Delay in funds irks Pakistan provinces

February 07, 2013 - 6:03:23 am

ISLAMABAD: All four provinces of Pakistan, especially Khyber Pukhtunkhwa, (KP) has expressed concerns over non-convening National Finance Commission and NFC Award Implementation Committee meetings in the past nine months.

Haji Adeel, the KP member in National Finance Commission, has sent a letter to the Ministry of Finance, conveying the concerns of the province and demanding an NFC meeting soon.

Adeel said the ministry had not convened the biennial meeting of the NFC, including the finance ministers of the federal and provincial governments and that it amounted to the violation of the constitution.

Similarly, the meeting of the NFC Award Implementation Committee including the finance secretaries from the federal and provincial governments which reviews the budgetary allocations and federal transfers have also not convened for many months.

The ministry had released a tentative schedule for the announcement of the federal budget 2013-14 and a ‘Green Book’ and decided that the federal budget would be presented to the cabinet and parliament on May 31, 2013.

Accordingly, a Letter of Indicative Budget Ceilings (proposed allocations for the current and development budgets) based on three years’ projections and divisions for current and development expenditure is to be sent to  the principal accounting officers of ministries, with copy of ceilings to financial advisers and deputy financial advisers and sector chiefs in the Planning Commission Finance Division, sources said.

It is also to be released by tomorrow.

The ministry also has plans to finalise the federal budget by March 31 due to general elections and this urgency requires a proper and well-thought consultation process with provinces and political parties represented in parliament.

According to official sources, political parties are involved in issues relating to the general elections and are not focussing on the budget. 

However, the provincial governments having stakes in the federal budget making process are more conscious of the delay in NFC meetings.

As per practice, the federal government consults the provinces before preparations of the federal budget and on the completion of preparations in federal capital to update them on budget priorities and possible provincial shares in federal revenues in the upcoming federal budget.

However, since no  meetings of NFC and NFC Award Implementation Committee have been held yet, the provinces are concerned.

The governments in the KP and other provinces are anxious to have an update on possible projections for the 2013-14 budget so that provinces are able to start preparing their budgets.

They are also expected to share their revenue generation efforts to be initiated by them in their budgets since the seventh NFC Award Implementation Committee meeting had made it mandatory for the provinces to increase their revenue to help the federal government contain its budget deficit within limits acceptable to international financial tnstitutions (IFIs) and lending institutions for continuation of loan programmes.

The ministry has also issued directives to the federal ministries and divisions to finalise budget proposals.

It has also directed that  the foreign exchange component of estimates of development expenditure is required to be shown distinctly together with the source from which it will be met — whether from own resources or from foreign aid.

When the foreign exchange components are to be financed (wholly or partly) from foreign aid, the source and type of aid should invariably be indicated in budgetary provisions for the relevant project/scheme and at the end of the relevant new item statement.

In case of freign aid grants, equal amount of recoveries should be reflected in the relevant attachment for recoveries with new items statement.

The provision made for foreign exchange expenditure is not available for rupee expenditure or vice versa and no re-appropriation is permissible between the provision for rupee and foreign exchange expenditure.

This should be kept in view while framing estimates for the rupee as well as foreign exchange requirements. 

In case of imports of machinery and equipment, the orders for imports may not be placed unless adequate budgetary provisions have been made for payment of duties and taxes.