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December 17, 2019

Development spending grows 27pc in July-Oct

Business

December 17, 2019

ISLAMABAD: Provincial governments have cumulatively spent Rs112 billion on developments during the first four months of the current fiscal year of 2019/20, depicting 27 percent year-on-year growth, finance division said on Monday.

Combined development spending of the four provinces amounted to Rs88 billion during the corresponding months of the last fiscal year. “It is incorrect to say that the provincial government has provided the surpluses at the cost of development activities,” the finance division said in a statement, referring to reports.

“Neither the provincial surplus is Rs202 billion nor the surplus amount had been transferred/returned to the federal government. The actual provincial surplus for the period July-September 2019 is Rs190 billion.”

Federal government managed to keep budget deficit at 0.9 percent of GDP, or around Rs400 billion, during the first quarter of the current fiscal. The primary balance was kept in surplus for the first quarter of the current fiscal year as opposed to the anticipation of Rs102 billion deficit.

The International Monetary Fund (IMF) had lauded the financial and fiscal management and maintenance of expenditures within the budget, but it emphasised on a full use of the development budget to achieve the development goals. In July, Pakistan agreed to a $6 billion extended funded facility program of the IMF, introducing reforms to bring wilting economy back on stability path after depleting foreign exchange reserves and drooping revenues.

Pakistan and IMF agreed to keep the budget deficit at 7.2 percent of GDP for the current fiscal year as against 8.9 percent of GDP for the last fiscal year. The government would have to keep budget deficit on lower side in months and quarters ahead of the remaining period of the current fiscal year to achieve the target.

The country’s budget deficit were expected to cross 9 percent of GDP in the last fiscal year of 2018-19, but revenue surpluses of Rs138.87 billion from the provinces helped the centre contain the deficit at 8.9 percent of GDP. Sindh and Punjab generated revenue surpluses of Rs55.6 billion and Rs48.8 billion, respectively, while Khyber Pakhtunkhwa and Balochistan recorded revenue surplus of Rs17.10 billion and Rs17.13 billion, respectively.

The finance division further said federal transfers are made to the provincial governments as per National Finance Commission (NFC) formula and are transferred from federal government account to the respective provincial government account maintained with the State Bank of Pakistan according to standard procedures.

“The amount so transferred remains available to the respective provincial government all the time in their separate accounts with State Bank of Pakistan,” it added.

The finance division said the ministry of finance compiles and consolidates fiscal operations of State of Pakistan (federal government and all the four provincial governments) on quarterly basis.