Fiscal deficit would surge past 8 percent of GDP if budgeted inflows of $3 billion for the next fiscal year on account of the auction of 3G licences, privatisation proceeds from Etislaat and Coalition Support Fund (CSF) did not materialise, officials of the Finance Ministry told the Senate''s Standing Committee on Finance on Thursday.
Rana Asad Amin said chances were bright that the estimated inflows on account of PTCL privatisation would materialise because the government had decided to initiate a crackdown against grey trafficking. The committee members argued that these inflows were being budgeted for the past three years without actually materialising, adding that these budgeted inflows were also unlikely to materialise even in the next fiscal year.
The committee recommended that these inflows should be excluded. The Finance Ministry''s Adviser remarked that the committee should also propose alternative inflows to supplement the resulting budgetary gap. The committee suggested that the increase in Public Sector Development Programme (PSDP) allocation should not have been more than 20 percent and the block allocation of Rs 115 billion for special initiatives should also be used to manage fiscal deficit, instead of relying on foreign inflows which were unlikely to materialise.
Rana Asad Amin said that CSF inflows, if not budgeted, were unlikely to materialise and the US had reimbursed $ 1.8 billion in the current fiscal year when everyone was arguing that it would not materialise.
The Advisor Finance Ministry further stated that the government would save Rs 40 billion from cuts in administrative expenditures and all possible efforts would be made for further savings. He said that the 3G auction process would be expedited to ensure its sale in the current fiscal year. Additionally, he said that the change of government was likely to have a positive impact on the materialisation of CSF, privatisation proceeds from Etislaat and 3G licences.