Another blow to development

Business Recorder

17-05-2025

EDITORIAL: To take money out of the Public Sector Development Programme (PSDP) and reallocate it as subsidy is not just bad policy — it's a confession. When the Economic Coordination Committee (ECC) surrendered Rs50 billion from the PSDP to the Power Division to meet circular debt targets set by the IMF, it tacitly admitted that long-term development has once again been sacrificed at the altar of short-term survival.
Even worse, this wasn't a contingency. The plan to fund solar tube wells in Balochistan was approved nearly a year ago. That it still wasn't reflected in budget allocations — and now requires a last-minute diversion of core development funding — says all that needs to be said about planning capacity and fiscal governance.
That this comes amid chronic under-utilisation of the PSDP makes the decision all the more indefensible. According to the Planning Commission, just 41 percent of the revised PSDP allocation has been spent in 10 months. The total allocation had already been revised downward — from Rs1.4 trillion to Rs1.1 trillion — yet only Rs448.6 billion was utilised by end-April. Clearly, the problem is not a lack of available funds, but a near-systemic inability to spend them productively.
The gap between funds released and funds utilised is particularly revealing. Of the Rs638 billion authorised for various ministries and divisions, only Rs339 billion has actually been spent. The PSDP release schedule from the Finance Division had allowed for 73 percent of funds to be disbursed by this point in the fiscal year. The fact that actual utilisation is lagging so far behind points to failures in coordination, execution, and oversight.
Worse still is the complete inaction by several ministries. The commerce, communications, and religious affairs divisions, among others, have spent nothing from their PSDP allocations so far. This is not merely inefficiency — it is dereliction. Ministries that cannot spend even a fraction of their budgetary authorisations are not just administratively weak, they are obstructing national development itself.
And yet, one line item has bucked the trend: funds earmarked for parliamentarians. Against a revised allocation of Rs25 billion, a full Rs35 billion has already been spent. In a year where so many ministries failed to move a rupee, development funds for elected officials have not only been fully disbursed, they've overshot the budget. This alone captures how public money continues to be lavished on political priorities at the cost of national ones.
The government has claimed that the Rs50 billion reallocated to the Power Division will help solarise 27,000 tube wells in Balochistan. While the solarisation plan may have merit, the fact that Rs14 billion had already been disbursed under this head shows that it was an established project — yet one that never made it into actual planning frameworks or development allocations. Now, instead of correcting that oversight, the government is plugging the hole by cannibalising PSDP funds, further diminishing the scope of broader development.
All this is happening during a time of rare macroeconomic breathing room. The IMF's recent satisfaction with Pakistan's performance and a relatively low inflation environment had created a small window for consolidating fiscal reform and rebooting growth. Instead, mis-governance is squandering it. For yet another year, PSDP utilisation is likely to fall well short of target—continuing a pattern of underperformance that spans governments and budget cycles.
It is telling that this year, ministries were asked to surrender unspent funds a month earlier than usual. While this may have been intended to enforce discipline, it has instead amplified confusion. Some divisions reportedly cut their development activity prematurely, fearing that delayed paperwork would result in permanent loss of funds. That budget management is still subject to such reactive, uncoordinated decision-making speaks volumes about the institutional fragility of the system.
Pakistan cannot afford to treat development spending as a flexible account. The PSDP is not a slush fund to be redirected when convenient — it is the country's primary lever for building infrastructure, improving services, and fostering long-term growth. But unless budgeted funds are actually spent, and unless they are spent well, none of this matters. Time and again, successive governments have failed to meet development targets not because of economic constraints alone, but due to inefficiency, poor governance, and often outright neglect.
In the end, the numbers speak for themselves. Billions remain unspent, core ministries are dormant, yet parliamentarians are flush with funds. And once again, what passes for planning is little more than posturing. It's not just wasteful — it's unforgivable.
Copyright Business Recorder, 2025