BUDGET 2009-10: Rs 2.48 trillion outlay envisages 85 percent raise in development exp

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (June 14 2009): The Minister of State for Finance and Economic Affairs, Hina Rabbani Khar, on Saturday unveiled the Federal Budget for 2009-10, according to which total outlay for the next fiscal year will be Rs 2.482 trillion, which is 23.5 percent higher than the budget estimates of 2008-09.

Rs 646 billion allocated for PSDP Rs 722.7 billion gap to be financed with Rs 264.9 billion foreign loan and Rs 457 billion domestic borrowing Rs 660 billion to go to debt servicing Rs 175 billion administrative expense

-- Reckons IMF conditionalities

-- Targets 4.9 percent fiscal deficit

-- Shows relatively moderate burden of new taxes

-- Seeks industry's revival

The consolidated budget of the federal and provincial governments has been estimated at Rs 2.897 trillion, whereas total resources are estimated at Rs 2.174.9 trillion, with a consolidated budget deficit of Rs 722.7 billion, or 4.9 percent of GDP, which is 1.5 percent higher than what was agreed in the Letter of Intent (LoI) agreed with the International Monetary Fund (IMF) in March 2009.

This deficit will be financed by Rs 264.9 billion foreign and Rs 457.6 billion domestic loans. Analysts are of the view that the government may have agreed with the IMF team to slash the development program by the end of the year to meet the agreed target of budget deficit or may later renegotiate the target based on global economic performance.

Total resource availability during 2009-10 has been estimated at Rs 2.318 trillion, against Rs 1.836 trillion in the budget estimates of 2008-09. According to official budget documents, net revenue receipts for 2009-10 have been estimated at Rs 1.372 trillion, indicating an increase of 23.3 percent over the budget estimates of 2008-09.

The provincial share in federal revenue receipts is estimated at Rs 655 billion during 2009-10, which is 15.3 percent higher than the budget estimates for 2008-09. The capital receipts (net) for 2009-10 have been estimated at Rs 191 billion, against Rs 221 billion budget estimates of 2008-09.

The external receipts in 2009-10 are estimated at Rs 510 billion, which shows an increase of 70 percent over the budget estimates of 2008-09. The overall expenditure during 2009-10 has been estimated at Rs 2482 billion, of which the current expenditure is Rs 1699 billion, and development expenditure at Rs 803 billion.

Current expenditure shows an increase of 3.5 percent over the revised estimates of 2008-09, while development expenditure will increase by 68.1 percent in 2009-10 over the revised estimates of 2008-09. The share of current expenditure in total budgetary outlay for 2009-10 is 68.5 percent, as compared to 79 percent in the revised estimates for 2008-09.

The expenditure on General Public Services (inclusive of debt servicing transfer payments and superannuation allowance) is estimated at Rs 1189 billion, which is 70 percent of the current expenditure. The size of Public Sector Development Program (PSDP) for 2009-10 is Rs 646 billion, while for other development expenditures an amount of Rs 157 billion has been allocated.

The PSDP shows an increase of 54 percent over the revised estimates 2008-09, which were mercilessly slashed during the current year to meet the budget deficit target agreed with the IMF. The provinces have been allocated an amount of Rs 200 billion for budget estimates 2009-10 in their PSDP.

An amount of Rs 25 billion has been allocated for Earthquake Reconstruction and Rehabilitation Authority (Erra) in the PSDP 2009-10. However, there are no foreign loans expected for this purpose in 2009-10. The budget for fiscal year 2008-09 was estimated a total of 31250 million rupees but the revised estimates gave a zero figure. It is not clear whether this is indicative of the donors' backing out of their commitments.

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