ISLAMABAD: The government disbursed Rs429 billion for development projects in the first 10 months (July-April) of this fiscal year, accounting for only 61 per cent of the Rs700bn total allocations.

The pace of development spending during 2015-16 is significantly slower than last fiscal year when the Public Sector Development Programme (PSDP) had consumed almost 67pc (Rs349bn) of budgetary allocations (Rs535bn) in the first 10 months.

With this pace of releases, the government is likely to cut the development programme by over Rs75bn to contain the fiscal deficit within limits, a senior official said. The government is facing problems selling another modern telecom licence that was anticipated to yield about Rs50bn during this fiscal year.

Data compiled by the Planning Commission, utilisation of funds by all the federal ministries amounted to Rs122.5bn, accounting for only 58pc of their allocated share of Rs209.6bn for the whole fiscal year. During the same period last year, the ministries had utilised about Rs177bn in first 10 months against the total allocation of Rs259bn, more than 69pc.

Under the government’s approved disbursement mechanism, the PSDP should have consumed 80pc of total allocations in the 10 months. The mechanism required disbursement of 20pc each in first two quarters followed by 30pc each in last two quarters.

Power sector utilised the highest Rs97bn of the PSDP funds during the July-April period, almost 85pc of the Rs114bn allocation for the year. This was in line with government’s top focus on enhancing power generation capacity and initiation of some projects under the China-Pakistan Economic Corridor (CPEC).

During the same period last year, the power sector had consumed about Rs44bn, about 69pc of total allocation of Rs64bn.

The utilisation of funds in the road sector was strikingly slower than last year. Major road sector projects of the National Highway Authority consumed Rs64bn (40pc of allocation) against last year’s same period consumption of Rs70bn (63pc).

The government disbursed about Rs41bn for development schemes in special areas like AJK, Gilgit-Baltistan and the tribal region that accounted for almost 95pc of Rs43bn allocation. General elections are due in a few weeks in Azad Kashmir while these were conducted recently in GB.

Full disbursements were made for community development schemes of the parliamentarians as the entire amount of Rs20bn allocated for the purpose stood consumed ahead of local bodies elections last year.

This appeared to be in line with expectations of the International Monetary Fund (IMF) that expected Pakistan to curtail its overall development budget by Rs360bn (24pc) of allocations to limit fiscal deficit.

According to official documents released on the weekend after approval of Pakistan’s 10th quarterly review by its executive board, the IMF expected the government to rein in its overall development programme at Rs1.155 trillion, down 24pc, against Rs1.513tr approved by parliament and four provinces.

The IMF has targeted the federal government to contain PSDP expenditure at Rs620bn, down 12pc, against Rs700bn authorised by parliament. On the other hand, the cumulative annual development plans of the four provinces would be reduced to Rs535bn, down about 35pc against Rs813bn announced by the four provincial assemblies.

As part of the IMF programme, the government has set a limit on the country’s overall fiscal deficit for current year at 4.3pc of GDP including 0.3pc expenses for military operations against terrorists in the tribal region and resettlement of temporary displaced persons.

Published in Dawn, May 7th, 2016