A new report by the International Monetary Fund (IMF) has said Pakistan’s Public Sector Development Programme (PSDP) has become “unaffordable” due to limited fiscal space, as the government again proposes only Rs700 billion for the development budget for the next fiscal year.
“The PSDP is unaffordable with currently approved projects likely to take a decade and a half to complete before accounting for cost increases,” stated a technical assistance report that the IMF prepared after a visit in March at the request of Pakistan.
The technical assistance missions are separate from any programme review missions and are fielded at the request of the host country.
The report, which has not been officially released, has identified loopholes in Pakistan’s public investment management and recommended the measures needed to strengthen it.
Despite severe fiscal constraints and a huge backlog of incomplete projects, the report revealed that “new projects with a total cost Rs2.3 trillion were added by government in the last budget”. The fiscal squeeze was compounded by the need to make room for flood response measures during the year.
The report noted that the total cost to complete the already approved projects in the PSDP is Rs12 trillion, against a budget allocation of Rs727 billion for the outgoing fiscal year. The report added that at the current level of allocation, it would take over 14 years to complete just ongoing projects.
The technical mission report noted that the years to completion of the approved projects “is likely understated since ongoing projects not receiving funding in 2022-23 (known as unfunded projects) are not counted in the funding backlog”. It said that the fiscal year 2022-23 PSDP also did not include flood-related projects.
