Notwithstanding a revenue shortfall of Rs165bn in the first three quarters of the fiscal year, the government has ramped up cash flows to the public sector development programme in order to ensure completion of as many projects as possible before next year’s elections.

It is a rare phenomenon, that the development programme has remained unaffected from the revenue gap, since it was practically impossible to contain major ‘on-tap’ expenditures like debt servicing, defence and running of the government.

By April 21 this year, the government released about Rs518bn (79pc) for the core PSDP (of Rs655bn). Total releases for the entire federal development programme including special development schemes and resettlement of the people of tribal areas and the prime ministers schemes have amounted to Rs580bn or 72pc of the overall Rs800bn portfolio.

The government has decided to reset fiscal deficit at 4.1pc of GDP, up from 3.8pc fixed in the 2016-17 budget, approved by the parliament to protect the pace of development.

Federal Minister for Planning and Development, Ahsan Iqbal, agrees that the utilisation of maximum funds allocated for development projects was very important. Not only this, he stated that the planning commission would make every effort to secure a maximum allocation of funds for next year, to complete the maximum number of projects and support the growth momentum.

It is a rare phenomenon that the development programme has remained unaffected by the revenue gap

He said it was also important to have a larger development portfolio because it would trigger activity in the construction industry on which a number of other growth oriented industries were dependent, having job creation potential. Therefore, keeping in mind the financial means, the planning commission is seeking up to Rs1 trillion for the next year’s development outlay against Rs700bn indicated by the finance ministry.

With next year budget announcement now planned for May 26, ahead of Ramazan, the meeting of the annual plan coordination committee (APCC) comprising the federal and provincial development ministers has been called on May 17 to finalise the development plan.

Mr Iqbal said he had already proposed to the prime minister convening the meeting of the National Economic Council (NEC) on May 21 or 22 to approve the development budget in consultation with the provincial leadership. He said the prime minister and the finance minister would be requested to increase development allocations.

According to latest updates, the pace of disbursement of funds is even faster than last year when the government was able to surpass revenue its collection target — a rare feat in recent history.

More importantly, the pace of spending has apparently been led by key sectors — roads and power — under the China-Pakistan Economic Corridor (CPEC) initiative. For example, the National Highway Authority (NHA) has been given almost 87pc (Rs166bn) of its allocated share of Rs192bn as of April 21. During the same period last year, the NHA had spent about Rs64bn or about 40pc of the Rs160bn allocation.

Power sector spending is even higher at 93pc (Rs121bn) of the Rs130bn allocation. Last year, the power sector had utilised about Rs94bn (or 82pc) of the Rs114bn allocation. This means the CPEC implementation has now gone into full gear.

This also shows that the government is steadfast in its top priority to end load shedding in its tenure because the disbursements for power sector projects were scaled up significantly over the last two months. Total releases for the power sector were struggling at just 12pc in first half of the year and 36pc at the end of seven months, but they then increased up to 93pc after February.

The utilisation of funds by federal ministries has improved from 64.5pc (Rs152bn) released to the federal ministries in almost 10 months against an allocation of Rs237bn, up 57pc (or Rs119bn) from last year’s allocation of Rs210bn.

In line with the government priority to end load shedding, the disbursements for power sector projects have been scaled up significantly. Total releases for the power sector stood at Rs109bn as of March 10 against an allocation of Rs130bn for the full year, accounting for almost 84pc.

Also, part of the CPEC, the releases to the power sector were struggling at just 12pc at the end of the first five months and 36pc at the end of seven months but have been jacked up significantly in February to 84pc. Last year, the power sector had consumed more than 78pc (Rs89bn) of Rs114bn allocated funds in eight months.

Ironically on the other hand, the government released just Rs13.4bn for water sector projects as of April 21 against an annual allocation of Rs31.7bn, accounting for about 42pc.

Lower disbursements for water sector projects was an indication of the struggling pace of development despite being a high priority area given the continuously declining per capita water availability that is now bordering on acute scarcity.

Under the government’s disbursement mechanism, it should release 20pc funds each in the first two quarters of a fiscal year followed by 30pc each in the subsequent two quarters.

Published in Dawn, The Business and Finance Weekly, May 1st, 2017