In dire straits: Govt slices development funds by Rs100 billion
Spends 16% less than last year on uplift projects.
According to sources within the planning ministry, ongoing work on various projects has been affected due to the cuts by the government. DESIGN: CREATIVE COMMON
ISLAMABAD:
The federal government has made steep cuts in development spending, slicing it by as much as Rs100 billion in the first half of the fiscal year. Spending was whittled down to Rs120 billion from Rs220 billion earmarked for various development projects.
However, despite the cut it breached the fiscal management limit when it came to non-development expenses.
From July through December 2013-14, the government spent Rs120 billion on development programmes, restricting the expenses to 22% of the annual development budget of Rs540 billion, official documents revealed.
According to standing financial management instructions prescribed by the finance ministry, the government is entitled to spend 40% of the annual budget in the first half of the fiscal year while the remaining is spent in the next half.
However, the development spending in the first half of the current fiscal was recorded at Rs22 billion or 16% less than the development spending in the corresponding period last year.
Last month, during a briefing on the country’s fiscal performance reduced development spending was also discussed with the prime minister, an official’s privy with the development said.
In an attempt to slice the development outlay, the finance minister blocked releases worth Rs47 billion out of Rs167 billion sanctioned by the ministry of planning and development in the first half.
Denying the claim, Asif Sheikh, spokesman for the planning ministry, insisted that the finance ministry did not block the funds.
According to sources within the planning ministry, ongoing work on various projects has been affected due to the cuts by the government.
The sources further disclosed that the government reduced development spending in order to remain within the budget deficit ceiling that it agreed with the IMF, as it could not rein in current expenditures and tax revenues that fell short of the preset target. The government managed to restrict the budget deficit to 2.2% of gross domestic product (GDP) during the first half.
Meanwhile, the current expenditures during the first half of the fiscal year remained at Rs1.376 trillion, which were 48.6% of the total annual budget. As per standing financial management instructions, the current expenditures should have been 40% of annual budget or Rs1.150 trillion. The government spent Rs225 billion over and above the ways and means limit.
The documents further reveal that during first half of the fiscal year the government spent Rs559 billion or 52.5% of the annual budget on domestic debt servicing.
Similarly, an amount of Rs38.8 billion or half of the annual budget was spent on servicing of foreign debt. The trend suggests that the government is likely to exceed its annual budget earmarked for debt servicing.
Published in The Express Tribune, February 12th, 2014.
The federal government has made steep cuts in development spending, slicing it by as much as Rs100 billion in the first half of the fiscal year. Spending was whittled down to Rs120 billion from Rs220 billion earmarked for various development projects.
However, despite the cut it breached the fiscal management limit when it came to non-development expenses.
From July through December 2013-14, the government spent Rs120 billion on development programmes, restricting the expenses to 22% of the annual development budget of Rs540 billion, official documents revealed.
According to standing financial management instructions prescribed by the finance ministry, the government is entitled to spend 40% of the annual budget in the first half of the fiscal year while the remaining is spent in the next half.
However, the development spending in the first half of the current fiscal was recorded at Rs22 billion or 16% less than the development spending in the corresponding period last year.
Last month, during a briefing on the country’s fiscal performance reduced development spending was also discussed with the prime minister, an official’s privy with the development said.
In an attempt to slice the development outlay, the finance minister blocked releases worth Rs47 billion out of Rs167 billion sanctioned by the ministry of planning and development in the first half.
Denying the claim, Asif Sheikh, spokesman for the planning ministry, insisted that the finance ministry did not block the funds.
According to sources within the planning ministry, ongoing work on various projects has been affected due to the cuts by the government.
The sources further disclosed that the government reduced development spending in order to remain within the budget deficit ceiling that it agreed with the IMF, as it could not rein in current expenditures and tax revenues that fell short of the preset target. The government managed to restrict the budget deficit to 2.2% of gross domestic product (GDP) during the first half.
Meanwhile, the current expenditures during the first half of the fiscal year remained at Rs1.376 trillion, which were 48.6% of the total annual budget. As per standing financial management instructions, the current expenditures should have been 40% of annual budget or Rs1.150 trillion. The government spent Rs225 billion over and above the ways and means limit.
The documents further reveal that during first half of the fiscal year the government spent Rs559 billion or 52.5% of the annual budget on domestic debt servicing.
Similarly, an amount of Rs38.8 billion or half of the annual budget was spent on servicing of foreign debt. The trend suggests that the government is likely to exceed its annual budget earmarked for debt servicing.
Published in The Express Tribune, February 12th, 2014.