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PSDP comes to standstill amid tight fiscal control

ISLAMABAD: Amid tight fiscal control under the IMF programme, the federal-funded Public Sector Development Programme (PSDP) has nearly come to a standstill, with its five-month spending struggling at just 6.6 per cent of the targeted 26pc of the annual budgetary allocation.

This concerning spending pattern, which impacts public interest projects that influence living standards and economic growth, was revealed during a meeting on the progress of PSDP projects for 2024-25, chaired by Planning Minister Ahsan Iqbal.

A senior government official told Dawn that the meeting was informed that only Rs92bn had been utilised for the PSDP by Nov 20, against a revised budget allocation of Rs1.1 trillion, down from Rs1.4tr, as part of the IMF agreement. The Rs92bn utilisation accounts for 6.6pc of the budget allocation or 8.4pc of the revised PSDP cap.

Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government should release 15pc of budgeted allocation in first quarter, followed by 20pc in the second quarter, 25pc in the third quarter and the remaining 40pc in the last quarter of the fiscal year. As such, the estimated release for the PSDP up to Nov 20 should be around 26pc of annual allocation or no less than Rs290bn.

Minister wants comprehensive strategy for timely completion of development projects

This year’s utilisation is also significantly lower than last year’s Rs117bn, or around 13pc of Rs940bn annual allocation, despite the tight fiscal position and strict stabilisation programme in place.

The official said a major reason for lower utilisation this year was fewer disbursements by international lending agencies that stood at just Rs2.5bn so far in almost five months. The official, however, claimed that the Planning Commission had sanctioned about Rs142bn so far for the PSDP that also struggled at just 10pc of budget allocation of Rs1.4tr.

An official statement said the planning minister had called the “review meeting to assess the progress of PSDP projects for 2024-25”. Senior officials of the Ministry of Planning provided a detailed briefing on the allocation, releases, and expenditure of funds for PSDP projects across the country, it added.

Given the slow progress, the statement quoted the minister as directing his ministry “to develop a comprehensive strategy to ensure the timely completion of all ongoing PSDP projects”.

The meeting was told that about Rs406bn road infrastructure projects were currently under implementation in Balochistan. Ahsan Iqbal directed that these projects be completed within three years and emphasised the government’s commitment to prioritising development initiatives in Balochistan.

These Balochistan projects include three schemes of N-25 dualisation of the Khuzdar-Kuchlak section of National Highway, dualisation and rehabilitation of the Karachi-Quetta-Chaman road from Karachi-Karoro and Wadh-Khuzdar, and dualisation of Kararo-Wadh section and Kuchlak-Chaman section at a total cost of Rs224bn.

Four other motorway projects (M-8) included the construction of Hoshab-Awaran-Khuzdar Section-II and Hoshab-Awaran-Kiwzer Package-I, construction of the Gwadar-Ratodero road project and Wangu Hills Tunnel at a total cost of Rs96bn. Two more Balochistan projects — dualisation and improvement of existing N-50 from Yarik-Sagu-Zhob Bypass (Rs76bn) and rehabilitation and upgradation of Awaran-Jhali Jao Road (Rs7bn) — were currently in initial phases of implementation.

The minister directed his ministry to ensure the timely utilisation of funds by other ministries under the development budget. He stressed the importance of coordination with other ministries regarding their financial requirements for the next quarter, particularly for projects funded by external assistance, to avoid any delays in fund disbursement.

Published in Dawn, November 23th, 2024



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