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The timing of the budget fiscal year 2019

The Abbasi administration has wholeheartedly endorsed Ishaq Dar’s oft-announced decision to formulate and present the budget for fiscal year 2018-19 even though the party’s tenure ends on 1 June 2018 – one month prior to the end of the current fiscal year on 30 June 2018. This has prompted two widely opposing views – those in favour and those against – though the basis of support or lack of it is not only along partisan lines but is also evident amongst independent economists/analysts.

Those in favour of the PML-N passing the budget argue that the Caretakers would be installed once the tenure of the incumbent government ends, representing a three-month transition period, a government empowered to take few if any major decisions specifically those with far reaching economic or political implications. A budget, they further argue, is for one year and with the year ending on 30 June unless the budget for the forthcoming fiscal year has been passed by the national assembly the Caretakers would have no authority to release funds to meet even essential expenses relating to current expenditure and/or for ongoing projects leading to a shut down of government on the pattern recently experienced by the US government.

Shut down on the same pattern as the US is not applicable to Pakistan. The Constitution’s Article 86 notes: “Power to authorize expenditure when Assembly stands dissolved: Notwithstanding anything contained in the foregoing provisions relating to financial matters, at any time when the National Assembly stands dissolved, the Federal Government may authorize expenditure from the Federal Consolidated Fund in respect of the estimated expenditure for a period not exceeding four months in any financial year, pending completion of the procedure prescribed in Article 82 for the voting of grants and the authentication of the schedule of authorized expenditure in accordance with the provisions of Article 83 in relation to the expenditure”. The federal government, after the end of the tenure of the PML-N government on 1 June this year, would be the Caretakers. Unfortunately though the time period is specified, not exceeding four months, yet the amount that can be used is not noted which leaves ample room for misuse of funds and/or allocations for projects that are associated with a particular political party thereby raising the possibility of allegations of pre-poll rigging.

Another source of concern with the PML-N formulating the budget for the forthcoming fiscal year, given its majority in the present parliament, would be an approval of supplementary grants that, opposition parties legitimately fear, may include expenditure that is political in nature – an extreme example being disbursements to PML-N parliamentarians for development work in their constituencies as a pre-poll rigging measure. Article 84 of the constitution stipulates that “if in respect of any financial year it is found (a) the amount authorized to be expended for a particular service for the current financial year is insufficient, or that a need has arisen for expenditure upon some new service not included in the Annual Budget Statement for that year; or (b) that any money has been spent on any service during a financial year in excess of the amount granted for that service for that year; the Federal Government shall have power to authorize expenditure from the Federal Consolidated Fund, whether the expenditure is charged by the Constitution upon that Fund or not, and shall cause to be laid before the National Assembly a Supplementary Budget Statement or, as the case may be, an Excess Budget Statement, setting out the amount of that expenditure, and the provisions of Articles 80 to 83 shall apply to those statements as they apply to the Annual Budget Statement.”

What is even more disturbing is the fact that the government intends to present the budget for 2018-19 mid-May or at least seven weeks prior to the end of the fiscal year due ostensibly to the onset of Ramazan. Last year too, the budget was presented around five weeks before the end of the fiscal year due to the holy month – which made even more of a mockery of the government claims of revenue generation for the year as well as the amount spent on current and development expenditure than has been the norm.

Be that as it may, the budget process has begun. The first stage namely the budget call circular was issued on 18 December 2017 by the Additional Finance Secretary (budget) titled submission of revised estimates 2017-18, budget estimates 2018-19 and medium-term budget estimates 2018-19 to secretaries, additional secretaries Principal Accounting Officers of ministries/divisions or. It is the first stage of the budget process with Section 1 requiring them to provide revised and budget estimates in respect of federal government receipts, current and development expenditure, and section II requiring allocation of indicative budget ceiling to ‘output’ services and for development of output based budget.

The second stage in the process is for the Finance Division to prepare the medium-term budget strategy paper (three years) and Medium-term Fiscal Framework. This again is usually a wish list, and would be more so during an election year with the supplementary grants for the year ending understated and revenue generation overstated, giving an unrealistic budget deficit.

The third to the twelfth stage in the budget making process requires request for funds for development/current expenditure by ministries/divisions (past precedence reveals that these requests are routinely considerably over stated and the Finance Ministry trims them drastically) and approvals from the relevant authorities for allocations as well as revenue generation all the way to the cabinet till the budget is presented in the national assembly. This process has begun however the federal ministers’ input in funding requests for their ministries including for specific projects is significant and here there are wide divergences between political parties with the PML-N focused on physical infrastructure, particularly roads and the Pakistan Tehreek-e-Insaf on social infrastructure like education and health. It is these differences that one would hope may sway the incumbent government’s decision to present the budget for 2018-19; however given the executive’s statements this hope is unlikely to be met.

Anjum Ibrahim, "The timing of the budget fiscal year 2019," Business Recorder. 2018-02-26.
Keywords: Abbasi administration , Political implications , Political party , Development expenditure , Fiscal framework , Physical infrastructure , PMLN , US , Ishaq Dar 2018-19