Budget deliberations in the Senate : Land reforms debate causes rift between PPP, MQM

Parties aim to resolve the issue outside of the Senate finance committee.

ISLAMABAD:

Days ahead of a crucial vote on the federal budget for fiscal year 2012, the ruling Pakistan Peoples Party is once again at loggerheads with its coalition ally, the Muttahida Qaumi Movement, this time over land reforms – an issue on which both parties represent opposing constituencies.

Senators from both parties engaged in a heated debate over the issue during a meeting of the Senate finance committee on Thursday. The argument reached fever pitch when PPP Senator Sughra Imam threatened to leave the meeting, which would have left the committee short of a quorum.

The committee was already operating with a bare minimum of three members and a walkout by Imam would have stalled discussion of the budget in the Senate, blocking its passage in the upper house until the issue was resolved between the two parties.

The MQM has proposed land reforms – which would limit the amount of agricultural land an individual is allowed to own – and recommended that they be made part of the 2012 budget. The reforms are unpopular with the PPP because they represent a largely rural constituency that would be unhappy at the prospect of their land being taken away by the government and redistributed amongst landless peasants. Senator Imam blocked the proposal and suggested that the issue be discussed outside of committee before being raised again in the Senate the next day.

“If the matter remains unresolved, it will be referred to the arbitration committee of the PPP and the MQM,” said Senator Ahmed Ali of the MQM, the finance committee chairman.

The government is expected to call for a vote on approving the federal budget for the next fiscal year on June 24. Even if the MQM withholds support of its 25 members in the National Assembly, the government may be able to pass the budget owing to its alliance with the Pakistan Muslim League Quaid.

Misleading Parliament

The committee also took up the issue of the finance ministry allegedly misleading Parliament on the true size of the government’s fiscal deficit. According to news reports, the government overspent its budget allocation by Rs387 billion, bringing the deficit to 6.2% of the total size of the economy, higher than the 5.7% claimed by the finance ministry.

“On the face of it, the news is correct,” said Senator Safdar Abbasi of PPP.

Testifying before the committee, Finance Secretary Waqar Masood said that the news reports did not count the savings the government achieved through its austerity measures, though he declined to specify any numbers. “The constitution does not bind the finance ministry to provide that data to Parliament,” he claimed.

Later on, Finance Ministry spokesperson Rana Assad Ameen claimed that the government has saved Rs225 billion which would restrict the budget deficit to its stated 5.7% of gross domestic product. The amount saved includes Rs74 billion in cuts from the development budget, Rs15 billion from the Benazir Income Support Programme, and about another Rs70 billion through other sources.

However, another finance ministry official disputed that claim, saying that the government’s ability to meet its deficit target relies on an addition profit of Rs60 billion at the State Bank of Pakistan, Rs35 billion in aid from the United States and Rs120 billion in budget surpluses from the provincial governments.

Losses at state-owned companies

Meanwhile the finance ministry told the committee that, in addition to the Rs166 billion that the government plans to spend on subsidies, Rs25 billion will be spent on another bailout of Pakistan Railways and over Rs3.8 billion on bailing out Pakistan International Airlines.

Published in The Express Tribune, June 10^th, 2011.