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Defence spending exceeds 1st quarter budget limit | DAWN.COM | Latest news, Breaking news, Pakistan News, World news, business, sport and multimedia
ISLAMABAD: Pakistans defence spending exceeded the first quarter (July-September 2010) budgetary limits by about Rs28 billion mainly because of war on terror and militarys prolonged stay in the tribal region, a senior official told Dawn on Friday.
The budget for the current fiscal year earmarked Rs442 billion for defence. Higher than planned expenditure on defence and flood rescue and relief work and lower than estimated revenue collection in the first quarter had increased the quarterly fiscal deficit to 1.6 per cent from the budgeted target of 1.4 per cent of GDP, the official said.
The finance ministry had asked the ministries, divisions and all other federal departments in August this year to limit their expenditures to 20 per cent of the approved budget during the first quarter of the fiscal year.
The defence spending during the July-September quarter was estimated at about Rs89 billion, but provisional figures for the period available with the finance ministry put it at about 117 billion, he said. The defence expenditure during the same period last year had stood at about Rs86 billion.
With this pace of spend-ing, the official said, the annual defence expenditure could cross Rs580 billion, against Rs552 billion estimated by the IMF and the budgeted allocation of Rs442 billion.
The finance ministrys guidelines for the current expenditure require all government agencies and ministries, including the offices of the President and the prime minister, to keep expenditures at 20 per cent for the first and second quarters of the fiscal year of the approved allocation and 30 per cent in the third and fourth quarters, the official said.
As part of expenditure control measures, the government had put additional restrictions in the 2010-11 budget that required approval of the federal cabinet for supplementary grants beyond 10 per cent of the approved allocation in unavoidable circumstances.
The official said the provisional data on fiscal operations had already been shared with the International Monetary Fund and would be made public by end of this month, with a delay of almost a month.
He said that transfers to provincial governments had, on the other hand, remained short by 6 per cent of their shares under the National Finance Commission award mainly because of lower than estimated revenue collection.
This would mean that the provincial and federal governments would have to curtail their expenditures to avoid further increase in the fiscal deficit.
The government has already revised down the revenue target for the current year to Rs1655 billion from budgetary estimates of Rs1667 billion because of about three months delay in introduction of Reformed General Sales Tax (RGST), although it expects to generate about Rs66 billion worth of additional taxes through 10 per cent flood surcharge on income tax liability, 1 per cent increase in special excise on dutiable items and improved accountability and audits.
The federal government had fixed a deficit target of Rs685 billion or 4 per cent of the GDP but provincial budgets increased this estimate to Rs877 billion or 5.1 per cent. The deficit target has now been set at Rs812 billion (both provincial and federal) or 4.7 per cent of the GDP in consultation with the IMF.
Under a budget restructuring exercise agreed to with the IMF, the government expects to create an additional cushion of Rs361 billion Rs224 billion at the federal and Rs137 billion at the provincial levels. The consolidated expenditures have been curtailed by Rs295 billion after floods.
Overall, the development programme at the federal and provincial level will be cut by Rs251 billion Rs140 billion of the federal and Rs111 billion of the provincial development programme.
ISLAMABAD: Pakistans defence spending exceeded the first quarter (July-September 2010) budgetary limits by about Rs28 billion mainly because of war on terror and militarys prolonged stay in the tribal region, a senior official told Dawn on Friday.
The budget for the current fiscal year earmarked Rs442 billion for defence. Higher than planned expenditure on defence and flood rescue and relief work and lower than estimated revenue collection in the first quarter had increased the quarterly fiscal deficit to 1.6 per cent from the budgeted target of 1.4 per cent of GDP, the official said.
The finance ministry had asked the ministries, divisions and all other federal departments in August this year to limit their expenditures to 20 per cent of the approved budget during the first quarter of the fiscal year.
The defence spending during the July-September quarter was estimated at about Rs89 billion, but provisional figures for the period available with the finance ministry put it at about 117 billion, he said. The defence expenditure during the same period last year had stood at about Rs86 billion.
With this pace of spend-ing, the official said, the annual defence expenditure could cross Rs580 billion, against Rs552 billion estimated by the IMF and the budgeted allocation of Rs442 billion.
The finance ministrys guidelines for the current expenditure require all government agencies and ministries, including the offices of the President and the prime minister, to keep expenditures at 20 per cent for the first and second quarters of the fiscal year of the approved allocation and 30 per cent in the third and fourth quarters, the official said.
As part of expenditure control measures, the government had put additional restrictions in the 2010-11 budget that required approval of the federal cabinet for supplementary grants beyond 10 per cent of the approved allocation in unavoidable circumstances.
The official said the provisional data on fiscal operations had already been shared with the International Monetary Fund and would be made public by end of this month, with a delay of almost a month.
He said that transfers to provincial governments had, on the other hand, remained short by 6 per cent of their shares under the National Finance Commission award mainly because of lower than estimated revenue collection.
This would mean that the provincial and federal governments would have to curtail their expenditures to avoid further increase in the fiscal deficit.
The government has already revised down the revenue target for the current year to Rs1655 billion from budgetary estimates of Rs1667 billion because of about three months delay in introduction of Reformed General Sales Tax (RGST), although it expects to generate about Rs66 billion worth of additional taxes through 10 per cent flood surcharge on income tax liability, 1 per cent increase in special excise on dutiable items and improved accountability and audits.
The federal government had fixed a deficit target of Rs685 billion or 4 per cent of the GDP but provincial budgets increased this estimate to Rs877 billion or 5.1 per cent. The deficit target has now been set at Rs812 billion (both provincial and federal) or 4.7 per cent of the GDP in consultation with the IMF.
Under a budget restructuring exercise agreed to with the IMF, the government expects to create an additional cushion of Rs361 billion Rs224 billion at the federal and Rs137 billion at the provincial levels. The consolidated expenditures have been curtailed by Rs295 billion after floods.
Overall, the development programme at the federal and provincial level will be cut by Rs251 billion Rs140 billion of the federal and Rs111 billion of the provincial development programme.
