Pakistan

Development: it’s not enough

Development: it’s not enough

Never mind the tall official figures as far as next development budget is concerned. After accounting for federal and provincial development allocations – which include provisions for PSDPs, poverty alleviation, subsidies, and other support schemes for the young and the vulnerable – it is apparent that the development pie will considerably shrink when actual spending starts in FY20.

Put simply Pakistan’s public sector as a whole is looking to spend spend every seventh rupee (15%) out of its total spending, on development next fiscal. And that’s the budgeted sum – actual figure will likely be low. In the PML-N years, from FY14 to FY18, every fourth rupee (23%) was spent on development. In the PPP period, from FY09 to FY13, development spending had every fifth rupee (20%) coming its way.

But those numbers matter little when the big picture makes it clear that in the last decade, Pakistan spent, on average, a mere 4 percent of its GDP on development. In a country where the public sector still looms large on national economy, the share of development spending in GDP ought to be much higher. But don’t expect the PTI government to set about raising this share while it grapples with the twin deficits.

What the government hasn’t done, but could still do, is ensure that the targets that are set are realistic and there are reforms to ensure that the public sector gets a bigger socioeconomic impact for its shrinking development spending. On the numbers front, the government has not done itself a favor by setting steep budgetary targets for development spending.

There is little likelihood that the national PSDP figure of Rs1.6 trillion will be realized – albeit the Rs86 billion that has been budgeted for ‘other development expenditures’ outside of PSDP may have a better chance of a decent utilization level.

This consolidated development budget of Rs1.7 trillion, up from the revised figure of Rs1.36 trillion this fiscal, will be difficult to realize fully when the actual development spending is already way down this year. In the nine months ended March 2019, the federal and provincial governments had collectively spent about Rs656 billion on those two heads (PSDP and non-PSDP development). That is less than half of the revised budgetary figure for FY19. And next fiscal may bring even more chopping than the current one.

Be that as it may, the government still has the opportunity to reform its decades-old development paradigm. These are lean economic times, so why not get the development house in order? It is time to jettison the same-old, inefficient PSDP mode of development, which is administered by bureaucrats and not by project managers, and bring in the much-needed competence and accountability to this universe.

Copyright Business Recorder, 2019