THE government’s decision to finance priority PSDP schemes on a three-year rolling basis is a significant step towards reforming the public development programme and cutting the throw-forward effect of scarce resources. The reform effort has been a part of IMF programmes since 2021. However, it seems to have been gaining momentum lately due to stringent monitoring by the Fund. Still, it would be premature to expect the shift in PSDP strategy to deliver immediate results.
Public funding through annual development programmes is an important tool governments have to create growth infrastructure. But infrastructure is expensive to build and resources for development are shrinking, with the private sector having little interest in funding these projects. Little wonder that our annual infrastructure spending of 2pc of GDP is one of the lowest in the region and well below the national GDP level requirement of 10pc. So the backlog is piling up and the throw-forward effect is becoming a drag on our shrinking resources due to successive governments’ inability to reduce wasteful expenditure and increase tax revenues. Besides, each incoming government — federal and provincial — is adding incomplete projects, compelling many to dub the country a ‘graveyard of development projects’, with tens of billions of rupees needed to close the growing infrastructure gap and fund incomplete schemes. While reforming these programmes is essential to ensure the efficient utilisation of taxpayers’ money and transparency — from the selection of a scheme to its completion — as well as to prevent cost and time overruns, which result from delayed project implementation, and to stop the rapid rise in the backlog of incomplete schemes, it is not enough to fill the funding gap for infrastructure development. It is also time that the authorities became innovative about financing infrastructure through private investment. Only private investment along with a reformed public development spending framework can help plug the growing gap.
Published in Dawn, November 26th, 2024
