Musharraf Cuts Rs. 50 Billion from Public Sector

Poor to suffer more as Musharraf regime cut Rs. 50 billion from Public Sector Development Programs

by Syed Abdul Khaliq

On the eve of its exit, the caretaker government of Pakistan under Musharraf has decided to cut Rs. 50 billion (about US $ 840 million) out of the Rs. 335 billion Public Sector Development Program to manage its day to day affairs.

This anti-people decision is taken on March 14, 2008 due to a slowdown in the economy and a reduction in revenue collection, the government was facing difficulties in meeting its growing financial needs. The very fact has exposed the tall claims of the Musharraf regime that Pakistan is gaining economic stability in his period. It is shocking disgrace to the public of Pakistan, already crippling under unprecedented price hike.

The Musharraf regime is quite tactful in this regard as it is using the word 'withdrawal' or 'extraction' for the cut in PSDP. They are afraid that the word 'cut' will send a wrong signal. Therefore, better call it 'taking out' funds or 'extraction' from the current PSDP.

According to the English daily "Dawn" as result of the decision all social sector development projects would heavily suffer except for a few big projects. That means no funding would be available for a number of social sector projects during the current financial year. Thus big projects including Mangla Dam rising, Chashma-2 nuclear power plant, Diamer-Bhasha dam, Kurrum Tangi and Munda dams would have to be continued without any interruption, but those projects which have not yet been started are being deferred and no funding will be available for them during the current financial year.

These financial constraints are the direct result from the mismanagement of the economy by the Musharraf regime during the last 8 years. Principally the PSDP funding should not be touched as it is meant for development of the poor. Moreover, it has already been abused beyond limits. According to economic experts, after this decision none of the targets set at the start of the financial year 2007-08 are likely to be met.

It is pertinent to mention that Musharraf is not ready to cut his own expenses as he continues to spend Rs. 316 million on his palace every year but the burden of state financial constraints has been shifted onto the poor people of the Pakistan who are supposed beneficiaries of the social sector development programs. In other words it is dishonor to the masses in the light of the fact that development allocation funds are being snatched away from a public that is already grappling with a food inflation rate in excess of 15 percent - one of the highest current account deficits in history - and an economy that depends on remittances and foreign aid to survive each day.

It may be mentioned that the Public Sector Development Program (PSDP) is the main instrument for providing budgetary resources for development projects and programs. As a percentage of GDP, the PSDP has declined sharply from 7.5 per cent in 1991-92 to 2.5 per cent in 1999-2000. Since then it is absued.

The PSDP has been designed to achieve the Millenium Development Goals (MDGs), i.e. eradicating poverty, ensuring equitable development of regions and various social groups, empowering women and minimizing wastages.

The PSDP sectoral program prioritization at national level indicates that infrastructure sector would get 48.6% of total outlay followed by Millennium Development Goals (35.0%), balanced development (13.2%) and accelerating output growth (3.2%). In the infrastructure sector, energy has been given the highest priority with 19.8% of total allocations followed by transport and communications (14.9%) and water resources (13.5%). Within the Millennium Development Goals, education and vocational training including higher education would receive 10.8% share followed by physical planning and housing, health and nutrition and science and technology at 4.6%, 4.3% and 2.6% respectively.

Looking at figures in sectoral prioritization one can easily guess that big energy projects especially construction of new dams will continue, but the masses welfare projects like education, health, sanitation, transport, roads and housing would be halted in the name of 'national interest'. The government economic gurus will soon be out to negate the negative effects and justify the decision by using the development jargon and jugglery of economic figures. Anyway the decision is highly condemnable and would also affect the development policies of the future PPP government.