Business desk
ISLAMABAD: The government has capped the development spending for the first half of the fiscal year at mere 20% of the annual budget because of severe economic crisis, as multilateral creditors remained reluctant to provide any major solace to Pakistan in the aftermath of the recent floods.
However, the spending limit condition would not apply to the parliamentarians’ schemes – an unsurprising development.
They would receive 100% of the annual budget within the six-month period (July-December) because of the upcoming general elections, according to sources in the planning and development ministry.
The planning ministry has issued fresh instructions to all the federal government ministries and departments, informing them that their second quarter ceiling (October-December period) had been reset at “10% of the rupee authorisation”.
Effectively, the cumulative spending during the first six months would be less than 20%, as the government had already restricted the development expenditures for the first quarter to 10% as well.
The caps have been imposed on the rupee component of Rs667 billion.
In July this year, the finance ministry had issued an office memorandum and set the first half development budget limit at 45%.
After the fresh instructions, the government has effectively reduced the development budget by 25% or over Rs180 billion, according to the details.
For the current fiscal year, the government has allocated Rs728 billion for the Public Sector Development Programme but so far only Rs54 billion or 7% of the annual budget had been spent.
The step has been taken to remain aligned with the fiscal targets agreed between Pakistan and the International Monetary Fund (IMF) under the revised $6.5 billion bailout package.
Pakistan was hopeful that it would receive some concessions from the IMF and World Bank after the devastating floods wreaked havoc in the country.
But during Pakistani authorities’ recent interaction with the the IMF and WB, the principal lenders have advised Pakistan to stay on course, according to sources privy to these discussions.
