Development spending in Pakistan has encountered significant constraints as the country grapples with fiscal challenges. In the first two months of the fiscal year, only Rs22.5 billion has been spent, falling short of the annual budget allocation of Rs950 billion. This stagnation in development expenditure has been attributed to rising interest payments and disruptions caused by changes in government.
According to data from the Ministry of Planning and Development, the actual expenditure on core development in the first two months amounted to only Rs8.1 billion, after excluding the Rs14.4 billion disbursed by the previous government for its parliamentarians’ schemes under the Sustainable Development Goals (SDGs) Achievement Programme. This amount was spent primarily before the caretaker government took office, with a substantial portion allocated to water, power, and information technology projects. The remaining amount was spent by various federal ministries, divisions, and corporations.
In the first two months, the Ministry of Planning and Development released Rs135.4 billion for development projects, which accounted for about 14% of the annual Public Sector Development Programme (PSDP) worth Rs950 billion. However, despite the release of funds for parliamentarians’ SAP schemes, the disbursements authorized for ministries, divisions, and corporations amounted to only Rs74 billion, just 8.6% of their budgetary allocation.
These challenges in development spending come in the midst of rising interest payments and fiscal pressures. Reports suggest that interest payments in the first month of the current fiscal year exceeded the federal government’s net income. The government has been facing difficulties in balancing its expenditures with limited resources.
As a result of these constraints, development projects in Pakistan are likely to face negative impacts due to insufficient funding. This will have adverse effects on the living standards of a population already grappling with record-high inflation. The caretaker Finance Minister, Dr. Shamshad Akhtar, has emphasized the need for a review of public sector development spending, particularly in the context of the IMF program.
Despite these challenges, efforts are being made to address the fiscal constraints and ensure sustainable development in Pakistan. It is crucial for the government to find solutions that prioritize infrastructure development and allocate adequate funds to support the country’s growth and improve the lives of its citizens.