Pakistan: Abysmal performance

Sindh's Annual Development Programme has allocated 24.8 billion rupees for development projects out of a total budgetary allocation of 161 billion rupees in seven months of the current fiscal year, a Business Recorder exclusive reveals. This is alarming though not surprising. Pakistan's provincial governments as well as the federal government announce a significant allocation for development programmes, which allows them to claim that their commitment to development far outpaces that of their predecessors; however rarely, if ever, is the budgeted allocation for development actually disbursed. The fact that for Sindh disbursement so far has been only 15 percent of the total budgeted for the year should be a source of serious concern to the peoples' representatives who are going to go back to their electorates to seek a fresh mandate within the next three to four months. Failure to utilise funds earmarked for development projects is all the more dire because in today's Pakistan, with private sector activity held hostage to massive loadshedding, law and order problems and the crowding out of private sector borrowing due to heavy borrowing by the state, federal and provincial governments can increase economic activity through utilisation of development funds. This, in turn, would have raised gross national product with its positive impact on all major macroeconomic indicators and increase the number of employment opportunities. The federal finance ministry has developed a reputation for not disbursing funds for development given its failure to either check the rise in current expenditure relative to what is budgeted or indeed to generate the budgeted revenue. Thus it diverts funds budgeted for development programmes to meet current expenditure to ensure a budget deficit that is more sustainable than would have otherwise been possible. Thus one may legitimately question whether Sindh's finance department had the necessary resources to make the releases. A high-level meeting on the utilisation of development funds for various ADP projects under the chairmanship of Chief Minister Qaim Ali Shah was informed that the fault for the small releases to-date lay with the relevant departments which failed to seek the release of funds allocated to them for use for identified development schemes. In this context, the question arises whether the failure to request for release of development funds earmarked for specific projects is not attributable to Pakistan's extremely low absorption rate. This may provide only part of the answer and the perception is that the appallingly poor utilisation of development funds is inexplicably an indication of a lack of political will as well as capacity to implement schemes that would not only benefit the public at large but also the political fortunes of the incumbent government. It is extremely unfortunate that provinces have not been able to meet the challenges that they vigorously fought for and succeeded in getting in terms of greater financial autonomy and devolution of critical and politically sensitive social sectors (education, health etc) in the National Finance Commission (NFC) award as well as the 18th Amendment. True that provincial capacity remains inadequate but all provinces, to a greater or lesser degree, need to urgently build the requisite capacity in terms of not only generating more revenue than they have so far been able to generate but also to utilise allocations earmarked for the appallingly and poorly performing social sectors.