ISLAMABAD: The federal and provincial governments continued to exert tight control over recurring expenditures and slowly utilised development funds to contain the country’s consolidated fiscal deficit at 4.6 per cent of gross domestic product (GDP) last year.

This was reported to parliament jointly by the five governments – federal and four provinces – under article 9(3) of the National Finance Commission (NFC) award of 2009.

The federal and provincial governments said they generally followed the policy of austerity to limit fiscal deficit to 4.6pc of GDP, although the budgeted target of 4.5pc was missed by a small margin.

Based on a similar policy, the Centre and the provinces would limit fiscal deficit to 3.8pc of GDP this fiscal year.

‘Prudent spending and austerity measures help contain fiscal deficit at 4.6pc of GDP’

The federal government said it restricted current and development expenditure (net after austerity) at the level of 20pc of budget allocation for first and second quarters and at the level of 30pc each for third and fourth quarters respectively of 2015-16, except that releases on account of salaries and pension were made at 25pc of budget estimates for each quarter.

The revenue collection and expenditure were monitored on a monthly basis, said the federal government, adding that it also monitored revenues and expenditures of the provincial governments on monthly basis.

The finance ministry said the federal government also kept a complete ban on purchase of all types of vehicles from both current as well as development budget except operational vehicles of the law enforcing agencies. Likewise, the creation of new posts was banned except those required for development projects and approved by the competent authority while no re-appropriations were made from heads of budget relating to employees related expenditure and utilities allocation.

The Punjab government said it followed “strict austerity measures to reduce expenditure on purchase of durable goods”. All such purchases were subject to clearance by a high-level austerity committee led by the provincial finance minister.

Also, Punjab is focusing on improvement of agriculture income tax through assistance of the World Bank and is in the process of automation of stamp papers (e-stamping) to revamp stamp duty collection.

The provincial government said it had established four commissionerates of the Punjab Revenue Authority (PRA) at Multan, Gujranwala, Faisalabad and Rawalpindi and a camp office at Murree to enhance sales tax collection on services. Also, it had launched restaurant invoice monitoring scheme linked with a lottery scheme to encourage customers to demand sales tax invoices.

The Sindh government said it had contained its budget deficit through effective and efficient financial management, leading to declining trend and improves cash balance position and was now monitoring on daily basis its cash balance with the State Bank of Pakistan.

The KP government reported putting in place a release policy for current and development expenditure and was able to keep cash balance in its Account No. 1 for more than six months.

The Balochistan government said it was monitoring its cash balance with SBP on a daily basis to ensure that the cash position remained within limit. Also, it had also maintained the revenue surplus under a decision of the Council of Common Interest and was now working with the World Bank for reviewing overall provincial tax governance mechanism and had undertaken public financial management project financed by the European Union to review the financial management system.

Meanwhile, Minister of Finance Ishaq Dar reviewed half-yearly economic performance on Monday and noted GDP growth on upward trajectory and steady inflation below 4pc in December 2016 and in first six months of the current fiscal year, reflecting continued price stability.

The minister said 7pc growth posted by the FBR in first six months ended in December 2016, reflected catching up of the shortfall experienced in the initial months, largely on account of giving relief to consumers on petroleum prices together with sales tax refunds of Rs45 billions.

On the expenditure side, the performance was on track as expenditure was allowed in a prudent manner in accordance with budget, and keeping in view the revenue growth. He said economic activities were picking up, investments were taking place, particularly in CPEC-related projects which would further accelerate after the recent understanding with Chinese authorities to further expand the scope of China-Pakistan Economic Corridor by including water security, Karachi Circular Railway, mass transit programme for Balochistan, projects for Khyber Pakhtunkhwa, and rehabilitation of Railways-related project.


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