ISLAMABAD: Amid competing demands from about six dozen departments that are seeking more than indicated resources, the federal government on Monday began the process of allocating the indicative budget of Rs890 billion for development and current expenditures for next fiscal year.

The formal process to approve financial year 2015-16’s development budget began with the Priorities Committee – the inter-ministerial body – that held its first session with 14 government ministries and departments. Besides recommending the development budget, the Priorities Committee will also propose ministries-specific ceilings for recurring expenses.

For the next fiscal year that will begin from July, the Ministry of Finance has indicated Rs580 billion for development spending and another Rs307 billion for running the civil government. In total, the Priorities Committee will make recommendations to allocate Rs887 billion for new fiscal year. The allocations for defense spending are not decided at this level.

The Priorities Committee places its recommendation on development budget in front of the Annual Plan Coordination Committee (APCC), which is headed by Minister for Planning, Development and Reforms and has authority to make changes. The APCC then gives its proposals to National Economic Council, which is headed by Prime Minister and having representation of all the federating units.

The Ministry of Planning has already termed the Rs580 billion indicative development budget ceiling ‘insufficient’ and sought at least Rs725 billion –Rs200 billion higher than current year’s development budget of Rs525 billion.

In the meanwhile, it has also started deliberations with the ministries to reduce the list to a level that is not only in line with the governments’ priorities but also justifies the resources’ allocation.

The next financial year 2015-16 will include the projects of high impact in the Public Sector Development Programme having closer conformity with economic and development oriented strategy as envisaged in vision 2025, said the Planning Minister Ahsan Iqbal.

Due to resources scarcity coupled with the Ministry of Finance’s half-year cut on the development budget, the development projects are facing significant delays. Like the previous fiscal year, when the government had cut the budget to Rs432 billion from original Rs540 billion, this year again the development spending is expected to remain short of the target.

Against this year’s Rs525 billion, actual spending is expected to be closer to Rs467 billion, according to a latest report of the International Monetary Fund.  As of April 10, the government released only Rs272 billion for development spending, which was just 51.8% of the annual allocation, according to Ministry of Planning’s documents.

The releases have been slowed to restrict the overall budget deficit to the IMF-determined target of 4.9% of Gross Domestic Product. The Federal Board of Revenue’s inability to achieve this year’s tax target of Rs2.810 trillion has necessitated deep-cut on development spending, said a Finance Ministry official.

Ahsan Iqbal said that the government was committed to overcome the energy crisis by 2017-18. Iqbal directed to expedite the spending of allocated money for prompt execution of projects before the end of current financial year 2014-15.

However, the status of releases shows that the government will not be able to fully utilise the development budget. As of April 10, the government released Rs28.7 billion for the power sector development projects, which was only 45.1% of annual allocation of Rs63.6 billion.

Iqbal also directed National Highway Authority to expedite the work on M-8 and N-85 to ensure their timely completion by June 2016 in order to connect Gawadar with Quetta. But when it comes to overall NHA spending, the agency was given only Rs36.9 billion till last week out of total allocations of Rs111.6 billion.

A Planning Ministry official said that due to various reasons the NHA will not be able to fully utilise the funds.

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