23 October 2004	Saturday	08 Ramazan 1425

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KARACHI, Oct 22: The ambitious Rs18 billion development programme for Sindh for the current fiscal year is bound to come under a big cut as the provincial government's decision to open up job opportunities for 43,000 will take up additional Rs3 billion from the tight revenue budget and leave virtually no fiscal space to accommodate such a gigantic outlay.

The cut on development will come mostly on the new development schemes proposed by the allies of the ruling coalition. The financial outlay of the new development schemes is almost 45 per cent of the entire development programme, which will be affected by the impact of rising salary bill.

At present the strength of Sindh employees is being put at 425,000 for which the provincial budget provides Rs37.5 billion a year for salaries and wages every year. Another Rs5 billion is for pensions of the retired employees.

Syed Sardar Ahmad, the senior minister of Sindh, who hold charge of finance, told Dawn on Friday that he had proposed to the cabinet on Wednesday that instead of 43,000 employees the government should provide 21,000 jobs so that additional salary bill impact remains at Rs1.5 billion which is affordable in present circumstances. "But no one was ready to hear me and the proposal was turned down," Sardar Ahmad said. With Rs3 billion impact, he said, the salary bill and pension amount will go up to over Rs45 billion which is almost 45 per cent of the total revenue budget.

For last three years, the federal government has stopped providing any loan assistance to the provincial governments to finance their development programmes. "We have to squeeze our current expenditure to generate funds for the development programme," the minister said.

With over Rs45 billion for the salary bill, Rs11 billion for debt servicing, Rs30 billion for maintenance and repair of existing stocks, electricity and petrol bill, Rs5 billion for subsidies which is on rise this fiscal because of wheat shortage, the minister is sceptical to generate enough finances for taking up Rs18 billion development plan in the province. There seems to be very little fiscal space to accommodate a giant size Rs18 billion development programme.

The cut, it is certain, will come on the new development schemes which comprise 45 per cent of the total development budget which is bound to make assembly members angry. "The assembly members have a choice," an official remarked.

"Either the MPAs get their relatives, friends and voters a job in the government or take up water supply, sanitation, health or education scheme in their constituency," he said.

In the current fiscal year, the development programme includes a record 45 per cent outlay for new development schemes. A loose coalition government is prone to pressures of the partners and that is amply manifested in inclusion of new development schemes to keep all the political allies in good humour.

Normally the annual development programme includes 15 to 18pc new schemes and the focus is in completion of the on-going schemes to ensure quick completion and avoid run over cost.

Syed Sardar Ahmad disclosed that he has released 50pc of the development funds in first quarter of the current fiscal year but no money has been released for new schemes. The funds have been released only for the on-going schemes.

Within these financial constraints, the minister has been able to take steps for creating a pension fund. The government provided Rs1.2 billion for this fund in 2003-04 and another amount of Rs1.2bn has been earmarked in the current fiscal year.

The target is to create a pension fund of Rs5 billion. This fund will be operated with collaboration of the Slic, and Sindh government is now in process of setting up an independent trust.

Syed Sardar Ahmad is determined not to resort to overdraft from State Bank of Pakistan under any circumstances. Debt servicing of cash development loans is also a perpetual burden on Sindh government.

Sindh has to pay as much as 18pc interest on the loans and payment system is such that in last 32 years Islamabad has been paid more than twice of the principal amount but still three-fourth of the original principal amount remains unpaid as bulk has been adjusted towards interest amount.