Budget in June

The Finance Ministry, succumbing to the political and other pressures, is now set to present the 2010-11 Budget in the month of June instead of earlier planned by end of May, sources said. A Budget Strategy Paper-II (BSP-II), though, will come in the Parliament to soothe the parliamentarians, giving broader outline and framework of the budget for next three years, encompassing the outcome based budgeting for social sector and other sectors.
The Budget speech would be made either on June 5 or 12, while former is more likely, they said. "We are working to reduce 12 documents to 6 documents, and you would hardly find ''Budget in Brief'' and ''Budget Statement'' in the same way as you used to get on the day of the budget", said an official involved in this exercise.
A ''fiscal framework'', a ''growth framework'' of ''annual plan'' and others would be part of these documents, too. The order of the things is placed like meeting of National Accounts Committee to firm up growth figures on May 21-22, and the National Economic Council, to approve Public Sector Development Program (PSDP), by May 31, as used to be in regular exercise.
As per the directions of the IMF, which seems sensible not to base the projections of revenue side on foreign aid, which is not reflected in the budgets of the respective countries, would not be included in the budget documents. Financing should be worked out on the most probable sources, which it could not do last year and cost the Ministry too much as, after third months of the current fiscal year, the Finance Ministry was not aware of from where the funds would be coming, and it is not sure even now.
An exercise by the Federal Board of Revenue to work on general sales tax (GST), as a substitute to value-added tax (VAT), is an internal one and has nothing to do with the Finance Ministry, or any other department. This was done to avoid any mishap at the ending hours of the fiscal year. The Finance Ministry is committed with the IMF, and other donors, on VAT and just wants VAT to be enforced, anyway.
"When we enforced GST, many experts were susceptible of its success, and now, about VAT, same kind of thoughts are emerging, which are good for discussion, but we are confident to take it to the next level by enforcing it successfully", said an FBR official. On VAT, President Asif Ali Zardari has also asked the new Advisor on Finance, Dr Abdul Hafeez Sheikh, to conduct an inquiry that if there is any truth in sabotaging the ''NFC Award''.
Hafeez left for Washington on Monday night to participate in Spring Meetings of IMF and World Bank and update the two and the US Treasury on the framework of the strategy and framework of the coming budget. The Finance Ministry is also expecting next review of the Fund in May, after the approval of the May 3 Fifth Tranche approval. This would take up with the end-March data which the ministry is now compiling.