[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]Sharp currency depreciation and unforeseen expenses make the budgeted budget insufficient.
As a result of unanticipated short-term debt repayments and a sharp currency devaluation, the government had to authorise over Rs402 billion in supplemental grants on Monday to cover the costs of servicing the external debt for the current fiscal year.
The Economic Coordination Committee (ECC) of the cabinet made a number of decisions that directly affected the federal budget in the amount of Rs444 billion, including the provision of sovereign guarantees for the Sukkur-Hyderabad motorway in the amount of Rs9.5 billion.
The ECC, which is led by Finance Minister Ishaq Dar, also set the rates for 49 medications that are being made available for the first time in Pakistan.
According to a press release from the Ministry of Finance, the ECC authorised Rs402.3 billion as a technical extra grant for debt servicing for foreign loans and credits.
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The National Assembly has authorised a budget for the current fiscal year totaling Rs4.4 trillion for the repayment of foreign loans, short-term foreign commercial loans, and interest on foreign debt.
The ECC was informed that the budgeted amounts of Rs142 billion for short-term loan repayments and Rs511 billion for interest payments on foreign loans turned out to be insufficient.
The short-term foreign loan repayments increased to Rs331 billion from the original budget of Rs142 billion as a result of certain unforeseen external debt repayments after several international commercial banks declined to extend their loans, according to the sources.
The government had hoped that the commercial banks in Europe and the Middle East would refinance their debt, but its hopes were dashed by credit rating downgrades and substantial default risks.
Similarly, Rs. 511 billion has been approved by the National Assembly to pay interest on foreign loans. According to the sources, the Economic Affairs Ministry has now calculated the interest expense on foreign loans at Rs725.4 billion as a result of currency devaluation, leaving a shortfall of Rs214.3 billion.
The budget allotment for interest payments was insufficient due to inaccurate predictions of the Rs186 to dollar exchange rate parity for the current fiscal year. According to the sources, there were 235 rupees to every dollar paid in interest during the previous fiscal year.
The government has accepted the assumption of a Rs290 to $1 exchange rate parity for the upcoming fiscal year, which will again lead to lower funding for servicing external debt. According to the sources, the State Bank of Pakistan directed the finance ministry to create the budget for the upcoming fiscal year using the Rs308 to the dollar exchange rate.
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The ECC also authorised the issuance of a sovereign guarantee for the build-operate-transfer of the Hyderabad-Sukkur motorway in the sum of Rs9.5 billion. The bidder would invest Rs307 billion of its own money in the project as part of a public-private partnership, which will be funded by toll revenues.
The National crisis Management Authority’s reserves needed to be refilled in order to be better equipped to respond to any coming crisis, thus the ECC also approved Rs 12 billion in supplemental funding for the purchase of relief supplies.
For the Power Division’s implementation of the 1320 MW coal-fired power project Jamshoro, the ECC authorised an additional grant worth Rs9.2 billion.
According to the Finance Ministry, the ECC took into account a statement from the Ministry of National Health Services and after a thorough discussion approved the fixation of Maximum Retail Prices for 49 new pharmaceuticals on the grounds that they were less expensive than those in the bordering countries.
According to the handout, most of these medications are being sold for the first time in Pakistan at rates that are far lower than those in the neighbourhood.
The New Gwadar International Airport, which Pakistan hopes to have finished by September of this year, was also given approval for Rs839 million in supplemental funds by the ECC. Additionally, a Rs 120.5 million supplemental budget for wages and non-wage expenses was approved.
For the Establishment Division to pay government agencies for services provided from various sources, a sum of Rs140.6 million was granted. To cover the shortfall in salary payments, Rs 700 million was granted to the Ministry of Information.
For the purpose of completing the establishment of the 6th Battalion of Pakistan Post Guards for anti-smuggling purposes, the ECC sanctioned Rs348 million in favour of the Ministry of Interior.
To assist families who were harmed by military operations, a sum of Rs1.3 billion was authorised for NADRA’s FATA Temporary Displaced Persons Emergency Recovery Project. A sum of Rs49.5 million has been designated in the Ministry of Interior’s favour for future distribution as financial support for Shuhada’s family and the victims of the Swat terrorism incident.
The Pakistan Atomic Energy Commission received Rs1.4 billion to cover its employee-related expenses. The Ministry of Defence has been granted Rs5.3 billion by the ECC to cover employee-related expenses.[/vc_column_text][/vc_column][/vc_row]
