May 04, 2008	Sunday	Rabi-us-Sani 27, 1429

KARACHI, May 3: The four provincial governments are drawing up their budgets on the basis of President Pervez Musharraf’s national finance distribution formula which stipulates population as the only criterion for distribution of resources.

There is a lot of confusion on availability of resources from the federal government and it is hampering the budget-making exercise as the provinces depend almost 90 per cent on transfers from Islamabad.

After two successive national finance commissions headed by Shaukat Aziz failed to reach any consensus during 2000 to 2005, President Musharraf exercised his powers and amended the provision of 1973 Constitution that is related to distribution of revenues between the federation and the provinces and promulgated Distribution of Revenue and Grants in Aid (amendment) Order 2006.

“This will be the third consecutive year for preparing provincial budgets on the basis of Musharraf formula,” an official of the Sindh Finance Department said who has no idea on the tenure of the president’s order.

He was not certain whether another constitutional amendment would be required to resume normal practice of constituting a new National Finance Commission after every five years from this year.There is total confusion on the lines on which the 2008-09 budget is to be drawn up. None in the bureaucracy or political leadership is ready to give a clear picture.

Sindh Chief Minister Syed Qaim Ali Shah is holding meetings with senior officials, party leaders and coalition partners almost every day. But he is blank and tentative on resources availability from the federal government for the next fiscal year.

Conversations with serving and retired officials in finance, planning and development and a few other departments indicate a possible outlay of Rs180 to Rs200 billion for 2008-09 budget.

The rule of thumb is a 10 to 15 per cent increase over the outgoing fiscal year’s budget. But the size of Annual Development Plan (ADP) remains tentative. “Our budget preparation exercise is being hampered by a number of factors,” an official explained.

First and foremost is the unstable international oil price which has already knocked out 2007-08 budgetary projections of revenue collection and expenditure. Total federal revenue in 2007-08 is now being estimated at around Rs990 billion as against budgetary projection of Rs1,025 billion. The official doubts achievement of even the revised target.

While the revenue budget is down, the expenditure budget is up because it was prepared on assumption of $58 to $60 a barrel and the oil price has now gone up almost twice. The 2007-08 budget is totally out of original shape as almost all budgetary projections have become irrelevant and severely impacted on provincial budgets. New governments have been formed at the federal and provincial levels but have not yet settled down to take stock of the situation. Bureaucrats provide information and inputs to the political leadership. But for the last few weeks, the process of transfers and postings at various levels in federal and provincial governments is showing no signs of respite and hence bureaucrats are found wanting for answers.

“I have just taken over my assignment,” replied a lady bureaucrat who asked for at least a week or 10 days to understand the situation before she could communicate on the budget.

A 41-member mega cabinet has already been put in place in Sindh without any one being given responsibility of finance and planning and development.

The officials say that the 2007-08 budgets of federal and provincial governments were drawn up with election in sight. But ambitious development outlay and tax collection targets received a severe setback because of international oil price rise, promulgation of emergency and finally the assassination of Benazir Bhutto.

In this all round confusion, there is no one to indicate as to when the Annual Plan Coordination Committee (APCC) will meet and when will National Economic Council (NEC) hold deliberations.

Normally, the APCC and NEC meet in last week of May or early June. Budget presentation begins some time in the second week of June from the National Assembly which then goes on in provincial capitals till last week of June.