ISLAMABAD:
With its gaze firmly set on elections, the National Economic Council is set to approve at least Rs888 billion for development spending by federal and provincial governments in the next fiscal when it meets on Thursday (today).
Headed by Prime Minister Yousaf Raza Gilani, the NEC, which sanctions economic plans and development budgets, will approve at least Rs375 billion for the federal public sector development programme (PSDP) and Rs513 billion for annual plans of the four provinces.
The anticipated development budget is Rs163 billion, or 22.5%, higher than the Rs725 billion budgeted for the outgoing fiscal.
The proposed budget is also Rs63 billion higher than the recommendation made by the Annual Plan Coordination Committee (APCC) which is headed by the deputy chairman Planning Commission. The APCC has recommended Rs350.2 billion for federal and Rs475 billion for four provinces’ development budgets.
While the NEC working paper still shows Rs350 billion for the federal development budget, an official of the finance ministry told The Express Tribune that the ministry has agreed to increase the ceiling to Rs375 billion on the intervention of the prime minister.
According to the working paper, Punjab will spend Rs206 billion on development projects next year, Sindh Rs188 billion, Khyber-Pakhtunkhwa Rs78 billion and Balochistan Rs41 billion.
Thursday’s meeting will be attended by chief ministers of three provinces, Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (G-B). Punjab, however, will be represented by its chief secretary since Chief Minister Shahbaz Sharif will not attend the meeting due to his party’s stance that Gilani is no longer the prime minister, after a conviction in a contempt case by the apex court.
A finance ministry official said that due to higher spending, all provinces are expected to present deficit budgets ahead of the upcoming general elections. Contrary to that, the finance ministry has projected that the four provinces will collectively save Rs125 billion to narrow the federal fiscal deficit.
Meanwhile, to accommodate Balochistan’s demand for additional allocation, the NEC will cut Rs10 billion from proposed funding for the Diamer-Basha dam and allocate it to Balochistan.
PC’s recommendations
While politicians press for a larger share of the pie to lure in voters, the Planning Commission is proposing major changes in budget allocations.
The commission will request the NEC to abolish the Departmental Development Working Party in an effort to avoid misuse of funds. The commission has also proposed that projects of ministries devolved under the 18th Amendment will only be financed through discretionary development funds for the premier.
The NEC will also approve next year’s annual plan that envisages 4.3% economic growth, 10.5% inflation, a current account deficit of $5.3 billion, imports at $42.8 billion, exports at $25.9 billion and remittances at $14.1 billion.
Published in The Express Tribune, May 24th, 2012.
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So how does one "deficit spend" when the World considered your a credit risk? Does this mean your just going to print more money and what are the consequences of that? Further - isn't this the same budget that already has Billions in anticipated revenue coming from the Americas -- what happens if that doesn't materialize?