Qaim Ali Shah presents Rs686 billion outlay Sindh budget

KARACHI: Sindh Chief Minister Qaim Ali Shah on Friday presented budget proposals for the fiscal year 2014-15. During his budget speech in the Sindh Assembly, he said that outlay of the budget would be Rs686 billion.

The Sindh government has announced 40,000 job opportunities in financial year 2014-15. Shah said that Pakistan Peoples Party government had created 200,000 jobs in last 6 years.

He said that in the new budget more jobs would be created for poor and jobless citizens of the province as it is the priority of PPP to provide maximum number of jobs to people.

The chief minister said that Sindh didn't get its share of royality on account of gas infrastructure. He said that salaries of the Sindh government employees had been increased by 10 percent in the budget.

He said 168 billion rupees have been proposed for the development projects of the province in the budget. Shah said that Rs42 had been allocated for the development budget of Karachi.

Power sector close to collapse under Rs513.37 billion debt

ISLAMABAD: Amid the unprecedented power shortages of over 7,000MW, Pakistan’s power sector receivables have risen to a whopping Rs513.368 billion in the first 10 months of the current financial year 2013-14, threatening collapse of the entire system.
According to the latest documents on receivables as of April 2014 available with The News, the provinces are required to pay Rs87.256 billion that include Sindh’s Rs54.547 billion, KP Rs20.540 billion, Punjab Rs6.619 billion, Balochistan Rs5.550 billion and the AJK’s Rs36.693 billion.

The shocking fact is that the government has failed to collect electricity bills from private sector consumers as this sector has emerged as the biggest defaulter owing a mammoth Rs345.386 to the Pakistan Electric Power Company (Pepco).

The document also unveils that the domestic sector in Fata is required to pay Rs32 billion, which has also been included in the head of private sector consumers.

Finance Minister Ishaq Dar said that the government was going to implement a special plan next week to improve the recovery of electricity bills as the finance ministry had no money to clear the circular debt that had risen to over Rs300 billion.

The prime minister is worried and annoyed over the appalling situation of power sector and it is clear that the Ministry of Water and Power is bound to speedily recover these bills and clear the circular debt. However, the finance ministry will also depute a senior official to help the Ministry of Water and Power to recover the dues.

Dar said that he was going to soon pay more to the Ministry of Water and Power from the head of inter-tariff differential subsidy so that PSO’s imminent default could be averted.

Meanwhile, the IPPs have reduced their power generation by over 1,600MW despite the fact that they have the capacity to generate 8,500MW of electricity. They have reduced their generation just because of non-availability of the required liquidity. They have no money to pay the interest to banks on loans they have borrowed to purchase the fuel. The government owes Rs210 billion to the IPPs and if the situation continues unabated, then the IPPs may halt their operations exposing the country to more loadshedding, according to Adbullah Yousaf, the Chairman of Advisory Council of the IPPs.

Meanwhile, the Pakistan State Oil is on the verge of being declared a defaulter as one of its letters of credit (L/C) is going to expire on Friday, June 13.The dues of PSO have also swelled to Rs130 billion as of today that the power sector has to pay to the state-run entity.

“We have supplied furnace oil of Rs160 billion to the power sector by June 9, 2014 in the current financial year and in return PSO miserably lacks the liquidity as the power sector is not paying for the fuel it has used so far,” a senior official in PSO told The News.“This situation has exposed PSO with zero liquidity because of which it has no fiscal space to place more orders to import furnace oil for power generation.”

Govt to get $10 billion in loans, grants in 2014-15

ISLAMABAD: The Nawaz Sharif government will receive the highest-ever foreign inflows in the shape of loans and grants of over $10 billion during 2014-15, The News has learnt.

Following the resumption of the World Bank and Asian Development Bank loans, as well as increased foreign loans and grants from bilateral creditors, the government is expecting foreign inflows of up to $10 billion against the estimates of $5.76 billion in the budget 2013-14.

“The net lending will stand at over Rs650 billion in the next budget as foreign inflows will cross the Rs1,000 billion mark and can touch Rs1,050 billion while repayment of loans in the shape of amortization will consume almost Rs400 billion,” said the official sources.

The finance ministry official claimed that the public debt would not surge despite obtaining heavy foreign loans as the government would retire its domestic debt proportionate to foreign loans. But there are certain risks as well because in case of revising downward the GDP growth, especially reduction in growth of Large Scale Manufacturing (LSM), the overall GDP growth might fall below four percent.

Then the debt-to-GDP ratio can go up instead of the official projected figures of bringing it down, said the sources.The official circles say the government is going to give a loud and clear message that there will be no more dependence on domestic banks to finance the budget deficit in a big way as had happened in the last five years when the increased demand of borrowing had resulted in a situation that the banks had started dictating terms knowing that the government had turned into a “desperate borrower”.

A senior official of the Finance Division confirmed to The News on Friday that Pakistan would become eligible for concessionary loan of $3 billion under the IDA-17 from July 1, 2014 and can get this amount within three year period. This funding, coupled with the ADB and IDB loans in the pipeline, will enable Islamabad to jack up its foreign assistance up to Rs1,000 billion against the envisaged estimates of Rs576 billion in the outgoing fiscal year.

In the budget 2013-14, the government had projected foreign inflows of Rs576 billion against the revised loan and grants figure of Rs243 billion in 2012-13.Interestingly, the foreign inflows in the first nine-month(July-Sept) period remained negative; Rs50 billion in the outgoing fiscal year as total foreign inflows stood at Rs196 billion against the repayment of loans to the tune of Rs246 billion in this period.

But the situation has changed altogether since April this year when first Saudi Arabia provided a gift of $1.5 billion in two installments and then Pakistan’s oversubscribed Eurobond fetched $2 billion in one go. The resumption of loans from the WB and ADB also helped the government to get another $1.5 to $2 billion into the national kitty.

The generous foreign inflow has increased the foreign currency reserves level to $13 billion and will touch $15 billion soon.In another important development, the finance ministry on Friday made changes in its fiscal operation for July-March period of the current fiscal year and disclosed that the budget deficit was 3.8 percent instead of the earlier released figures of 3.1 percent of the GDP for this period.

All this happened because of treatment of $1.5 billion from Saudi Arabia, as earlier the Finance Ministry had included it into the figures, resulting into fattening this head up to Rs157 billion for this period.

Now in its explanatory note on its website, the Finance Ministry states: “The high statistical discrepancy is due to the impact of a transfer receipt from a friendly country amounting to Rs157 billion which has been kept separately in an account Pakistan Development Fund. Without this, impact of statistical discrepancy would come to Rs14 billion which would imply a deficit of Rs969 billion i.e. approximately 3.8% of GDP which is significantly less than the last year’s deficit of 4.6% of GDP.”

Govt to spend $34 billion for key infrastructure development: Dar

 

ISLAMABAD: Federal Minister for Finance, Senator Mohammad Ishaq Dar on Tuesday said that the government would spend $34 billion in the next four years in various sectors of economy particularly for the expansion of motorways, power transmission lines and development of energy sector.
Talking to Minister of Finance of the Canadian Ontario Province, Charles Sousa, who called on him, Dar said that his government was determined to pursue very aggressive infrastructure development program in the country to help accelerate economic growth.

“The government is determined to pursue the policy of transparency, good governance and zero tolerance for corruption besides fulfilling its election manifesto by prioritising four ‘E sectors’ that include Education, Economy, Energy and Eradication of Extremism,” Dar said.

The finance minister also briefed Sousa about the introduction of 3G and 4G technologies in a transparent process, which would attract massive investments in the telecommunication sector. He expressed his determination to correct the existing energy mix in Pakistan as currently, 75 percent source of energy is furnace oil, due to which per unit cost has become exorbitantly high. Hence, the government intends to give priority to clean energy, he said.

Dar expressed voiced hope that the Canadian companies would invest in hydro projects as they have tremendous expertise in this field. He stated that the government has signed a 2,000MW nuclear power plant agreement with China and was negotiating for additional 3,000MW plant on BOT mechanism. While speaking about the security situation of the country, the Finance Minister underscored the need for giving dialogue a last chance.

The minister said that he will be presenting his second budget in June, 2014, adding although Pakistan’s GDP has been growing at three percent for the past few years, this year the growth is expected to be four percent. However, the target of 6% growth is likely to be achieved in the next few years owing to various economic reforms being undertaking by the present government, he added.

On the occasion, Sousa expressed the hope that by following robust and vigorous economic agenda, the government would certainly overcome economic difficulties, which would, in turn, pave the way for more foreign investments, both by expatriate Pakistanis and foreign companies. He stated that the better economic condition was the best way to give hope to the people, which would help reduce illiteracy and extremism.

Sousa appreciated Pakistan’s positive role in the post 9/11 war against terrorism and deplored criticism against Pakistan in this regard. He said that the Ontario government was pursuing a practical ‘energy mix’ policy adding the 50 percent source of energy was nuclear, followed by hydro and gas while the green energy constitutes only 6 percent.

Sousa stated that the Ontario government greatly admires Pakistani businessmen, entrepreneurs, doctors, engineers, accountants and other professionals, who have been making valuable contributions to the Canadian economy and society.

He said that he will be presenting his second budget as the Finance Minister and to boost the economy and employment the government is proposing to spend C$11.3 billion more than the previous year.