THE federal Public Sector Development Programme (PSDP) is one of the biggest engines of growth simply by virtue of the enormous resources that can be thrown into the economy through it. The revival of growth that the government presents as its signature achievement has in large part been achieved by sharply escalating development spending. In the outgoing year, for example, the government disbursed Rs744bn through the development budget. Although this amount was below the budgeted Rs800bn (for the federal PSDP only), it still represents enough money that goes directly into productive activities and that can shape the fiscal framework as well as the growth environment in important ways. But with this volume of money passing through government hands, it is crucial that proper oversight be maintained to ensure it is being directed towards the projects for which it is intended.

In the last fiscal year, as an example, revenue shortfalls necessitated a steep cut in the domestically financed component of the development budget, and the axe largely fell on the programmes marked to facilitate the return of temporarily displaced persons of the Waziristan operations. The amount allocated for this programme was Rs100bn, but it was cut by Rs38bn. From the remainder, around Rs24bn was then diverted to various expenditures not connected to the TDPs at all, such as paying for the contingent liabilities of the JF-17 Thunder contractual payments, as well as a ‘security allowance’ and raising a special security force.

Although these diversions were effected after obtaining the necessary approvals, they speak of the ease with which funds marked by parliament for one purpose can be diverted to another. It is not clearly known how much of the development budget gets diverted in similar ways since the reporting template for the programme does not include the relevance disclosure requirements. What is known, however, is that growing amounts from the development budget are now being directed towards funding projects related to CPEC, for which more than Rs1.1tr have been marked thus far and Rs180bn spent until June 2016. Given the sheer amounts involved, and the growing absorption of domestically financed projects meant for CPEC, parliamentary oversight is becoming ever more critical. Yet the development budget remains one of the least debated and scrutinised areas of public finance. Parliament must play a more active role in providing oversight in this crucial area.

Published in Dawn, July 22nd, 2017