economic growth and jobs creation like SBP is entrusted for inflation. The DCPC, while concluding the session, suggested that besides growth targets we are also missing on the equity in economic resource distribution.

There are virtually no policies e.g. we have no tax policy, industrial policy etc. and deficits in crucial health and education entitlements are increasing.

Owing to fiscal crunch, the government provision of public goods should be narrowed. Coordination and strengthening of other economic institutions such as the ECC, the ECNEC, the NFC, IR water system, and the IPCC is needed to harness the assets of society.

First panel discussion on reviewing the PDP was chaired by Sartaj Aziz.

The problems faced by current public investment management system are of structural nature and can be reduced.

The presenters of the session urged to use the examples from South Korea and Malaysia, i.e. the way they did it.

They started with exporting primary goods but focus was on producing secondary goods.

Panelists identified uncertainties in availability of funds for the PSDP and the lack of coordination in finance and planning departments to be of critical importance. Out of the box solutions such as having an IPO and community government partnership models can reduce the burden of the government.

Sartaj Aziz stressed the need for picking the easy reforms first rather than going for a complete overhaul e.g. improving the planning manuals and getting them approved from the ECNEC and the IPCC.

He said this is needed to have a national impact, improving the selection, training and accountability procedure for planning departments (PDs), having an expert advisory council for review, and application of technology for system improvement.

Second inclination of the PSDP towards political manifesto is natural and cannot be avoided but minimized such as by having a master plan (e.g. identified potential bridges on rivers) or having the sectoral policies or improving the project completion period for providing space for new projects rather then they forcing their way in.

Second panel discussion was led by Illango Patchamuthu, country director World Bank Pakistan. The panelists of this session identified that even the laid down procedure formulating the projects is not followed.

The failure to do so is due to the procedural bottlenecks and capacity issues. The PC-IV and PC-V are missing from the system, thus effective monitoring or improvement in the system on dynamic basis is not happening. There are overlap in projects objectives and jurisdictions.

The use of technology in the project development and later on in its implementation and monitoring and evaluation is redundant. Planning Commission approved about 10 years ago a complete road map on digitization of the PSDP was approved but never implemented.

The use of technology and data analytics was considered a pre-requisite for effectiveness of the PSDP in the future.

Use of spatial planning and integration of different tiers of vertical and horizontal levels of the government would be required. There are many examples within planning like use of Suparco services for crop produce estimates, which can be mainstreamed.

Concluding the session, Illango stated that overall system both from the technology and policy front, needs to be improved. Cleia Rontoyanni of the World Bank public sector specialist stated that several good practice required by Public Finance Management 2019 included; exclusion of unapproved projects from PSDP and budget; sector strategies/investment plans/programmes/ as basis for project; distinction between the core/nation projects and sector projects; project execution thought treasury single account, financial reporting in Financial Reporting and Budgeting System (FABS); asset registries for infrastructure and other fixed assets; reporting of fiscal risks, commitments and contingent liabilities including from Public Private Partnerships (PPPs) and other contractual obligation; and charts of accounts, PSDP guidelines, standard operating procedures (SOPs) and manuals.