ISLAMABAD: The Pakistan Army’s request for an additional budgetary allocation of Rs45 billion for meeting the burgeoning security needs will strain the country’s restricted financial resources, Prime Minister Yousaf Raza Gilani’s economic team informed him on Tuesday.
The team, led by Finance Minister Dr Abdul Hafeez Shaikh, told the prime minister about the “prevailing grave economic situation” and difficulties in bridging the ever-widening “gap between national income and expenditure”.
Sources within the finance ministry told The Express Tribune that the briefing focused on consequences of delaying power sector reforms, the fallout of the non-implementation of General Sales Tax (GST) and the Pakistan Army’s request for additional funds.
Sources said that last week, Shaikh met the army chief in Rawalpindi to discuss the matter. The finance ministry indicated that an additional Rs10 billion could be set aside, which will jack up the defence budget to Rs452 billion, sources said. Army’s spokesperson Maj-Gen Athar Abbas could not be reached for comment.
Sources said that the finance ministry told the prime minister that the only option for overcoming challenges was to quickly implement GST and carry forward power sector reforms.
“The failure to implement the multi-tier power sector reforms would result in an additional burden of at least Rs214 billion on the budget,” a participant of the meeting told The Express Tribune.
According to an official handout, Gilani has given the ministry of water and power a week to finalise the constitution of boards of directors of electricity generation companies. He also asked the ministry to meet provincial governments and the Karachi Electric Supply Company (KESC) to resolve issues. The finance ministry has also been told to meet them.
The finance ministry also briefed the prime minister about the fallout of not implementing GST. “It will immediately result in the blockage of foreign funding that will shift the entire burden of budget financing on the domestic market,” Finance Secretary Salman Siddique was quoted as telling Gilani. The ministry said that the government would be left with no option but to borrow over Rs1 trillion from the domestic market which will result in high inflation and loss of jobs in the private sector due to unavailability of money for business.
Published in The Express Tribune December 15th, 2010.
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