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Govt development spending decreases 23pc in nine months of FY2019

Govt development spending decreases 23pc in nine months of FY2019

ISLAMABAD: The government has disbursed an amount of Rs449 billion for development programme on completion of first three quarters of 2018-19, down 26 per cent, from Rs607 billion in same period last year.

An update on the Public Sector Development Programme (PSDP) disbursements by the Planning Commission (PC) showed the government had expedited disbursement of development funds over the last couple weeks as it gets closer to the completion of fiscal year. The releases during July – March FY19 were still significantly short of the targeted disbursements mainly because of a large revenue shortfall.

This was evident from the fact that the government released about Rs75 billion in just two weeks. The total development spending had stood at Rs373 billion or about 55pc of the revised annual PSDP allocation of Rs675 billion. The overall disbursements have increased to Rs449 billion by first week of April, accounting for 66.5pc of revised target or less than 44pc of original allocation of Rs1,030bn.

The PC said it had released about Rs432bn in first nine months for the core PSDP projects, accounting for 72pc of the revised allocations of Rs597bn or 52pc of the original allocation of Rs825bn. In contrast, the Ministry of Finance separately released Rs17bn or 22pc for special projects, special areas and PM programmes against a total allocation of Rs78bn.

The government is anticipating its fiscal deficit to cross 6.3pc of GDP during the current fiscal year – missing by a wide margin its revised target of 5.1pc set in September last year. It has already suffered a revenue shortfall of about Rs318bn in 9MFY19.

According to PSDP implementation plan, the government should have released about 70pc funds of the annual allocation by March 31. Under disbursement mechanism put in place in consultation with the finance ministry, 20pc allocated funds are required to be released in each of the first two quarters and 30pc each in the third and fourth quarters of the financial year.

The data suggested that about Rs178bn has been released by PC to all the 39 federal ministries and divisions in three quarters, which worked out at 61pc of Rs291.5bn annual allocation. In comparison, Rs138bn had been released to these ministries the same period last year, accounting for 46pc of revised allocation of Rs302 billion.