ISLAMABAD: With plan to present Budget 2021-22 in parliament on June 11, the federal government on Tuesday asked the provinces to adopt strict fiscal discipline, rationalise expenditure and divert savings towards socioeconomic development.

As part of budget-making exercise, the centre also asked the provinces to rationalise their workforce in view of rising salary and pension bills, improving revenues and harmonise tax structure. The meetings were part of an overall consultative process with key stakeholders including provinces to seek inputs for formulation of a “people friendly growth-oriented budget”, the Ministry of Finance said.

On its part, the federal government decided to seek international financial support for agriculture package, water sector and social protection as part of foreign exchange component of the upcoming budget.

In his separate meetings with finance ministers of Punjab and Khyber Pakhtunkhwa, Finance Minister Shaukat Tarin asked both the provinces to rationalise their expenditures.

Budget likely to be announced on June 11

Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood Khan and Secretary Finance Kamran Ali Afzal also attended the meetings.

As part of the IMF programme, the federal and provincial governments had given an undertaking to harmonise federal and provincial taxes and that the provinces would enhance their cash surplus to Rs440bn next fiscal year from Rs210bn during current year to help contain overall fiscal deficit at 7.1pc of GDP next year.

In his meeting with KP Finance Minister Taimur Saleem Khan Jhagra, Mr Tarin asked the provincial administration “to adhere to strict financial discipline and work out modalities to rationalise expenditure and divert savings towards socioeconomic development in the province particularly amid Covid-19 and in post Covid-scenario”.

The KP minister was also asked to take measures that stimulate economic activity through out-of-box thinking for ‘enhancing revenues, rationalising workforce and harmonizing tax structure aiming at improving service delivery in the province’.

Mr Jhagra reported efforts being undertaken by the provincial government to curtail expenditure and rationalise spending with a key focus on providing maximum relief to the masses amid Covid-19 pandemic.

He also outlined measures taken to enhance provincial tax collection by expanding tax base and reducing the number of taxes. He expressed strong commitment of the KP government “to streamline pay and pension expenditure which takes the biggest chunk of the overall budget.

While discussing budget proposals, Mr Tarin stressed that education and health are the key priority areas and must be given preference during the budget-making exercise. He encouraged consultative process between the federal government and federating units for effective resource mobilisation.

Mr Tarin also advised the Punjab’s Finance Minister for value-addition in budget- making exercise and asked him to “rationalise expenditure and harmonise taxation policies for a growth-oriented budget”.

The Punjab finance minister briefed the economic team about the overall fiscal position and upcoming budget considerations and highlighted the steps taken by the provincial government to provide maximum relief to the vulnerable segments of the society during these testing times.

Published in Dawn, May 5th, 2021