ISLAMABAD: The federal government is expected to allocate Rs575 billion for the Public Sector Development Programme (PSDP) and increase salary and pension of its employees by about 10 per cent in the budget 2015-16.

A senior government official said a budget strategy paper (BSP) had been finalised and it would be presented to the federal cabinet for approval next week.

The budget is likely to be announced in the first week of June.

The official said the allocation for defence would be around Rs760bn, but a final round of consultations with the military leadership was yet to take place before announcement of the budget.

The meetings of the priorities committee have been completed and the estimate for civil government expenditure had been set at Rs293bn, a bit higher than current year’s Rs290bn, and for salary and pension increase at about Rs40bn.

The allocations for subsidy have been scaled down to Rs150bn against Rs203bn of the current year. The subsidy curtailment will mainly come from the power sector through further tariff adjustments.

Sources said the Ministry of Finance had given a financial envelop of Rs575bn to the Planning Commission to adjust development projects, but the commission had strongly opposed the given target and wanted more than Rs750bn to accommodate new initiatives next year.

They said finally the allocation for the federal development programme could be increased to Rs600bn against current year’s Rs525bn, which was being cut down by almost 30pc to make up for the revenue loss arising out of easing inflation rate.

A finance ministry official said the next year’s allocation for development should be seen in the context of actual utilisation during the current year.

He said the annual plan coordination committee was expected to meet in the first week of May to firm up federal and provincial development budgets and other economic targets, to be followed up with a meeting of the National Economic Council probably in the third week of next month.

Officials said the BSP for next year should have been presented to the federal cabinet in the third week of March, but it was delayed. The cabinet is now expected to take up the BSP for approval in the first week of May to formally set the government priorities for the next financial year under third year of the stabilisation programme with the International Monetary Fund.

While the cabinet would set the general guidelines for the next budget, the tune and tenor of the overall direction of the country’s economy would be based on consultations with the IMF in view of an ongoing bailout programme.

After cabinet’s clearance, the BSP would be presented before the parliamentary standing committees on finance and revenue.

The government has decided to share the budget proposals with stakeholders, including businesspersons and chambers of commerce and industry in May.

Officials said the broad ambition of expanding national economy by 7.2pc in 2016-17 would be protected along with over 6pc growth rate for the next year.

The macroeconomic targets for the next year and broad outline for subsequent two years would also be part of the BSP.

Published in Dawn, April 22nd, 2015

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