ISLAMABAD: The government has put a tight squeeze on public sector development funds to create a substantial cushion for meeting international commitments on fiscal control in case of a shortfall in revenue collection.

In the first four months (July-October) of the current fiscal year, the government disbursed Rs99.8 billion for the Public Sector Development Programme which accounts for 19 per cent of the total annual allocation of Rs525bn. And no fund has been made available to the agencies concerned for achieving the Millennium Development Goals of meeting basic human requirements like food, health and education, despite an allocation of Rs12.5bn having made for the purpose.

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The government has also stopped disbursements for special federal development programme and projects meant for provinces and special areas, although an amount of Rs36bn has been earmarked for the purpose.

A senior government official said the government was obliged to limit fiscal deficit to 4.7 per cent of gross domestic product under a commitment made to the International Monetary Fund (IMF), but anticipated shortfalls in revenue collection were forcing the government to go slow on development programmes.

Under its declared disbursement policy, the government should have released by Oct 31 at least Rs142bn or 27pc of the total allocation, but stayed behind the target by more than one third (Rs42bn).

In percentage terms, PSDP disbursements this year were even lower than during the last fiscal year – the first year of fiscal consolidation and economic stabilisation. In the first four months last year, the government had released about 23pc of total spending – Rs98.2bn out of the total PSDP of Rs425bn.

The approved disbursement schedule required the government to release 20pc of the total allocation in the first three months of the fiscal year, followed by another 20pc over the next three months (about 7pc per month). The remaining 60pc should be disbursed to the executing agencies and various ministries and divisions at a rate of 30pc in each quarter (about 10pc per month).

Of the total disbursement, all federal ministries and divisions were given Rs64.8bn and another R36bn to special areas like Azad Kashmir and states and frontier regions (Safron), including Federally Administered Tribal Areas Fata), and big corporations like Wapda and the National Highway Authority.

Disbursements for Azad Kashmir and Fata were lower than last year, although AJK received higher funds under the monthly and quarterly disbursement schedule. AJK received about 35pc of its annual share in four months while Fata received less than 19pc.

Major projects in Azad Kashmir got Rs4.2bn in the first four months, compared to Rs4.7bn during the same period last year. About Rs4.2bn was provided to Gilgit-Baltistan in four months against Rs4.05bn during the same period last year. Safron, including Fata, received Rs3.6bn against Rs5.16bn.

The Pakistan Atomic Energy Commission was the highest recipient of PSDP disbursements. It received almost half (47pc) of its annual allocation in four months – Rs23.74bn out of the total allocation of Rs51.47bn. Pakistan Railways was the second largest recipient of development funds. It received Rs15.2bn (38pc) in four months against annual allocation of Rs39.56bn. Water sector projects were given Rs9.7bn (22pc) from the annual allocation of Rs43bn.

The federal ministries and divisions received Rs64.8bn in four months from the total annual allocation of Rs255.87bn.

Published in Dawn, November 10th, 2014