ISLAMABAD, March 16: The Rs100 billion additional burden, as a result of higher oil imports bill during the current fiscal year, would affect the poverty situation and growth rates besides the government’s expenditure including public sector development programme (PSDP). This was stated by adviser to the prime minister on finance Dr. Salman Shah here on Wednesday indicating to make difficult choices like reducing or slowing down development and poverty related expenditure besides a nationwide energy conservation campaign to meet this additional burden.

He told reporters here on Wednesday that oil import bill was estimated to be around $4.5 billion by end of the current fiscal year against last year’s $3 billion owing to high international prices. Obviously, this means $1.5 billion or Rs100 billion extra burden constituting around 1.5-2 per cent of GDP which would have adverse impact on national economy from all dimensions and the nation, the parliament and the government would have to take difficult choices ahead, he said.

The resultant higher costs would marginally impact the GDP growth rate negatively in the short term but there was a possibility of growth rate recovery in the longer term when higher costs were absorbed by the economy.

He said the nation would have to decide as to how to absorb the higher costs of this additional Rs100 billion burden because the government alone could not meet this challenge.

Dr Salman Shah said a nationwide energy conservation campaign would have to be launched for better and efficient utilisation of energy, increased development and exploration of domestic oil and gas resources so as to reduce overall dependence on fuel imports. Around 88 per cent of fuel requirement is currently being met through import, which would have to be reduced through higher domestic energy.

Unless this was done, the Public Sector Development Programme would have to be slowed down or reduced but a decision whether to reduce the development programme or slow it down would be taken by the end of the year when actual gap is ascertained, he said.

He said the government had a target of Rs47 billion of petroleum development levy for the current fiscal year but actual collection in this respect was almost neutral despite increase in domestic oil prices because the government had to pay around Rs5 billion to the oil companies.

Obviously, if the targeted Rs47 billion is not available, it will have a very negative impact on government’s finances and it will have to cut expenditure. So the parliament will have to look at it and suggest how to move ahead, said Mr Shah.

Responding to a question about the impact of this additional burden and higher oil prices, he said this would obviously affect the poverty situation as development and poverty reduction interventions in the rural areas would have to be curtailed. “So the nation would have to decide whether the people were prepared to pay higher oil prices or cut on development programme.

Responding to another question about National Finance Commission Award, the prime minister’s adviser said a lot of work had been done before the last year’s budget and now the process would be carried forward by developing consensus before the announcement of next year’s budget after listening to the views of all the provinces.

He said the provinces were showing flexibility in this regard because a new NFC award was in their interest as their financial shares would increase.

He did not say when the formal negotiations on NFC award would be resumed but it would take place when progress was achieved during the informal meetings followed by pre-negotiations analysis of the data and home work so that all details were worked out.

He said the resolution of NWFP’s net hydel profit dispute with Wapda was in progress through arbitration. Similarly, he said, the Sindh and Balochistan are discussing the issue of gas development surcharge.