Borrowing restricted: Cabinet to approve Budget Strategy Paper

Critics term cabinet’s nod a farce as IMF has already made the major decisions.

ISLAMABAD:

The federal cabinet will stamp the Budget Strategy Paper today (Thursday), which carries the broader parameters of next year’s budget that have already been determined by the International Monetary Fund.

The parameters include limiting the government’s discretion by restricting borrowing for budget financing to Rs1.4 trillion.

The Ministry of Finance was giving final touches to the strategy document till late Wednesday night, according to ministry’s officials. The document is going to be handed over to cabinet ministers after the start of the meeting, providing them no opportunity to critically review it.

The critics term the exercise of getting the cabinet’s nod on a Budget Strategy Paper ‘farce’, as all the major decisions have already been taken.

While the federal cabinet will today give its approval, the IMF has already defined what Pakistan ought to announce as its new budget for fiscal year 2014-15 which will be unveiled in the first week of June, said officials. According to Jeffery Franks, the IMF’s Washington-based mission chief to Pakistan, the budget deficit for next fiscal year will be 4.8% of Gross Domestic Product or Rs1.4 trillion – a key indicator that the federal cabinet is expected to approve it as it is.

Officials said if the government decides to determine the budget deficit higher than what has been prescribed by the IMF, it could create problems during the fourth review of the $6.7 billion programme.

Ministry of Finance spokesperson Rana Assad Amin was not available for comments.

Meanwhile, the development budget is expected to be Rs525 billion while the current expenditures are estimated at about Rs3.6 trillion.

Published in The Express Tribune, May 15^th, 2014.