APCC fails to agree on development budget

ISLAMABAD: Inconclusive talks with the International Monetary Fund (IMF) have virtually halted budget-making process as the Annual Plan Coordination Committee on Friday could not finalise the size of next year’s federal development budget, official sources said.

The Annual Plan Coordination Committee (APCC) met here under the chairmanship of Dr Nadeem Ul Haq, Deputy Chairman Planning Commission. Despite daylong consultations, the Committee did not come up with a recommendation for the National Economic Council about the exact size of the development budget for fiscal year 2010-11. An official said the finance ministry in the morning session informed the APCC that next year there would be very few resources for development.

A finance ministry official, who was part of the talks with the IMF, said other than the value added tax (VAT) Pakistan and the IMF also did not agree on the budget deficit target. “Same was conveyed to the APCC,” said the official. The government wants the deficit target to be at 5.1 per cent of gross domestic product (GDP) or over Rs800 billion but the IMF is insisting on 3.9 per cent of GDP or Rs650 billion. The Priorities Committee had recommended Rs328.3 billion federal development budget and the Planning Commission had asked for Rs400 billion. “Next year’s federal development budget will be probably lower than Rs328 billion,” said Planning Commission Deputy Chairman Dr Nadeem Ul Haq while talking to The Express Tribune.

He said the Commission was working on it and by next week it would finalise the actual size of the development budget for the consideration of the National Economic Council, headed by the prime minister. The Priorities Committee had recommended an overall Rs660 billion development budget for the next financial year. On the other hand, the Planning Commission had sought Rs721 billion to reduce poverty and meet development challenges. The Priorities Committee’s proposed federal development budget is just 9.3 per cent more than the revised development budget of Rs300 billion for the current fiscal year.

The National Economic Council had approved Rs446 billion federal development budget for the current year but due to scarcity of resources it was revised downward to Rs300 billion. Practically, there will not be any significant increase in the federal development budget due to the dearth of resources. Out of the proposed Rs328.3 billion, available budget is again Rs300 billion, as Rs28.3 billion have been marked as operational shortfall, a technical term which means that there is allocation but there is no money available for spending. The reduction in the federal share has compelled the finance ministry to cap the development budget.

For corporations, Rs69.4 billion development budget has been proposed, which is 36.4 per cent more than the revised budget of Rs50.9 billion for this fiscal year. For Azad Jammu and Kashmir, Gilgit-Baltistan and Fata Rs32 billion development budget has been recommended, a 25 per cent increase over the revised budget. The AJK government will get Rs14 billion; Gilgit-Baltistan Rs8 billion and Fata Rs10 billion. The Priorities Committee had proposed Rs34.4 billion for special programmes and Rs10 billion for the Earthquake Reconstruction and Rehabilitation Authority, showed an official document.

Published in the Express Tribune, May 22nd, 2010.