Budget 2013-14: Senate panel wants govt to drop $3b worth of receipts

Says the amount has been provisioned for unrealistically and distort economic realities.

ISLAMABAD:

A Senate committee on finance has urged the government to exclude uncertain pledges from next year’s budget, which it says will make the document more realistic. It has recommended that the government drop $3 billion worth of receipts pertaining to the disbursement of the coalition support fund (CSF), Etisalat’s arrears from the privatisation of the Pakistan Telecommunication Company (PTCL), and the auction of 3G spectrum.

Even though the Senate’s budgetary recommendations are not binding on the government, as the decisive powers in this regard rests with the National Assembly, the official recommendation will strengthen the stance taken by a visiting delegation of the International Monetary Fund (IMF), which is said to hold similar views on these transactions. The other day, the IMF delegation had been cautious in its response to the new budget in its preliminary meeting with Finance Minister Ishaq Dar.

The Senate Standing Committee on Finance approved the recommendations with a majority vote, even though Pakistan Muslim League – Nawaz (PML-N) Senator Nuzhat Sadiq opposed the move. The recommendation had been sponsored by Pakistan Peoples Party (PPP) legislators. The committee is scrutinising the budget on behalf of the Senate, which will later adopt the report and forward it to the National Assembly with a request to accommodate its recommendations in the budget.



In the proposed budget, the federal government has added $1.1 billion on account of the CSF, $1.2 billion from auction of the 3G internet spectrum licence, and $800 million from Etisalat as part of its non-tax receipts.

The inclusion of CSF, Etisalat and 3G receipts in the budget is contrary to the viewpoint held by Finance Minister Ishaq Dar when he used to sit on the opposition benches, Senator Sughra Imam of the PPP noted in her remarks.

“The finance minister is extremely ambitious. If these transactions do not mature, borrowings from banks will increase manifold,” she added.

As an alternative, the PPP proposed that the government cut the development budget by Rs180 billion and bring it down to Rs360 billion in order to restrict the budget deficit.

“If we do not add these numbers, our projected deficit of 6.3% of GDP will widen to close to 8% of GDP,” a visibly irritated Rana Assad Amin, who is the adviser to the Ministry of Finance, said in his response. He said that although the last government had added these heads in the budget for three consecutive years, it was now turning the tables on the newly-elected government.



He also said that Etisalat was withholding the $800 million due to Pakistan’s inability to crackdown on grey trafficking. He claimed that if we did not include the amount receivable from the CSF, the US would never disburse the money.

But even though the finance ministry seems optimistic for next year, certain caveats may delay these transactions even when they mature. For example, the US has recently changed the mechanism for working out CSF disbursements. After the change in methodology, insiders say the government can receive $400 million to $600 million at best.

As far as Etisalat’s arrears on account of PTCL’s privatisation are concerned, the government will have to take a decision on a property owned by PTCL in Karachi’s upscale Defence locale, while also solving the grey traffic problem. According to a clause in the privatisation treaty, both sides are required to appoint valuators and determine the highest value of any property whose value is disputed. Sources say that the government is reluctant to appoint a valuator, given that the price of the disputed land is in the millions of dollars.

The Senate panel has also recommended that the government amend the proposed budget to better reflect a 30% cut in non-development non-salary expenditures announced by Prime Minister Nawaz Sharif as part of its belt-tightening measures.

An official said that since some of the budget documents had been printed before the premier’s oath-taking ceremony, the finance ministry will soon issue a notification to give effect to the decision. He said the non-salary budget for the ministries is Rs140 billion for next year, which will be reduced to Rs100 billion after the cut is implemented.

Published in The Express Tribune, June 21^st, 2013.

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