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No hike in development funds for AJK, GB, Fata

ISLAMABAD: Envisaging no increase in development funds for Azad Jammu and Kashmir (AJK), Gilgit-Baltistan (GB) and Federally Administered Tribal Areas (Fata), the government has convened a meeting of the National Economic Council (NEC) on May 30 to approve the country’s development programme and macroeconomic framework for the next fiscal year.

The NEC meeting will be chaired by Prime Minister Nawaz Sharif and attended by the four chief ministers, AJK prime minister, GB chief executive, Khyber Pakhtunkhwa governor as the representative of Fata and at least four federal ministers.

A senior government official told Dawn that the AJK and GB governments had already been informed that there would be no change in their development budget, in view of the bloated requirements of projects affiliated with the China-Pakistan Economic Corridor (CPEC), energy projects and a slightly scaled-down revenue target of Rs3.6 trillion against the Rs3.735tr originally approved by the federal cabinet on April 27.

They have also been conveyed that the overall federal Public Sector Development Programme (PSDP) would be capped at around Rs650 billion, apart from about Rs100-120bn for expenditure on security and rehabilitation of temporarily displaced persons (TDPs).

Federal budget expected to propose an outlay of around Rs4.4 trillion

The official said the outgoing AJK prime minister — who hails from the PPP — was not at good terms with the federal government following a recent public spat over the upcoming AJK elections and would lodge a protest during the NEC meeting about the limited amount of resources allocated for the region.

Sources close to the AJK prime minister said the development budget for the region had, in fact, been curtailed because the PML-N government had reduced funding by almost 40pc since it came to power about three years ago.

Sources said the AJK development budget stood at Rs20bn in 2013-14, which was brought down to about Rs12bn last year (a decrease of 40pc) and then slightly increased to Rs13.3bn for the current year (up by 10pc).

The development budget for GB was Rs9.5bn in 2013-14, which was reduced by 3.5pc to Rs9.2bn last year and then increased by 8pc to Rs9.9bn for the current year. But funding for Fata and States and Frontier Regions (Safron) has been increasing gradually, from Rs18.5bn in 2013-14 to Rs19.1bn last year and further up to Rs19.7bn for the current year.

The next federal budget, the sources said, would have an outlay of around Rs4.4tr, including interest payments of about Rs1.354tr (up 5.8pc) over the current year, defence expenditure of Rs860bn (up by 10pc), PSDP at Rs800bn (increased by 14pc), pension expenditures of Rs245bn (up 6pc) and subsidies to the tune of Rs170bn.

The NEC will also approve macroeconomic indicators for the next year, envisaging economic growth rate at 6.2pc and putting the rate of inflation at 6pc, budget deficit at 3.8pc of the GDP, and the tax-to-GDP ratio at 12.5pc. The public debt-to-GDP ratio is targeted at 59.4pc for next year.

The foreign exchange reserves target for next year will be set at $23.6bn, while the overall size of the economy (GDP) has been estimated at Rs34.8tr, up from Rs30.67tr in the current year.

The consolidated PSDP for next fiscal year has been estimated at Rs1.497tr, up 15pc from this year’s Rs1.3tr. This will be an allocation of 4.3pc of the GDP, compared to the 4.2pc allocated in the current year.

Around Rs210bn is being earmarked for energy projects, while Rs467bn will be spent on infrastructure development.