Absence of CSF, gas cess leads to Rs300b revenue shortfall

Non-tax revenues decrease whereas expenditures go up


Zafar Bhutta May 04, 2018
Because of the misuse of GIDC, gas consumers had got stay orders from courts that prevented the government from collecting the cess in the outgoing fiscal year. PHOTO: FILE

ISLAMABAD: The government is facing a revenue shortfall of Rs300 billion primarily in the wake of no fund flows under the Coalition Support Fund (CSF) and gas infrastructure development cess (GIDC) for the ongoing fiscal year 2017-18.

The issue was taken up by the cabinet in a meeting held on April 17.

Meeting participants told the cabinet that in 2017-18, the budget deficit for the first nine months stood at 4.1% of gross domestic product (GDP), which came mainly because of a decrease in realisation of non-tax revenues and higher expenditures.

It was informed that on the revenue side, major shortfalls would be in tax revenues amounting to Rs78 billion, the CSF estimated at Rs127 billion that the US had stopped disbursing a few years ago and GIDC worth Rs95 billion that the government could not collect due to court cases.

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Earlier, the US government was releasing the CSF which was aimed at compensating Pakistan for the losses incurred in the war against terrorism.

GIDC was imposed by the previous government of Pakistan Peoples Party (PPP) in an attempt to finance the building of gas pipelines, but the current Pakistan Muslim League-Nawaz administration has spent all the collection worth more than Rs300 billion on projects like Metro bus.

So far, no pipeline has been laid by utilising the cess. Rather, public gas utilities have been forced to borrow loans of over Rs100 billion from commercial banks.

Because of the misuse of GIDC, gas consumers had got stay orders from courts that prevented the government from collecting the cess in the outgoing fiscal year.

On the expenditure side, the cabinet was told that additional expenses of Rs143 billion would be made on pay and pensions, Rs100 billion would be required for the armed forces development programme, Rs47 billion would be released under the export package and debt servicing cost would go up by Rs73 billion following rupee’s depreciation.

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Under the flexible exchange rate policy, the rupee had weakened 10% against the dollar since December 2017 which would help manage rising imports and increase faltering exports.

However, the exchange rate adjustment had burdened the government with an additional debt servicing cost of Rs73 billion in the outgoing fiscal year. In order to cope with the situation and rein in the fiscal deficit, the cabinet members proposed some policy interventions.

Among these measures, the government will ensure collection of a minimum of Rs3.935 trillion in tax revenues against the target of Rs4.013 trillion, restrict the annual Public Sector Development Programme to Rs750 billion compared to the budget estimate of Rs1.001 trillion and ensure generation of Rs256 billion worth of surplus by provincial governments against the budget estimate of Rs347 billion.

Published in The Express Tribune, May 4th, 2018.

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