CUT in development spending and low utilization of the Public Sector Development Programme (PSDP) have become perennial issues despite pledges made by the officials concerned about bringing efficiency to the system. Ironically, utilization of the PSDP remained just 10% of annual allocation, raising a big question mark as to how the budgeted amount would be expended judiciously and transparently in the remaining eight months. According to the data released by the Planning Ministry, the PSDP spending during July-October period amounted to about Rs. 104 billion as against Rs. 1 trillion annual allocations and much less than Rs 412 billion authorized by the Planning Commission.
The PSDP fails to produce desired socio-economic outcomes due to systemic governance, financial and planning flaws. In the first place, whenever the government faces revenue shortfalls or strict International Monetary Fund (IMF) fiscal targets, the PSDP is treated as an easy target for budget cuts, claw-backs and delayed releases. It is known to all that projects are frequently selected and initiated under political pressure rather than rigorous cost-benefit analyses (CBAs) or structured priority matrices. Spreading limited funds across a massive volume of ongoing and new schemes leads to severe underfunding per project. This causes massive time and cost overruns with a large percentage of projects suffering multi-year delays. Executing agencies suffer from unqualified appointments, manual and delayed monitoring systems, neglected stakeholder management and unresolved land acquisition hurdles. It is alleged that PC-Is are approved without due diligence and sponsoring agencies lack competence as well as commitment to make best use of the allocated funds. The Pakistan Institute of Development Economics (PIDE) had proposed reforms to address these and other related issues and it is time these are implemented on priority basis.
