The finance ministry has convened a meeting of provincial finance secretaries tomorrow (Wednesday) to discuss how to improve the fiscal management in the wake of likely shortfall in revenue collection, it has been reliably learnt.
Sources said as the fiscal deficit is soaring, the estimated revenue targets for the current fiscal year are unlikely to be met after the delay in approval of Reformed General Sale Tax from the parliament, withdrawal of increase in oil prices and non-materialisation of inflows on account of 3-G licenses.
In addition, they said borrowing by the government has also led to an increase in the interest payment in addition to the allocations made in the budget. As the revenue is likely to decrease, the federal and provincial governments need to reduce their expenditure, an official said. The finance ministry would share woes on fiscal side with the provincial finance secretaries and would seek their help in containing fiscal deficit.
They said according to revised budgetary framework agreed with the IMF on the basis of 4.7 per cent budget deficit for the current fiscal year, provinces are estimated to give 0.03 per cent, Rs 61 billion, surplus budget deficit. The provincial finance secretaries would inform the meeting regarding their efforts to mobilise revenue resources and reduce their expenditures to meet the surplus budget deficit.
The details with respect to revenue collection targets and expenditure for six months as well as cash balance position has been asked by the federal government. However, a provincial official on condition of anonymity said the surplus budget deficit by the provinces seems unlikely.
The reason he gave was that provincial budget deficits were worked out on the basis of estimated additional revenue they were expecting to receive with the implementation of RGST during the current fiscal year. As the implementation of RGST seems unlikely, the budget deficit of my province will also go up, he maintained. He said that in such a situation, the provincial government may not be able to contribute to the surplus budget deficit for current fiscal year.
The economic team would also take up with the provinces, the issue of their payable dues against the Pepco and KESC, which are compounding the problem of circular debt. An official said that most of the Pepco''s receivables are against local government, provincial governments as well as federal government and its allied departments.
Failure by all these departments to pay their dues, he said would ultimately impact the budget. The economic team would try to resolve the problem of Pepco''s outstanding dues in the meeting by reconciling figures. The other agenda items of the meeting are nomination of other members of 8th National Finance Commission (NFC) and to seek concurrence of the provinces for the report of the NFC and explanatory memorandum.
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