Doing Development Better
The federal government in the budget for the fiscal year 2024-25 proposed an outlay of PKR 1,400 Billion for the Federal Public Sector Development Programme (PSDP), which was later reduced to PKR 1,150 Billion and approved by the parliament with the passing of the Finance Bill 2024-25. This is the first occasion when the PSDP allocation in the federal budget has crossed the one trillion-rupee mark. Over two-thirds of the PSDP funds have been allocated to the ongoing schemes for FY25, indicating the mammoth size of the PSDP portfolio. The focus this year too remains on dealing with infrastructural development challenges along with the transportation, energy, IT and Water Resources Sectors.
The PSDP 2024-25 allocations, as per the guidelines of the National Economic Council have been prioritized on the following:
- Projects about Water Resources, Transportation, Communication and Energy. These projects have been categorized as Strategic and Core Projects.
- Projects with a major foreign loan component to ensure timely completion of such projects
- On-going schemes upon which 80% of expenditure has been conducted FY24 to complete such projects in FY25.
| Figure 1: Foreign Loan Allocation – PSDP 2024/25 (PKR Million) |
While the government has further expanded the PSDP by introducing a little below 200 new schemes, the challenges associated with it seem to not be decreasing any time soon. The throw forward as of 01-07-2024 has exceeded PKR 11 trillion. A third of the ongoing projects remain incomplete despite completing their gestation period while cost overrun is a common occurrence in various projects as well. In addition to the throw forward, the foreign loan component of the PSDP projects is also significant. The foreign aid component forms over 40% of the total PSDP portfolio and 22% of the ongoing fiscal year’s PSDP allocations (Figure 1).
| Figure 2: New Schemes per Ministry/Division – PSDP 2024/25 |
The PSDP focus has remained primarily on infrastructure and real estate projects. Even in the PSDP 2024-25, the new schemes introduced focused on the same areas, with a few ministries taking most of the cake. (Figure 2).
This, however, has not happened overnight or in a few years. Instead, this is a direct consequence of the long-term development focus of the federal government which has remained consistent under different governments over the decades. It does beg the question; how did the decision-makers converge to adopting this developmental approach in Pakistan?
