Islamabad was severely paralyzed in November. And yet the government still found a way to boost development spending. Last month, the federal government disbursed around Rs70 billion for the trillion-rupee FY18 Public Sector Development Programme (PSDP), as per recent data from the Planning Commission. That is by far the best spending month for PSDP this fiscal.
The November spike brings total federal government PSDP spending to Rs243 billion, as of December 8, 2017. That’s about 29 percent of the Rs839 billion financial commitment made by federal government to the PSDP budget. The government can release up to 40 percent of the PSDP funds until December end. By that measure, it can release up to Rs100 billion in December and still be within that ceiling.
The remaining Rs162 billion – or 16 percent of the Rs1.001 trillion PSDP budget – will be funded by foreign aid (FA). External funding stood at Rs62 billion in the five-month period. CPEC projects account for bulk of the foreign funds, as two-thirds of FA went to the National Highways Authority projects. About 30 percent of FA made its way to the Water & Power Development Authority’s power-sector projects.
Put together, the total PSDP funding – government-sponsored plus foreign-sourced – had accumulated to Rs305 billion as of December 8. That’s 31 percent fulfillment of the massive PSDP promise this fiscal. While the spending in November provides a welcome boost, sustaining that momentum into the coming months is going to be a challenge, with political uncertainty mounting by the day.
Cornered from all sides, the extent to which the Abbasi government can spend its way to electoral relevance is debatable. After the elder Sharif’s ouster back in July, now the stars don’t seem aligned for the younger Sharif either. It seems that judicial proceedings and street-pressure are going to get tough from here on. In that environment, getting the bureaucratic machinery to move at a high gear and expedite development projects can be hard for the elected rulers.
Yet, despite the state’s surrender to a mob in November and the ensuing weakening of the PML-N’s right flank, the center seems to be holding alright. Mass desertions haven’t occurred in the party and PM Abbasi looks comfortable at the wheel. Better execution of sovereign bond issues lately enabled a right sequencing for gradual currency depreciation. Improvements in gas and electric utilities will be good enough for the winters. PSDP spending is also gathering momentum. But can all that be sustained in the coming months?
