Budgetary implications: No new physical assets for govt depts

Adviser to CM on finance says raising taxes is one option to deal with the deficit.

KARACHI:

The provincial government has announced an embargo on unnecessary expenditures such as the purchase of new vehicles and physical assets, despite the allocation of Rs2 billion for non-development expenditures.

The adviser to the chief minister on finance, Murad Ali Shah, said this while addressing a post-budget briefing at the Chief Minister House on Tuesday. Shah, who was flanked by Information Minister Sharjeel Inam Memon, the planning and development department’s additional chief secretary, Arif Khan, and finance secretary Sohail Rajput, said Rs2 billion had been allocated to physical assets. But the government will not utilise this amount until the financial position of the provincial government gets better. “We can generate an additional Rs4 billion by imposing new taxes and following fiscal policies. We will ensure good governance and try to overcome the budget deficit estimated at Rs21.6 billion,” he said.

The finance adviser went on to say that the budget deficit would be adjusted by raising the current limit of the State Bank’s overdraft from Rs15 billion to Rs25 billion and by imposing new taxes.

“The federal government had promised to release Rs269 billion under the revised estimates for the year 2012-13. But, unfortunately, this didn’t happen. The government actually released Rs50 billion less than the actual amount. The finance department, he said, had written letters to the federal finance ministry to live up to its promise, but all in vain.

The annual development programme of the provincial government fell from Rs181 billion to Rs97 billion in the outgoing fiscal year, because of insufficient funds, said Shah.

He defended the slight increase in the non-development expenditures allocated to the Chief Minister House, the governor, cabinet ministers and other departments by pointing to inflation.

He said, however, that the rise in the funds for ministers and advisers should be reviewed. He announced that the government would not hand the pink slip to any employee, no matter if they had permanent jobs or hired on contract. He further announced the recruitment of at least 150,000 people in the government department in next five years.

Shah said that Rs50 billion had been spent on the development schemes of Karachi in last five years. He hoped that federal government will provide assistance for Karachi Circular Railway project, expecting that the project would start from December and be completed within five years.

Shah said the PML-N-led federal government did not approve four projects of Sindh in the National Economic Council, which included the Lyari Expressway Resettlement Project, K-4 water project, the rehabilitation of the Qalandar Lal Shahbaz shrine and the Larkana drainage project. The federal government has assured the appropriation of funds outside the budget for the Sindh’s four projects, the adviser concluded.

Power projects in the pipeline

The adviser to the chief minister on finance, Murad Ali Shah, was very optimistic about Sindh’s ability to meet its own energy needs within the next five years.

“We have allocated Rs8 billion to energy projects except Thar coal, which was initiated by the provincial government under a public-private partnership.”  Two wind power projects each of 50 MW are in progress at Nooriababd on Super Highway near Karachi. They will start generating electricity within 18 months. For Thar coal, Rs12 billion had been allocated, he said, adding that the provincial government had already achieved a significant progress on it.  With the help of of Engro Company, mining activities would continue in the field.

Published in The Express Tribune, June 19^th, 2013.