June 25, 2007	Monday	Jamadi-us-Sani 09, 1428

Balochistan budget for 2007-08 envisages a total outlay of Rs63.081 billion against the total receipts of Rs53.248 billion. With a resource gap of Rs10.278 billion, the provincial government believes that the deficit will be met by increasing provincial income, economy measures and federal government assistance.

With a development outlay of Rs13.47 billion, the budget levies no new taxes.

The provincial government will spend Rs41.494 billion on current expenditure against total revenue receipts of Rs43.82 billion including income estimated from provincial resources at Rs2.966 billion. A sum of Rs40.86 billion is expected from the federal divisible pool.

Like previous four budgets, the PML-MMA coalition government has again come up with a deficit budget. The Rs59.69 billion budget for the outgoing year showed a staggering shortfall of Rs10.96 billion. The provincial government has never tried to bridge the gap through austerity measures, local resource generation and federal grants. The incidents of terrorism and subversion and cash strapped resources further burdened its fragile financial resources.

As usual, the provincial government is expecting grants from the federal government and international donors to finance the budget deficit. It exposes the severe resource constraints of a province on the country’s political periphery and its sole dependence on the centre to meet its financial needs. It amply reveals how an impoverished, heavily indebted and ever-neglected federating unit manages to run its affairs on loans and subventions and hopes and promises.

Annual Development Programme: A sum of Rs13.47 billion has been allocated for the Annual Development Programme (ADP), an impressive leap of 40 per cent over the outgoing year’s figure. The new ADP also includes Rs3.332 billion for foreign-assisted projects. The programme is by and large unfunded because only Rs3.332 billion are expected in foreign assistance, Rs11.50 million in Japanese cash grant and Rs107.62 million in ASPL-11.

The provincial government has decided to implement the ongoing development schemes and no new project has been included in the next year’s PSDP. Similarly, no new scheme had been included in the Rs10.81 billion ADP for 2006-07 for which the provincial government had allocated Rs6.35 billion and Rs3.760 billion was expected from the foreign assistance. The provincial government also carried an unimplemented development budget of Rs9 billion from the 2005-06. During the current financial year, 1071 development schemes were to be implemented under the PSDP.

The situation reveals some stark facts about the province. Firstly, the province lacks the institutional capacity to successfully carry out an annual development plan, hence the development funds are under-utilised. That is why, the fiscal and physical targets do not match. Secondly, the law and order situation, which is essential to continue and complete a developmental project, has not been satisfactory for the last three years.

While the volume of provincial PSDP has witnessed an increase over the last five years, it has been lower than the development budgets of other provinces. While Balochistan was facing resource constraint to fund its ADP of Rs7 billion last year, the Punjab’s chief minister had discretionary funds of more than Rs8 billion at his disposal.

Federal government is also implementing development projects. The mega projects underway in Balochistan include Gwadar port, Rs5.811 billion Mirani dam, Rs1.1 billion Sabakzai dam, Rs31 billion Kachhi Canal, Rs6 billion water courses project, Rs54 billion roads link project, Rs6.428 billion Naulang and Bolan dams, Rs2.016 billion flood water saving project, Rs2.243 billion Pat Feeder canal, Rs288 million flood protection project, Rs37.37 million rainwater harvesting and desertification control project.

Revenue base: Official sources claim that the province has improved its fiscal discipline and management. It has shown highest revenue growth of more than 20 per cent this year. Balochistan has managed to increase its small revenue base by more than 100 per cent in the last three years to Rs2.8 billion from Rs1.3 billion.

In revenue generation, according to the provincial finance secretary, Balochistan has left behind NWFP, which is generating Rs5 billion from its natural resources besides two industrial estates and a huge network of government and private sector partnerships.

One may appreciate the provincial government for its debt retirement strategy. Loans (CDLs) of higher interest rate were retired to save Rs1 billion per annum. The province also curtailed its recurring expenditure by Rs4.5 billion to Rs33 billion during the current year against budget estimates of Rs37 billion.

According to Balochistan Senior Minister, no progress has yet been made on the demands for Gas Development Surcharge (GDS) and due gas royalty so far. Balochistan lost Rs1.7 billion during the current fiscal in the royalty and GDS proceeds. This has been due to much lower gas production, and gas supply interruptions from gas fields at Sui, Loti and Pirokh.

Balochistan is the province that suffered the worst due to the NFC stalemate, as it largely depends upon the resources received from federal government through National Finance Commission. That is why, the parliamentary sub-committee on Balochistan headed by Senator Wasim Sajjad had also recommended the announcement of NFC award before the 2006-06 budget.

It has been observed that the heavy debt burden, state of law and order, corruption, lack of planning and poor governance are the key issues which have been distorting the budget priorities in the province.

Law and order: Balochistan witnessed an increase of about Rs4 billion in its federal divisible pool share from the federal government under an interim NFC award announced by President General Pervez Musharraf. But bulk of this has been eaten away by additional expenditures on law and order in the province. During this fiscal year, more than Rs800 million are reported to have been spent on setting up additional security posts in and around the gas producing areas. For the next fiscal, a sum of Rs4.52 billion has been allocated for improving law and order.

On the eve of the provincial budget, Balochistan Economic Forum (BEF) has advised the provincial government to find new and dependable sources of income to reduce its dependence on federal divisible pool for meeting its financial needs. It is necessary for the province to widen its revenue base by encouraging direct foreign investment and seeking international economic aid agencies’ and multilateral institution’s support for the socio-economic development of the province, with the cooperation of the federal government.