Govt misses development target
The government spent Rs905 billion on development schemes in the last fiscal year, which was lower than the allocation and may now require a downward revision in the 2.7% economic growth rate that had been worked out on the basis of Rs1.1 trillion in expenses.
Of the Rs905 billion, a little over half — or Rs456 billion — was spent during the last two months (May-June), also underscoring the need to revisit the current budget strategy that artificially suppresses expenses.
According to provisional figures, the federal government spent Rs905 billion under the Public Sector Development Programme (PSDP) in the fiscal year 2024-25, which ended on Monday.
The Rs905 billion spending was less than the Rs1.4 trillion original budget approved by the National Assembly for the fiscal year 2024-25. However, the government subsequently cut the PSDP to Rs1.1 trillion, but still, the actual spending remained lower than the revised budget.
For the last fiscal year, the government had announced a 2.7% economic growth rate, which was based on the assumption that the downward-revised Rs1.1 trillion PSDP would be fully spent.
In a press briefing last month, the Chief Statistician of the Pakistan Bureau of Statistics (PBS), Dr Naeemuz Zafar, confirmed that the GDP figure assumed that the Rs1.1 trillion would be spent.
An official of the PBS said on Wednesday that after the actual Rs905 billion spending, there will be some impact on economic growth calculations. He said the exact impact could not be immediately determined.
Speaking to The Express Tribune, Federal Minister for Planning and Development, Ahsan Iqbal said, "We had almost touched the Rs1 trillion spending mark, but due to slow approvals by the Accountant General Pakistan Revenues (AGPR), the spending remained at Rs905 billion."
Sources said the Ministry of Finance had instructed the department of the AGPR to slow down releases during the last days of June to meet International Monetary Fund (IMF)-related budget targets.
According to the current budget release strategy, about 40% of the total budget was sanctioned in the last quarter, which often results in subpar expenses and may also cause leakages.
A member of the Senate, who is also in the construction business, told The Express Tribune on the condition of anonymity that the AGPR did not clear contractors' cheques due to budget-related constraints.
During the July-April period of the last fiscal year, the government had spent Rs449 billion. But in the past two months, another Rs456 billion was booked under development spending. In June alone, Rs308 billion in development spending was shown.
However, the planning minister said that development work did not stop in the third quarter of the last fiscal year and that it was only the money that was released and booked during May-June.
For the sake of the IMF programme, the finance ministry squeezed the PSDP to achieve quarterly and annual primary surplus targets.
A recently released planning ministry report stated that lower-than-planned spending had impacted projects across various sectors. Despite thin fiscal space, the government was still adding either new projects or upwardly revising the cost of already approved schemes.
Major spending heads
According to the provisional figures, the government spent Rs60.5 billion on parliamentarians' schemes in the last fiscal year. The spending was more than the downward-revised budget.
But Iqbal said that after initially deciding to revise the budget downward, the government decided to retain the original allocation for the Sustainable Development Goals (SDGs) programme.
The parliamentarians' schemes are branded as SDG initiatives.
Another Rs69.5 billion was spent on provincial projects, which are funded by the federal government. Financing provincial schemes is against the commitments given to the IMF and the National Fiscal Pact.
About Rs64 billion was spent on schemes being executed in the erstwhile Federally Administered Tribal Areas, now merged with Khyber-Pakhtunkhwa.
Against a downward allocation of Rs61 billion, spending on higher education remained at Rs58.8 billion. The Pakistan Atomic Energy Commission received its full Rs25 billion budget, but for this fiscal year, the government has drastically cut its allocation.
Development spending by the Space & Upper Atmosphere Research Commission (SUPARCO) remained at Rs30.4 billion against the allocation of Rs41 billion.
The government spent Rs154 billion on projects of the Ministry of Water Resources, which also include spending on two major dams. The allocation was Rs195 billion. For this fiscal year, the government has reduced the water sector allocation by 28%.
Spending on motorways and highways under the National Highway Authority amounted to Rs144 billion, against the Rs161 billion allocation.
Development spending on power sector projects stood at Rs88 billion, as against the Rs98 billion allocation.
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