ISLAMABAD: The International Monetary Fund expects Pakistan to curtail its overall development budget by Rs360 billion (almost 24pc) of allocations to limit the fiscal deficit.
According to documents released over the weekend after approval of Pakistan’s 10th quarterly review by its executive board, the IMF expected the government to limit its overall development programme to Rs1.155 trillion, down 24pc, against Rs1.513trn allocation approved by parliament and the four provinces.
The latest IMF estimates are based on discussions between its officials and Finance Minister Ishaq Dar in the first week of last month in Dubai. The estimates are in line with disbursements reported to have been made by the Planning Commission.
According to the commission, total disbursements for the public sector development programme (PSDP), as of March 25, stood at Rs387.5bn (55.35pc) against the allocation of Rs700bn for the entire year. Based on the government’s schedule, the total disbursements should reach 70pc of the target in the first nine months of the fiscal year.
The IMF wants the federal government to keep the PSDP expenditure at Rs620bn, down 12pc, of the Rs700bn authorised by parliament. On the other hand, the cumulative annual development plans of the four provinces would be reduced to Rs535bn, down about 35pc from Rs813bn announced by the provincial assemblies.
Under the IMF programme, the government has to keep the fiscal deficit at 4.3pc of GDP, including 0.3pc expenses for military operations against terrorists in the tribal region and resettlement of temporarily displaced persons.
The Planning Commission’s data put disbursements made to federal ministries at Rs109bn in the first nine months of the current fiscal year, compared to Rs147bn during the same period last year, down by almost 26pc.
To place the debt-to-GDP ratio on a firm downward trajectory, bolster macroeconomic stability and set the stage for sustainable and inclusive growth, the government assured the IMF of its determination of keeping the budget deficit, excluding grants, to 4.3pc of GDP this fiscal year and to 3.5pc by the end of the IMF programme in 2016-17, mainly through revenue mobilisation and expenditure rationalisation across all layers of the government.
Towards that end, the government reported to the IMF that provincial governments had given in writing to contain their expenditures and continue to manage budgetary spending prudently and strive to achieve their contribution to fiscal consolidation.
