ISLAMABAD: Given the current security situation linked to the withdrawal of Nato forces from Afghanistan, the Finance Ministry expects increase in expenses on war against terrorism will continue in the next fiscal year too.
There was a substantial increase in these expenses as they ate up major share of the government’s grants to different departments and organizations. A well-placed source at Finance Ministry told this scribe here on Wednesday that fiscal spending had reduced due to a reduction in current spending growth in third quarter of the current fiscal year but the growth in development expenditures remained same as last year, despite the increase in federal development expenditures. “Net lending of the federal government also increased sharply, mainly to settle the circular debt,” the source added.
The source said that current expenditures of the government witnessed a growth of 9.9% than 22.7 % last year same period, however, this improvement was not based on fundamentals because subsidies had been eased significantly as compared to last year. Moreover, the source said that decline in government’s expenditures was accompanied by a rapid accumulation of payables in the power sector and it would have to be checked from further accumulation. “Slowdown in the servicing of domestic debt on year to year basis (YoY) cannot hide the sharp increase in interest payments on domestic debt and it is likely to continue in the coming fiscal year,” the source said.
The government had to increase financial support to Pakistan Railways than the support provided in the last year despite a slight improvement in Pakistan Railways’ financials,” the source said, adding that the government earmarked a substantial amount of money in Jun 2013 for Pakistan International Airlines (PIA) and it would be being released in the current fiscal year. It is important to mention that PIA and Pakistan Steel were included in the list of entities up for strategic private sector participation. The source said that the fiscal authorities were in the process of appointing financial advisers for these entities, who would be responsible for preparing comprehensive restructuring and privatization plans for these entities.
“Furthermore, the government is in the process of reviving the board of Pakistan Railways to oversee there structuring activities, however, a need to speedup these efforts to minimize the fiscal drain caused by these loss making enterprises,” the source added. Moreover, the source said that Finance Ministry had also identified eleven companies for divestment through capital market transactions and in June this year government’s shares in United Bank Limited (UBL) had been divested in June 2014. “Furthermore, the divestment process of Pakistan Petroleum Limited has also been approved,” the source added
