ISLAMABAD: The government has disbursed about Rs449 billion for development programme on completion of first three quarters of 2018-19, down 26 per cent, from Rs607bn in same period last year.
An update on the Public Sector Development Programme (PSDP) disbursements by the Planning Commission (PC) showed the government had expedited disbursement of development funds over the last couple weeks as it gets closer to the completion of fiscal year. The releases during July – March FY19 were still significantly short of the targeted disbursements mainly because of a large revenue shortfall.
This was evident from the fact that the government released about Rs75bn in just two weeks. The total development spending had stood at Rs373bn or about 55pc of the revised annual PSDP allocation of Rs675bn. The overall disbursements have increased to Rs449bn by first week of April, accounting for 66.5pc of revised target or less than 44pc of original allocation of Rs1,030bn.
The PC said it had released about Rs432bn in first nine months for the core PSDP projects, accounting for 72pc of the revised allocations of Rs597bn or 52pc of the original allocation of Rs825bn. In contrast, the Ministry of Finance separately released Rs17bn or 22pc for special projects, special areas and PM programmes against a total allocation of Rs78bn.
The government is anticipating its fiscal deficit to cross 6.3pc of GDP during the current fiscal year – missing by a wide margin its revised target of 5.1pc set in September last year. It has already suffered a revenue shortfall of about Rs318bn in 9MFY19.
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According to PSDP implementation plan, the government should have released about 70pc funds of the annual allocation by March 31. Under disbursement mechanism put in place in consultation with the finance ministry, 20pc allocated funds are required to be released in each of the first two quarters and 30pc each in the third and fourth quarters of the financial year.
The data suggested that about Rs178bn has been released by PC to all the 39 federal ministries and divisions in three quarters, which worked out at 61pc of Rs291.5bn annual allocation. In comparison, Rs138bn had been released to these ministries the same period last year, accounting for 46pc of revised allocation of Rs302bn.
The data showed that PC could not release any funds for development of erstwhile Federally Administered Tribal Areas (Fata) even though an allocation of Rs10bn had been approved in the supplementary budget presented by PTI government in September as federal contribution to 10-year development programme of the region now merged as districts of Khyber Pakhtunkhwa. Last year, the government had released about Rs16.9bn for states and tribal regions in about nine months against an annual allocation of Rs26.9bn.
Also, the government did not spend even a penny on special programmes so far for which the PTI government had made an allocation of Rs27bn, including a block allocation of Rs24bn for expected special initiatives under the China-Pakistan Economic Corridor (CPEC). These funds now stand transferred to parliamentarians’ schemes without any utilisation so far.
Releases to Azad Jammu & Kashmir stood at Rs18bn so far against a total allocation of Rs25.8bn. During the same period last year, Rs15.9bn were provided to AJK against the same allocation of Rs25.8. Likewise, Gilgit Baltistan was provided with Rs13bn this year against an allocation of Rs17.5bn, from Rs15.25bn last year out of Rs18.3bn allocation.
In contrast, the releases out of federal budget to corporations as percentage of total allocations were higher this year, mainly because of near completion of most projects that have been under implementation for a few years, with majority of them under CPEC. In absolute terms, the releases for National Highway Authority (NHA) and power companies had been significantly lower this year.
This is evident from the fact that PC released a total of Rs220bn to two leading corporations – NHA and the power sector – that were even higher than revised allocations of Rs218.6bn. In comparison, an amount of Rs279bn had been disbursed to these sectors in same period last year against a total allocation of Rs385bn.
According to fresh estimates of fiscal operations finalised by the Ministry of Finance, the fiscal deficit has been worked out to go beyond Rs2.4 trillion in absolute terms against Rs1.98tr target fixed as part of the supplementary budget 2018-19. The deficit was originally fixed at 4.9pc of GDP (Rs1.89tr) by the PML-N government for this fiscal year.
The government is estimating deficit numbers would be close to last year when it stood at 6.5pc of GDP or Rs2.243tr. The sources said the slippages on the fiscal front were emerging from both sides – revenue shortfall and expenditure overrun mostly on account of debt servicing and defence.
Published in Dawn, April 12th, 2019