ISLAMABAD: Ministry of finance is likely to keep fiscal deficit target at 4.5 percent of GDP for the next fiscal year of 2019 against the projected deficit of 5.5 percent for the outgoing fiscal of 2017/18 by tightening development expenditures, officials said on Monday.
“Keeping in view financing constraints, the ministry of finance has slashed down the PSDP (public sector development program) size to the tune of Rs750 billion for the upcoming budget as against the allocation of Rs1,001 billion made on eve of last fiscal year 2017/18,” a senior official told The News.
Officials said finance ministry started priorities committee’s meetings to finalise details of the budget for the next fiscal year. “In the maiden meeting on Monday, the ministries were asked to tighten their belts so they could seek increased allocation on the basis of proposed salary increase and inflationary pressures (in the next budget),” the official, who is privy to the meeting, said.
Pakistan’s budget deficit peaked to 5.8 percent of GDP in the last fiscal year 2016/17 against the envisaged target of 4.1 percent because of the inability of the Federal Board of Revenue to generate desired revenues and overspending by the provinces in June 2017.
The International Monetary Fund projected the budget deficit for the current fiscal year of 2018 at around 5.3 percent of GDP and it all depends on the provinces that how much they are involved into spending spree this time around to please their voters in the electioneering year.
Ministry of finance estimated that the budget deficit for the current fiscal year would be contained between 5.3 and 5.5 percent. “The country might be saved from widening budget deficit beyond imaginations just ahead of elections as government ruling parties in the centre as well as in provinces would complete their five-year term by May 31,” an official said.
The Planning Commission started separate meetings with representatives of ministries and divisions to finalise the proposed allocation of PSDP for the next fiscal year. The meetings will be concluded up to April 6 after which the ministries/divisions will be given proposed budgetary allocations for execution of development projects in the next fiscal year.
Officials said allocation of all ministries/divisions and departments would be slashed in the coming budget. An official said all discretionary programs, such as Prime Minister sustainable development goals’ program, youth initiatives and others would be abolished and “that would create a cushion of more than Rs100 billion in the coming fiscal year”.
The Planning Commission prepared three different scenarios with proposed allocation of Rs750 billion, including Rs105 billion for temporary displaced persons and other initiatives executed by finance division.
Allocations of up to Rs900 and Rs1,000 billion are also consideration, officials said. “It will be hard for the planning managers to meet increasing requirements of CPEC (China-Pakistan Economic Corridor) and other crucial projects in the next budget when these projects would require more funding,” an official said.
The Planning Commission will finalise its assessment of actual demands of all stakeholders after holding consultations with all ministries/divisions. “Subsequently, the Minister for Planning Ahsan Iqbal will take decision on whether to send out official communication to finance ministry for pressing upon the demand for increasing proposed share of development programs or direct the planning ministry to prepare PSDP for 2018/19 with the proposed size of Rs645 billion for the next financial year,” the official added.