Development spending remains sluggish, with 28% of PSDP funds utilised in eight months

The government’s Public Sector Development Programme (PSDP) has shown sluggish progress, with only Rs312.3 billion spent out of the Rs1.1 trillion allocated for the fiscal year during the first eight months of 2024-25. This amounts to 28.4% of the total allocation, signaling a gap in the expected pace of development expenditure.

However, according to a news report, a significant portion of the funds was channeled into parliamentarians’ schemes, known as the Sustainable Development Goals Achievement Programme (SAP). 

The disbursement for these schemes has outpaced expectations, with nearly 140% of the originally earmarked Rs25 billion spent. The total for SAP schemes was revised to Rs51 billion, and a swift 96% of this amount—Rs48.64 billion—was disbursed in just a few weeks.

Despite this, core PSDP expenditure remains low, standing at just 26% of the allocated Rs1.05 trillion for the year. Initially set at Rs25 billion, the SAP allocation was later increased to Rs50 billion, following negotiations with coalition partners. However, the release of these funds has raised concerns over transparency and the prioritisation of political interests over core development projects.

In terms of broader PSDP expenditure, ministries and divisions have struggled to meet their targets. The National Highway Authority (NHA) and the National Transmission and Dispatch Company spent just Rs59 billion combined, which is 23% of their allocated funds. Similarly, the power sector utilised a meager Rs10.6 billion, around 11% of its Rs94.5 billion allocation.

The Water Resources Division, responsible for managing the country’s largest PSDP allocation of Rs170 billion, has spent only 29% of its funds, amounting to Rs50 billion. 

Other key ministries, such as the National Food Security and the Higher Education Commission, have also lagged behind, spending only 4.9% and 24% of their respective allocations.

The government’s failure to effectively utilise development funds raises concerns about the efficiency of the planning ministry and its ability to ensure the completion of crucial development projects. 

Despite these challenges, a portion of the funds allocated to the federal ministries was spent in January and February, which saw a rise in expenditure levels. However, overall spending remains far below what was needed to meet fiscal targets and ensure the timely execution of development initiatives.