Finance Ministry would be unable to meet the budgeted deficit target if the provinces do not agree to generate the cash surplus indicated in the federal budget. Sources revealed to this correspondent that the Finance Ministry had forwarded a proposal to Ministry of Inter Provincial Co-ordination (IPCC) some two months ago to discuss the issue of provincial surplus in the next meeting of the Council of Common Interest (CCI). They added that an understanding was reached with the provinces in the seventh National Finance Commission (NFC) award that provinces would generate one percent (1%) of the GDP cash balance to meet the federal budget deficit.
Provinces failed to fulfil their commitment last fiscal year given that the federal budget projected a provincial surplus of Rs 297 billion while actual surplus was Rs 141.6 billion - or a shortfall of Rs 156 billion. This along with other factors made it difficult for the Centre to meet its budget deficit target of 4.3 percent for 2015-16 consequently revising it upward to 4.6 percent. This year Rs 336 billion has been budgeted as provinces' surplus.
Provincial share in federal revenue has increased from Rs 1538 billion in fiscal year 2014-15 to Rs 1862 billion in fiscal year 2015-16. This accounts for grave concerns within the Ministry of Finance about its own contracting resources after the last NFC award and it accuses provinces of making no serious visible effort to raise their tax collections and broaden their tax base.
The federal government, sources added, wants provinces with access to higher revenue from the divisible pool to shoulder greater responsibilities with respect to the federal deficit. Finance Ministry, sources further stated, has suggested that the CCI devise a mechanism whereby federal finance Secretary and Chairman Federal Board of Revenue meet with provincial finance secretaries on a quarterly basis to ensure consistency in policy as well as in consolidated federal and provincial budgetary operation, which, too, is released on a quarterly basis. The CCI meeting has long been overdue with the last one held in March 25, 2016 and since then Prime Minister's Office, which is constitutionally bound to have the meeting once in 90 days, has yet to convene a meeting.
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