Federal PSDP slowing down

KARACHI: After a good first two months this fiscal, the federal government seems to have gotten stuck in a low gear vis-à-vis development projects. But still, at the end of the first quarter (Jul-Sep), the federal government’s spending on the trillion-rupee Public Sector Development Programme (PSDP) has racked up impressive numbers.


As per the data released by the Planning Commission (PC), the PSDP releases totaled Rs169 billion as of September 29, 2017. That amounts to 17 percent of the budgeted amount of Rs1.001 trillion PSDP budget in FY18. The spending ceiling is set at 20 percent for the first quarter (Jul-Sep). So the numbers do not look that bad.


September was a slow month for federal PSDP, it appears. After releasing some Rs130 billion in the Jul-Aug period, the federal government could only dish out Rs17 billion more in September. What has picked up though is the foreign aid component, which was zero in the first two months. Then in September, about Rs22 billion have been released by the international donors and financiers for the PSDP projects, through the Economic Affairs Division (EAD).


As of September end, the federal government, which has budgeted to provide 84 percent of the PSDP funds in FY18, had disbursed Rs147 billion in 1QFY17. That amounts to 18 percent of its mandate. Rest of the PSDP is to be funded by foreign aid (loans and grants). The foreign aid component totaled Rs22 billion in the period under review, or 13 percent of the funds supposed to arrive from foreign sources.


So far in FY18, the bulk of the federal government spending has gone to the National Highway Authority (NHA) (Rs44bn), PM’s ‘Global SDGs Achievement Programme’ (Rs30bn), Special Areas (AJK, Fata and GB; Rs15bn), Special Federal Development Programme for TDP’s and Security Enhancement (Rs15bn), Railways (Rs9bn), and Wapda’s water-sector projects (Rs7bn).


About 99 percent of the foreign grants and loans have gone to the NHA and the power-sector projects of the Wapda. Taking a cue from the recent monthly foreign-aid disbursement report by the EAD, most of the foreign funds meant for PSDP projects had origins in China. These include CPEC-related projects for construction of motorways and highways. Some of the funding for power/energy projects seems to have come from the Asian Development Bank.


It is too early to tell whether the PSDP spending slowdown in September will feature in the coming months as well. Knowing that FY18 could likely be an election year, the PML-N would want to use all its development firepower as early as possible. But the growing trials and tribulations faced by the former premier Nawaz Sharif and his family may put a spanner in the works. That has the potential to discourage the bureaucracy from fast-tracking the political pet projects. Let’s see where things go from here.