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‘Provinces asked to help fill massive gap in budget’
🇵🇰 Pakistan /Economy & Trade

‘Provinces asked to help fill massive gap in budget’

From Dawn · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Pakistan's federal government faces a Rs1.7 trillion fiscal deficit, prompting requests for provinces to increase their financial contributions.
  • Key economic meetings, the National Economic Council (NEC) and Annual Plan Coordination Committee (APCC), were canceled and rescheduled, causing market uncertainty.
  • Provinces, particularly Punjab and Sindh, are being asked to shoulder a larger financial burden to help bridge the gap, with specific revenue targets proposed.

Pakistan's federal government is grappling with a significant fiscal hole of approximately Rs1.7 trillion, leading it to seek greater financial contributions from the provinces. Khyber Pakhtunkhwa's finance advisor, Muzammil Aslam, revealed that the federal government is facing difficulties in formulating the upcoming budget due to this deficit.

Adding to the economic uncertainty, crucial meetings like the National Economic Council (NEC) and the Annual Plan Coordination Committee (APCC) were canceled and rescheduled without clear reasons or advance notice. This lack of clarity has reportedly caused a massive plunge in the Pakistan Stock Exchange, unsettling markets.

The Centre did not expect the healthy profits next year and was banking on the petroleum levy, and more funds from provinces to shore up its kitty.

— Muzammil AslamKP's finance advisor explained the federal government's financial strategy amidst the deficit.

Aslam indicated that the federal government is relying on measures like the petroleum levy and increased provincial contributions to manage its finances. Proposals suggest that Punjab should contribute around Rs700-800 billion, Sindh Rs500 billion, and KP Rs200 billion from their shares of the divisible pool. These figures stem from suggestions to revisit certain taxes, such as customs duties, to generate the needed revenue.

When you formulate budgets in such pressures, there would always be infighting and coalition partners would not get the budget passed.

— Muzammil AslamAslam commented on the challenges of budget formulation under pressure from coalition partners and IMF demands.
DistantNews Editorial

Originally published by Dawn. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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