Excessive spending: Planning Commission plans for the inevitable
To keep spending from going overboard, the Planning Commission has recommended the government to cut the development budget by Rs51 billion as spending may exceed the present limit due to massive expenses on parliamentarian schemes.
The cut will not have an impact on the overall development spending of Rs300 billion for the current fiscal year, as higher than expected foreign assistance for development projects has allowed economic managers to borrow Rs51 billon less from the domestic market.
The federal government’s entire development portfolio is financed from domestic or international borrowings, as local revenues are not even enough to finance non-development expenses.
The PC has also suggested increasing the foreign currency component by the same amount of Rs51 billion, according to official documents.
The Annual Plan Coordination Committee (APCC) has been asked to slash the local component to Rs210 billion from Rs261 billion and more than double the foreign component to Rs90 billion from Rs39 billion.
Economic managers had initially assessed receiving Rs39 billion from foreign assistance, however, monitoring of development portfolios and resolution of outstanding issues has resulted into better foreign flows.
The Annual Plan Coordination Committee, headed by Planning Commission Deputy Chairman Dr Nadeem ul Haque, will review these recommendations before forwarding them to National Economic Council for final approval.
The NEC, scheduled to meet on May 11 under chairmanship of Prime Minister Yousaf Raza Gilani, will consider the APCC’s recommendations along with request for approval of next year’s development budget. The total national development budget including share of provinces has been proposed at Rs846 billion for the upcoming financial year.
The shifting of domestic component will reduce government borrowings.
But the other aim is to keep overall budget at Rs300 billion, as there are signs that spending may increase the threshold due to upcoming elections.
So far Rs274 billion have been released of Rs300 billion for development spending, according to official documents. The released amount is 91.4% of the total budget with over two months still left in the fiscal year, indicating that the spending may exceed the allocation.
Out of the total sanctioned budget, a sum of Rs191 billion has been released on account of domestic currency component. Of that Rs154 billion have been given against the budget managed by the PC while an amount of Rs37 billion has been sanctioned for parliamentarians projects.
For the outgoing fiscal year the government has allocated Rs33 billion for parliamentarian schemes but due to general elections that may be announced before end of 2012, there are signs that this head may even cross Rs40 billion.
It is yet unclear whether the government will increase the overall development budget or cut the PC component to restrict the budget at Rs300 billion.
The ball will land in the court of NEC to take the final decision in this regard.
Published in The Express Tribune, April 29th, 2012.
COMMENTS (3)
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What Planning Commission was doing four years before when PPP came in the government?
After the sitting government has lavishly spend money, now the Planning Commission has come forward and suggesting to the government to cut the development budget by 51 billion rupees?
I am of the opinion that Planning Commission has nothing to do with planning and instead suggest cut once the money is already spent.
Either there is no planning or poor planning by the Planning Commission.
It is better to shut down the Planning Commission as it has not planned any thing for the betterment of Pakistan and yet people working in the Planning Commission are drawing hefty salaries.
With the present lot in Government and those in the opposition, nothing will happen on this front.
"To keep spending from going overboard, the Planning Commission has recommended the government to cut the development budget by Rs51 billion "
Why is the reduction in development expenses inevitable. Why can the reduction not be in defense expenses. If we have 100 nuclear bombs, does building 10 more give our country more security? Do the defense housing plots and series 7 BBMWs to the jarnails give more security to the country?Why should civilians be the only ones that pay the price. Already the education budget has shrunk to 1.5% of GDP. ow much more can it shrink?