Budget on June 3 as Panama controversy rages

Budget on June 3 as Panama controversy rage

ISLAMABAD: With slower development spending so far, the government is undeterred to unfold next year’s federal budget on June 3 despite Finance Minister Ishaq Dar’s preoccupation with the Panamagate controversy.

A government official told Dawn that Mr Dar could not concentrate on the activities related to the budget since he returned from Dubai last week after concluding talks with the International Monetary Fund.

“He spends most of his time in the Prime Minister House to be part of consultations to get the government out of political challenge arising out of the Panama Papers controversy,” he said.

His only engagement outside the PM House on Wednesday was a meeting at the Punjab House with key ministers led by Interior Minister Chaudhry Nisar Ali Khan to thrash out issues regarding the formation of a parliamentary committee on Panama Papers.

A finance ministry official confirmed that the finance minister’s focus was on the political controversy, but the budget schedule had been finalised and would remain unchanged. “Last year, Mr Dar had chaired more than a dozen meetings on the budget in first two weeks of May. That’s not the situation this year. He has not presided over any budget-related meeting since he returned from Dubai,” he said.

The official said the federal budget would be presented in the National Assembly on June 3, preceded by a meeting of the Annual Plan Coordination Committee on May 23 and that of the National Economic Council on May 30.

“Let me assure you, the budget would be announced on June 3,” he said, adding that the budget exercise was in full swing.

A Planning Commission official said disbursements for development projects were much slower than last year. As of May 13, the government had disbursed Rs474 billion, accounting for only 67.7 per cent of Rs700bn total allocations.

During same period last year, disbursements for the Public Sector Development Programme (PSDP) had amounted to Rs383bn, accounting for 73pc of Rs525bn allocations.

With this pace of releases, the government is likely to cut development programme by more than Rs75bn to keep the fiscal deficit within limits. The government is facing problems selling another modern telecom licence that was anticipated to yield about Rs50bn.

The Planning Commission data suggested that utilisation of funds by all federal ministries has amounted to Rs148.8bn, or 71pc of their allocated share of Rs209.8bn for the whole year. During the same period last year, the ministries had utilised about Rs199.5bn, or 69pc, against total allocation of Rs259bn.

Under the government’s approved disbursement mechanism, the PSDP should have consumed 85pc of total allocations by now. The mechanism required disbursement of 20pc each in the first two quarters of the year, followed by 30pc each in the last two quarters.

The power sector stood out as the top consumer of PSDP funds as it utilised about Rs102bn so far, almost 90pc of Rs114bn allocation for the year. This was in line with government’s top focus on enhancing power generation capacity and initiation of some projects under the China-Pakistan Economic Corridor.

During the same period last year, the power sector had consumed about Rs48.5bn, or 77pc of total allocation of Rs64bn.

The utilisation of funds in the road sector was strikingly slower than last year. Major projects of the National Highway Authority consumed Rs74.7bn this year (47pc of full year share) against last year’s spending of Rs76bn, or 68pc of allocation.

The government disbursed about Rs42.2bn for schemes in special areas like AJK, Gilgit-Baltistan and the tribal region that accounted for more than 98pc of Rs43bn allocation. Because of upcoming general elections, the disbursements for AJK stood at 104pc (Rs13.8bn) so far against an allocation of Rs13.3bn.

In this scenario, the government is unlikely to make full disbursements against the budgetary allocations which is in line with expectations of the IMF that the development budget should be curtailed by Rs360bn (almost 24pc of total allocations) to limit the fiscal deficit.

Source: http://www.dawn.com/news/1259272/budget-on-june-3-as-panama-controversy-rages

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