Budget allocation for next fiscal year process begins amid uncertainty

Depts executing energy, road projects demand much more funds

ISLAMABAD: The government on Monday began the process of allocating the indicative budget for development and current expenditures for the next fiscal year to about six dozen departments amid uncertainty over actual size of the development budget due to pressing demands from the energy and highway authorities.

The formal process to approve the 2016-17 development budget began with the first session of the Priorities Committee - an inter-ministerial body - with 17 government ministries and departments. The committee will also propose ministries-specific ceilings for recurring expenses.



However, unlike the previous year, this time there is uncertainty over the size of development budget due to demand for much higher allocations from the agencies executing energy projects and the National Highway Authority, said sources.

This was one of the issues outlined during Prime Minister Nawaz Sharif’s visit to the Planning Commission last week.

Planning minister’s request

Planning Minister Ahsan Iqbal has sought the premier’s help to increase allocation for next fiscal year’s Public Sector Development Programme (PSDP) to Rs1 trillion - or 35% higher than what the finance ministry would like to earmark.

He demanded roughly Rs350 billion alone for the China-Pakistan Economic Corridor’s eastern and western route projects in addition to Rs188 billion for energy sector schemes. Sources suggested that financing for those energy projects including nuclear-fired that would be completed after 2018 could be slowed down to the extent that it did not affect the overall implementation plan. The PM’s priorities were those projects that would start generating electricity by March 2018, they said.

However, a final decision on allocating funds for the energy and road schemes would be taken during a meeting between the finance minister and the planning minister.

According to the sources, the PM was of the view that government’s performance would be judged from the development activities it was undertaking during its tenure.

For the next fiscal year, the Ministry of Finance has so far proposed Rs655 billion for development spending - a ceiling that is highly fluid.

For the outgoing fiscal year, the government had allocated Rs326 billion for running the civil government. This amount is proposed to be increased by 5% to 7% for the next year.

Committee’s working

The Priorities Committee does not discuss the defence budget that is decided by the General Headquarters and the finance minister.

The committee places its recommendations in front of the Annual Plan Coordination Committee (APCC), which is headed by the planning minister and has powers to make changes. The APCC then forwards its proposals to the National Economic Council, which is headed by the prime minister with representation from all provinces.



The Ministry of Planning is also currently negotiating with other ministries to reduce the list to a level that is not only in line with government’s priorities but also justifies the allocation of resources.

Published in The Express Tribune, April 12^th, 2016.

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