ISLAMABAD: The government has increased development spending to about 55 per cent of its budgetary allocations, significantly higher than last year’s 35pc during the corresponding period.

The data released by the Planning Commission shows that it has approved Rs384 billion disbursements for development projects as of January 17 against a budgetary allocation of Rs701bn, accounting for 55pc.

Exactly during the same period last year, the Planning Commission had approved release of Rs233bn for development schemes against a budgetary allocation of Rs675bn, accounting for 35pc.

As part of the accelerated disbursements, the government has so far released Rs18.6bn for the development schemes of its parliamentarians under the account of Sustainable Development Goals (SDG) against an allocation of Rs24bn for the full year, showing a 78pc spending in just six months.

83pc of allocations for security enhancement spent in six months; only 15pc of allocations for TDPs released

Of late, the PTI government has been under criticism from its own parliamentarians for poor performance in terms of development schemes in their constituencies and the resultant embarrassment they claimed to be facing from their voters.

Of the total disbursement of Rs18.6bn for the SDGs schemes, about Rs6.6bn has been released over the last couple of weeks.

Also, the government has disbursed a major part of about Rs26.8bn in first half of the year against total allocations of Rs32.5bn for security enhancement, showing 83pc spending.

In sharp contrast, only Rs5bn have so far been spent on special federal government programme for temporarily displaced persons (TDPs), accounting for just 15.4pc of the Rs32.5bn allocation. Likewise, only Rs1.5bn has been spent on the Prime Minister’s Youth and Hunarmand Programme against an allocation of Rs10bn, about 15pc. Similarly, only Rs4.4bn or 18pc funds have been spent for the development of newly merged tribal districts of Khyber Pakhtunkhwa against a total allocation of Rs24bn.

On top of that, about Rs8bn has so far been spent on the 10-year development plan for the merged areas against a budgetary allocation of Rs48bn, only 17pc.

More significantly, no funds have so far been authorised for disbursement against Rs2bn allocation for the Clean Green Pakistan Movement - a priority project of PM Imran Khan.

On the other hand, the Planning Commission has approved release of about Rs111bn to National Highway Authority that accounts for about Rs72pc of annual allocation of Rs155bn.

On the contrary, Rs7.3bn (17pc) has been given to the power sector against its allocation of Rs42.5bn for development schemes.

The development expenditures have been accelerated after a recent advice from the International Monetary Fund (IMF) to make maximum use of development allocations at all levels of government, including the federal and provincial governments, to uplift a slowing economic growth rate.

The development spending in little more than half of the current fiscal year has received a robust support from inflows from development lenders for project financing as foreign exchange component (FEC). The government has disbursed about Rs65bn FEC as of Jan 17 against an annual target of Rs128.3bn.

For speedy disbursements, the government has recently shortened the budget release process. Under the fresh mechanism, the government has decided to make available 50pc of total annual allocations for development projects in the first half of the fiscal year.

Under the previous arrangement, 40pc funds were provided to the Public Sector Development Programme projects in first six months, at the rate of 20pc in each of the first two quarters. Now, the ministry of finance has made available half of the budgetary allocations for approved PSDP projects to the Ministry of Planning and Development by revising its release strategy. As such, 20pc releases would now be made in first quarter, 30pc each in second and third and remaining 20pc in the last quarter of the year.

The move is aimed to give an incentive of advance releases to the executing agencies to utilise funds appropriately within required time period. Also, there would be no ways and means clearance of the Finance Division for the approved PSDP projects for the first three quarters of the financial year.

Earlier, the Planning Commission used to authorise funds for development schemes on the basis of cash plans of the executing agencies, but the Ministry of Finance used to withhold sizeable funds on the premise of “ways and means clearance” to slow down disbursements for development and meet urgent requirements of current expenditure or other obligations. It was one of the key reasons for project delays and cost overruns.

An updated revised release strategy for approved PSDP projects to formalise the new strategy is part of the Public Finance Management Act 2019 passed as part of the finance bill 2019-20 under the requirements of the World Bank and IMF programmes.

Published in Dawn, January 23rd, 2020