Development outlay

Budget 2016-17 may be one of the most important budgets in the last three decades. The reasons are simple enough. Pakistan’s economy has a historic opportunity in the shape of the CPEC and faces a major challenge in the declining agricultural sector. Of the three Ds in the budget – defence, debt and development – it is the last that is most important and highly contested. Given the budget is right round the corner, the Annual Plan Coordination Committee has approved a development outlay of Rs1.675 trillion – with the promise of 5.7 percent economic growth. Around Rs800 billion of the amount will be used for federal projects and Rs875 billion has been allocated for provincial projects. The CPEC and energy projects have been prioritised. According to reports, the APCC meeting did not go entirely smoothly. Balochistan Chief Minister Sanaullah Zehri walked out over perceived provincial inequity because only Rs24 billion out of Rs48 billion allocated to the province for development projects was released last year. Minister for Planning Ahsan Iqbal promised to deliver last year’s allocation for the province as well as increasing this year’s allocation for it. The failure to release funds for Balochistan is part of a larger trend in which less than 70 percent of the development funds for last year were actually spent.

The walkout by the Balochistan CM – the only CM in attendance – could set the stage for more protests from Khyber Pakhtunkhwa and Balochistan on the matter of allocations for major projects included in the CPEC. All the provinces will be looking at this year’s development budget to see whether the promises made on the CPEC have been met. For now, we know that extensive road networks have been promised for Balochistan next year, including highways linking Quetta and Khuzdar to Gwadar. Ahsan Iqbal has also promised the groundbreaking for the Bhasha Dam. The outlay offers little on agriculture – this despite promises made to protesting farmers and the failure of last year’s ad-hoc agricultural package. While the APCC meeting recognised the agricultural crisis facing the country, a 3.5 percent growth for the coming year has been predicted without specifying what was being done to ensure that this would indeed happen. This is also the case with the prediction of 5.7 percent overall growth in the GDP. Having already been revised down from the 6.5 percent promised in the government’s own medium-term framework, even 5.7 percent in real growth will be hard to deliver. With the other two Ds – defence and debt – still taking a large chunk of the overall budget and with planning mostly restricted to the task of road-building, real growth in the country’s productive capacity is likely to remain slow next year.