Slow projects face axe as govt prioritises completion
ISLAMABAD: The government decided on Friday to close several slow-moving development projects and transfer their funds to initiatives ready for completion by June 2025.
The decision was made during a review meeting of the Public Sector Development Programme (PSDP), chaired by Planning Minister Ahsan Iqbal, who is also the deputy chairman of the Planning Commission. The meeting also agreed to formulate three-year financing plans for priority projects.
“The projects that have been going on and on for years and are still far from completion should be closed. They are sick projects and have become a planning liability,” the minister was quoted as directing the relevant ministries. He added that the funds allocated for white elephants should be diverted in the remaining two quarters of the year to projects that were nearing completion.
“Top financing priority in the next seven months (December 2024 to June 2025) should be projects which could be completed by June 2025” to ensure their exit from the PSDP portfolio, an official told Dawn, quoting the minister.
Funds will be reallocated to initiatives ready for completion by June 2025
The meeting assessed the PSDP allocations and funds utilisation of seven key ministries and agencies, including the Ministry of National Food Security and Research, National Health Services, Regulations and Coordination Division, National Heritage and Culture Division, Pakistan Atomic Energy Commission (PAEC), Petroleum Division, and the Space and Upper Atmosphere Research Commission (Suparco).
Except for PAEC, all others had utilised less than 10 per cent of their annual allocation against the targeted 30pc. PAEC’s utilisation at Rs3.7bn stood at 15pc in the first five months of the fiscal year against the annual allocation.
The National Health Services has so far spent about Rs2.3bn or around 9pc of its allocation. Both the Petroleum Division and Suparco have so far utilised only 2pc of their annual allocations, with Rs44 million and Rs510m, respectively.
The National Food Security Division has used only 1pc (Rs307m) of its allocation, while the National Heritage Division stands at zero utilisation in the five months.
An official statement said the federal government had authorised Rs155bn for the first quarter to ministries and divisions under the PSDP framework. “The planning minister stressed the importance of ensuring that these funds are utilised effectively, with a focus on achieving tangible outcomes,” the statement said, adding that the minister called for “timely completion of projects, particularly ongoing initiatives, which should ideally be finalised as per timeframe mentioned in PC-1”.
The minister told the participants that the outcomes of ongoing PSDP reviews would guide future allocations and policy adjustments, ensuring that development projects contribute meaningfully to the country’s economic and social growth.
Under the IMF programme, Pakistan is required to rationalise over Rs9 trillion worth of current development portfolio that would take more than 14 years to complete at the current pace of implementation and subject to no new projects.
The government has committed to a “one-time review of all technically approved projects to reduce the set of active projects to high-priority projects that can be completed in a timely manner”.
The government has also decided to formulate a strategy for the induction of new projects in the coming fiscal year with a three-year financing and completion schedule that serves the priorities of the current government before the next elections.
At present, 1,071 development projects are part of this year’s federal PSDP, of which only 105 projects were nearing completion with 80pc or higher physical progress and have been allocated just Rs37bn during the current year. About 85 foreign-funded projects with a total allocation of Rs260bn were part of the current year’s portfolio.
The Planning Commission has reported a slow pace of spending, despite sufficient authorisations, during the current year. In the first five months, only nine ministries had a funding utilisation of 11pc to 18pc, while six other ministries were able to spend more than 5pc of their annual allocation.
The remaining 27 ministries or divisions had an expenditure level of less than 5pc, including 10 of them having zero spending in the first five months.
The PSDP utilisation as of Nov 20 has been reported at just Rs92bn, or 8pc of the revised budget allocation of Rs1.1tr, down from Rs1.4tr, as part of the IMF agreement. The Rs92bn utilisation accounts for 6.6pc of the budget allocation or 8.4pc of the revised PSDP cap.
Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government should release 15pc of the budgeted allocation in the first quarter, followed by 20pc in the second quarter, 25pc in the third quarter and the remaining 40pc in the last quarter of the fiscal year. As such, the estimated release for the PSDP up to Nov 20 should be around 26pc of the annual allocation or no less than Rs290bn.
This year’s utilisation is also significantly lower than last year’s Rs117bn, or around 13pc of Rs940bn annual allocation, despite the tight fiscal position and strict stabilisation programme in place.
Published in Dawn, November 30th, 2024