CENTRE TO RELEASE RS:140 BILLION TO PROVINCES

ISLAMABAD: The centre will release this year’s last tranche of Rs140 billion to the provinces from the federal divisible pool on Thursday but withhold for a few days about Rs16 billion earmarked for compensating flood-affected people, to achieve fiscal deficit target of 5.3 per cent.

At the conclusion of the year on Thursday, the authorities will have an inflow of $522 million (about Rs45 billion) from three international lending agencies, the World Bank, Asian Development Bank and Islamic Development Bank, to partially finance Rs1.08 trillion overall deficit for the current year.

Rana Asad Amin, the additional finance secretary and official spokesman for the ministry, told journalists that the World Bank had credited $162 million to Pakistan on Wednesday as part of education sector reforms programme in Punjab and Sindh. Another $200 million was expected to come on Thursday from the Asian Development Bank on account of second generation reforms in the capital market, mostly relating to restructuring of Securities and Exchange Commission of Pakistan.

He said the authorities were in contact with the IDB for an inflow of $160 million. Put together these inflows would offset the slippage on account of the non-realization of OGDC’s exchangeable bonds worth $500 million. Mr.Amin said the federal government would release Rs.16 billion to the provinces early next month for compensating the flood-affected people. An equivalent amount would be provided by the provinces.

He said the government had earlier decided to provide Rs20,000 to every affected family, but that would not be the case now. The provinces would provide compensation to the affected people on the basis of the damages they suffered, as assessed by the provincial authorities. Speaking of the reasons behind the increase in fiscal deficit, Mr.Amin said the government had estimated total expenditure at Rs2.274 billion and total federal receipts at Rs1.238 billion, leaving a shortfall of Rs.1,036 billion. Of this amount, the provinces had committed to offer a surplus of Rs.120 billion, reducing the overall deficit to Rs916 billion. He said the federal government already had about Rs80 billion surplus on behalf of provincial governments while Rs.142 billion would be transferred to the provinces on Thursday.

Mr.Amin hoped that provincial transfers on Thursday would help provincial governments to retire about Rs.100 billion of overdraft they had secured from banks. He hoped the provinces would be able to close their accounts with Rs120 billion surplus to help achieve deficit target of Rs.916 billion. He said the government had budgeted Rs.115 billion on account of Coalition Support Fund disbursements during the outgoing financial year, of which Rs68.5 billion had been received but another Rs.42 billion could not materialise. Likewise, a Rs60 billion non-tax revenue budgeted on account of sale of third generation telecom licences had also not materialized, which coupled with higher expenditure resulted in increased fiscal deficit of about 5.3 per cent.