WEB DESK: In what should have stunned the nation, Dr Hafiz Pasha, in an exclusive interview with Aaj News, claimed that the figures shared with the International Monetary Fund (IMF) with respect to allocations for Public Sector Development Programme (PSDP) were lower than what was claimed by Federal Finance Minister in his budget speech as well as supporting documents.
A perusal of the data presented in the budget shared with the Fund staff in the mandated quarterly (eleventh) staff review, reveals that the federal PSDP is projected at Rs 510 billion for 2015-16 (against the budget target of Rs 620 billion) and Rs 636 billion for the ongoing fiscal year. In the budget speech and supporting documents, the federal PSDP for 2015-16 budgeted at Rs 700 billion was revised downward to Rs 661 billion or an estimated Rs 151 billion lower than what the parliament was told. And equally disturbing, the federal PSDP for the current year is budgeted at Rs 875 billion in the budget documents while data shared with the IMF projects PSDP at Rs 636 billion in 2016-17.
Total PSDP, federal as well as provincial, is projected at Rs 1040 billion in 2015-16 against the budgeted target of Rs 1155 billion in the budget shared with the IMF. In the budget presented to parliament, total PSDP has been revised downward to Rs 1394 billion for the last year, from the budgeted target of Rs 1513 billion, or a difference of Rs 354 billion between the figure shared with the Fund and parliament. In the same vein, the projection of Rs 1675 billion on national PSDP for the current fiscal year as stated in the budget documents is higher than the Rs 1206 billion shared with the Fund by Rs 419 billion.
The Finance Ministry may well claim that as the budget is an ongoing process the government decided to increase the outlay on development to meet its growth projections for the next fiscal year. This, they may well argue, accounts for the lower figure shared with the Fund a month or so before the budget speech. Nonetheless, the discrepancy between what was shared with the Fund and what was later shared with parliament is extremely disturbing from two perspectives.
First and foremost, the eleventh staff review does not note this discrepancy, a review that was naturally uploaded three weeks after the budget speech given that the submission of the budget itself was cited as a condition prior to the release of the penultimate tranche. This raises serious questions about the competence of the IMF mission leader and one would hope that the relevant Fund staff takes the time to respond to these concerns.
Secondly, and equally disturbingly, the Ministry of Finance must also respond to the reason why the data it shared with the IMF with respect to actual allocations for PSDP in the last fiscal year is at odds with the data it shared with parliament. Given this data, it appears that the Finance Minister has blatantly breached parliamentary norms and privilege.
Dr Pasha also pointed out during the programme that the data shared in the budget with the IMF in the eleventh review with respect to the Coalition Support Fund (CSF) is unrealistic given the US as well as Pakistan’s concerns on this issue. Be that as it may, the Fund was informed that the government projected $937 million in 2015-16 under the CSF (the budget documents gave the amount as Rs 170 billion). However, defence sources informed Business Recorder that $200 million are pending under this account which may be cleared by 1st October this year. For 2016-17, the budget documents also estimate Rs 170 billion under this head, and the documents uploaded on the Fund website indicate $900 million.
The Finance Ministry has been accused by independent economists, including Dr Pasha of routinely overstating its revenue projections under both domestic and external sources. Additionally, given the recent discrepancies between data shared with the Fund and parliament the Ministry is breaching parliamentary norms, a fact that challenge the Sharif administration’s democratic credentials.
One would hope that the Ministry of Finance as well as the Fund mission leader responds to the various questions that have arisen in the aftermath of the eleventh staff review uploaded on the Fund’s website.
Source: Business Recorder