Budget 2012-13: Pakistan includes $1.1b in evasive coalition support

Unconfirmed reports say that an understanding on tax on Nato containers has also been arrived at.

ISLAMABAD:

The coalition’s support may not be forthcoming but that has not stopped Pakistan from including $1.1 billion in the next year’s budget as reimbursements from the United States on account of the Coalition Support Fund (CSF).

Sources say it may be indicative of a thaw in frozen ties between the war-on-terror allies.

“An amount of Rs99.5 billion, or $1.1 billion, has been added into non-tax receipts for the next financial year,” said sources in the finance ministry involved in the budget-making exercise.

For the current fiscal, authorities had budgeted $1.34 billion, or Rs118.7 billion, on account of CSF reimbursement but the US has not released the amount yet, linking it with reopening of the Nato supply lines. Outstanding CSF dues at present amount to $2.5 billion.

Some sources, however, say that the finance ministry’s budgeting of the CSF indicates that both the sides have arrived at an agreement.

The inclusion of the amount in next year’s budgetary projections without any solid assurance, however, will lead to higher budget deficit in the next fiscal. There are unconfirmed reports that an understanding on tax on Nato containers has also been arrived at.

“The [US and Pakistan] have resolved the outstanding issues,” said a western diplomat on condition of anonymity. The US could offer compensations to the families of deceased soldiers, he said.

The US was ready to apologise till April 15, but the attacks in Kabul inside the heavily-fortified red zone changed that, he added. No direct link has been established between the attack and elements from within Pakistan.

“Both Pakistan and the US officials have been negotiating for the last ten days,” said Secretary Finance Abdul Wajid Rana in a parliamentary committee meeting.

He said negotiations were going on for release of $400 million, “but still there are risks”. He did not explain the nature of risks.

Rana said there were indications that $400 million could be released before June, provided some of the issues are resolved.

Since June 2010, the US has not disbursed any amount and after May 2011 attacks Pakistan has not billed CSF claims, the secretary said.

“So far, we are calculating $400 million in our non-tax revenues for this fiscal,” said Rana Assad Amin, spokesperson for the finance ministry. The amount is only 30% of the original budget estimates.

The ministry has finally excluded Rs75 billion, estimated to be received through auction of 3G licenses, from its non-tax revenue receipts, he said.

This will widen the deficit to 5% of GDP, Rana added. Independent experts, however, have projected over 6% budget deficit excluding an additional 1.9% on account of debt payments.

(Read: Pak/US ties - Challenges ahead)

Published in The Express Tribune, May 12^th, 2012.