ISLAMABAD: As the Trump administration looks to limit foreign military aid, particularly to Pakistan, the country faces a challenge in figuring out the exact amount it could receive from the United States under the Coalition Support Fund (CSF) in the next fiscal.
According to sources, the defence ministry, based on understanding with US authorities, has estimated receiving at least $1.5 billion under CSF during 2017-18. But the finance ministry has not yet received positive signals from Washington.
Things have become more complicated after the US disbursed only $550 million during the first nine months of the outgoing fiscal year despite committing $880 million, according to sources in the finance ministry.
Moreover, Trump’s budget proposal aims to convert a portion of US foreign military grants to loans as part of a larger effort to slash spending on diplomacy, aid and programmes abroad by more than 29%. The Wall Street Journal, which first reported the proposal, named Pakistan among the countries which would be affected if the proposal is approved.
Director of the White House Office of Management and Budget Mick Mulvaney, in a briefing to reporters on Tuesday, also said aid to Pakistan would be reduced, though he did not give concrete details.
However, Pakistan does not treat CSF as aid and the US military aid to the country is in addition to disbursements under that arrangement. CSF receipts are second most important source of non-tax revenues for Pakistan, after the State Bank profits, and contribute about 18% to the total annual non-tax receipts.
While non-tax revenues issues remain unsettled, Finance Minister Ishaq Dar on Tuesday told The Express Tribune that “no major new tax will be imposed in the next budget”. He hoped to achieve the next fiscal’s tax collection target of over Rs4 trillion on the back of administrative efforts by the Federal Board of Revenue (FBR).
Dar will unveil the last budget of the incumbent Pakistan Muslim League-Nawaz government on Friday.
According to sources, the finance ministry was taking more time to finalise non-tax revenue estimates for 2017-18 because US policy towards Pakistan remains unclear under Trump’s presidency.
“We expect to finalise non-tax revenue estimates in the next 24 hours,” Dar said.
Answering a question, he expressed expectations of receiving another $330 million from the US on account of CSF disbursement for the outgoing fiscal.
“We hope CSF disbursements materialise as planned,” said Tokhir Mirzoev, the resident representative of the International Monetary Fund. He said the IMF cannot comment on the likelihood of these disbursements because it is an area of bilateral cooperation between Pakistan and the US.
Another finance ministry official said the government would book a ‘substantial amount’ under CSF for the next fiscal while trying to remain ‘as close to reality as possible’.
The sources said the federal government wanted to budget around Rs1.1 trillion as non-tax revenue. Nonetheless, the final figure would depend upon the CSF budgeting.
Due to less than budgeted CSF disbursements in the outgoing fiscal, the ministry also faces a challenge in containing the budget deficit.
According to the sources, the ministry is facing a Rs172 billion shortfall against its Rs959 billion non-tax revenue target in the outgoing year. It is trying to bridge the shortfall by recovering arrears from the National Highway Authority and other government-owned bodies. (WITH ADDITIONAL INPUT FROM REUTERS)