On Tuesday, PM Shehbaz Sharif expressed his dissatisfaction with the proposed allocation of Rs 700 billion for the development budget for the next fiscal year and instructed the relevant quarters to further increase it given the dismal state of economic growth in the country. While this is true, there is little that can be done given the severe economic crisis facing the country, and any kind of investment in this should be targeted to ensure certain results and benefits to the people who need it the most.
As per reports, PM Shehbaz’s proposed figure is over 50 percent more than this year’s original Public Sector Development Programme (PSDP) budget during the first review of an under-consideration Rs14.6 trillion budget for the fiscal year 2023-24. In addition to this, the PM has also directed the finance ministry to review the proposed salary increase for the federal government employees.
The aim here is to reduce the burden on the lower- and middle-income classes, however, this has now become a routine statement without any tangible results to show for. Even PM Shehbaz Sharif is well aware of the constraints at this point in time, but a lot of these statements and measures should be chalked down as politically motivated given the prevailing circumstances and upcoming general elections. In light of the deteriorating economic situation, it is estimated that Pakistan will experience a contraction of up to 3 percent to a nominal growth of around 0.5% in the outgoing fiscal year.
In fact, a recent report by the IMF stated that the country’s PSDP had become unaffordable as the currently approved projects will likely take a decade and a half to complete before accounting for cost increases. Despite severe fiscal constraints and a huge backlog of incomplete projects, new projects with a total cost of Rs 2.3 trillion were added to the last budget by the government. This has been a persistent issue due to a lack of policy continuity and poor implementation mechanisms, as projects such as the Narowal Sports Complex, Sehat Sahulat Card and Jamshoro power plant have faced a massive surge in terms of the completion cost.
What we need is transparency, policy continuity, and a focus on key areas that urgently require investment. Whether the allocation is doubled or tripled, it will be of little consequence if our approach towards development spending remains the same.