KARACHI: The International Monetary Fund (IMF) bailout package for Pakistan has had a rather indirect impact on Sindh, indicating a drastic cut in the federal government development outlay which has reduced 68 per cent of funding in Islamabad-financed projects in the province during the current fiscal.
Well-placed sources in the provincial government disclose that only a sum of Rs2bn had been received from Islamabad for such projects so far till the end of November. This is a mere 22 per cent of the total amount of Rs18bn that the programme entailed for 2008-09. “By the halfway mark, the Centre was expected to dish out Rs9bn” they said.
The sources have no idea of how many federally-funded projects would be affected from this cut, but said that the authorities in Islamabad had assured them of providing the remaining amount by the next month.
However, releases from Islamabad on account of 2008-09 budgetary allocations have remained on track and schedule. The federal budget had stipulated Rs128 billion for Sindh from tax assignments. By end-November, Islamabad has released Rs63 billion to Sindh which is close to the proportionate target of funds.
Similarly, the budget had indicated a provision of Rs40 billion straight transfers to Sindh for the whole year from collection of royalty and development surcharge on oil and gas. Sindh has received Rs17 billion so far which, too, is close to the budgetary projections. Sindh’s share in provincial GST collection on the basis of National Finance Commission Award 2006 is Rs1.315 billion for the current fiscal. Out of this, Rs 500 million have been released thus far.
Since the provincial government is getting its share of resources from Islamabad in time and on schedule, the finance department, too, released Rs22 billion for the on-going schemes. The provincial ADP for 2008-09 is worth Rs60 billion and funds are released according to targets.
“But IMF conditions can have an impact on employment programmes in Sindh government,” a PPP activist apprehends. The present government has promised to provide more than 40,000 jobs in provincial and local governments that would raise the salary budget by at least Rs3-3.5 billion. But the PPP government is going ahead with its employment plan. No officer or politician, however, is willing to come up with relevant numbers.
Sindh has more than half-a-million employees, which, according to a World Bank study, indicates the highest density of public servants in any of the four provinces. It also shows the highest ratio of civil servants against its 40 million population. Against such statistics, it is not surprising that the World Bank has noted bad governance, growing lawlessness and a demoralised bureaucracy to be the main features of Sindh administration.
One positive aspect of the IMF bailout package is that it has protected all priority expenditures that were part of the budget in terms of education, healthcare, social welfare, income distribution, skills development, land for the landless peasants etc. But the emphasis is on non-salary budget for the priority sectors.
Subsidies on wheat, irrigation water and other commodities can also come under IMF review at any stage. In 2001 and 2002 IMF experts were said to have minutely reviewed all federal and provincial budgets as there were allegations of “figures fudging” by the State Bank of Pakistan and other government agencies. The Pakistan government was accused of having misreported data and economic indicators in 1996 and 1997 as well. In the current letter of intent, the IMF has made a specific provision to get any information from Islamabad.
Not only in Sindh, but in other provinces as well, people may feel the pinch under IMF conditions if there is a demand for cut-down on subsidies, adjustment in tax rates, service charges, and the widening of the tax net.