ISLAMABAD, June 13: Development budgets announced by the four provincial governments have exceeded by Rs100 billion the size approved by the National Economic Council, raising concerns in the federal government about the expansionary fiscal position. The NEC had approved Rs513 billion for the provincial development plans.
A government official told Dawn on Wednesday that the NEC meeting, presided over by Prime Minister Yousuf Raza Gilani and attended by chief ministers and other provincial representatives last month, had approved the overall development outlay of Rs873 billion for financial year 2012-13. This included Rs513 billion for the provinces and Rs360 billion as the federal share in the public sector development programme.
With an outlay of Rs513 billion under the provincial development plans for the next year, the federal government had estimated a cash surplus of Rs80 billion from provincial governments to limit the country’s overall fiscal deficit at 4.7 per cent of GDP.
However, the uplift budgets announced by the four provincial governments put the total size of the provincial development allocations at about Rs614 billion.
“This means that the provincial governments have no plans to offer cash surplus, which would result in higher fiscal deficit,” the official said.
“This is irresponsible budgeting on behalf of the provincial governments,” he said.
The official said the Punjab government had announced an annual development plan of Rs250 billion, followed by Sindh of Rs231 billion, Khyber Pakhtunkhwa Rs97 billion and Balochistan Rs35.82 billion.
As such, the total development allocations made by the four provinces have come to about Rs614 billion, against the NEC-approved size of Rs513 billion.
Federal Finance Minister Abdul Hafeez Shaikh had announced in his budget speech to work closely with provincial governments for better fiscal management.
The extravagant development allocations by the provincial governments have, however, raised concerns at the federal level.
The official said that both Punjab and Sindh exceeded their development ceilings by wide margins while Khyber Pakhtunkhwa and Balochistan also surpassed their limits though their financial impact was of limited nature.
The official said the federal government had taken up the issue with the provincial governments and it would be convening a meeting of provincial chief secretaries and finance secretaries for a brainstorming session on the matter soon after the federal budget was approved in a couple of days to try to convince them to limiting development allocations within the ceiling of Rs513 billion.
In view of the fact that federal and provincial governments will practically have less than eight months before the general election, it was all the more important not to spread limited resources among too many projects, the official said.