Uncertainty clouds budget presentation
The announcement of the federal budget for 2024-25 remains in unusual limbo, with key customary ingredients still missing, casting doubts on its presentation in parliament on June 10.
Sources said the critical National Economic Council (NEC) meeting, essential for reviewing the current year’s macroeconomic situation and development programme and approving the next year’s economic and development agenda, has yet to be scheduled. In fact, the government has yet to constitute the National Economic Council.
Also, Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb will be on a four-day visit to China and thus unavailable to lead key consultations until June 8. Thus, the first available date for an NEC meeting could be after June 8, provided the relevant documentation with provinces, the prime minister and the president are circulated through electronic means for constituting and notifying the NEC.
Under Article 156 of the Constitution, the president is ultimately required to constitute the NEC, led by the prime minister as its chairman and comprising the four chief ministers and one member from each province to be nominated by the respective chief minister and four other members, normally key federal ministers, as the premier may nominate.
Under this article, the NEC “shall review the overall economic condition of the country and shall, for advising the Federal Government and the Provincial Governments, formulate plans in respect of financial, commercial, social and economic policies; and in formulating such plans it shall, amongst other factors, ensure balanced development and regional equity and shall also be guided by the Principles of Policy set out in Chapter 2 of Part-II”.
Officials confirmed that the NEC had not been notified as of Monday night. Interestingly, the Annual Plan Coordination Committee (APCC) continued its meeting on Monday, although the Planning Commission had announced last week that the forum had recommended to the NEC a Rs1.221 trillion development budget of the federal government along with 3.6 per cent growth target for the current year.
Planning minister bypassed
Officials also confirmed that it was the first time that the APCC meeting, led by Planning Commission Deputy Chairman Jehanzeb Khan, had taken place without even informing the planning minister about its schedule or development and macroeconomic indicators.
The minister, who was on a visit to China and Malaysia, was reportedly flabbergasted to learn on his return that he had been completely bypassed, the sources said, adding that the APCC meeting on May 31 was also unusual as it missed some of the major sectors in the allocation of funds and project review. These sectors included the National Highway Authority, the Ministry of Finance, its development portfolio and the water sector, to name a few.
Therefore, some changes could not be ruled out by the time the NEC meeting is called, although the political head of the planning ministry appeared helpless for now. However, the rules of business required the planning minister to authorise and sign the summary of the presentation of the APCC recommendations to the NEC.
Moreover, aspirations of the governments of Azad Kashmir and Gilgit-Baltistan had also remained unaddressed, as their development portfolios for the next year have been kept frozen at the current year’s level of Rs51 billion each. The two leaderships were in hectic contacts with the ministers for finance and planning on Monday.
An official, who attended the second-round APCC meeting on Monday, said the sectors missed on May 31 were “cleared” on June 3, but the overall envelope of the federal Public Sector Development Programme (PSDP) would remain unchanged at Rs1.221tr, as indicated by the Ministry of Finance.
The official said these agencies had been told that they could prioritise their development projects within their allocated budget. For example, the Higher Education Commission was told that its allocation would remain at Rs21bn for the next year against Rs63bn in the current fiscal year, but they should update in a day about their priority projects for inclusion.
Budget strategy paper
Interestingly, it is also unusual that the budget strategy paper (BSP) for the next fiscal year has not yet been shared with parliament, though it is more because of political uncertainties emanating from the legal status of reserved seats and because of the absence of standing committees of the Senate and the National Assembly, particularly those related to finance.
This will be the first time in recent history that the BSP has not gone through the parliament, and there is no time left for the exercise. Customarily, the BSP, which envisages broad outlines of the budget allocations, is presented to these standing committees of the parliament.
It would be even more unusual for the federal budget prepared in consultation with the IMF to go directly from the federal cabinet to parliament and, if the Senate and National Assembly standing committees on finance are not constituted, to be passed without the expert review and debate of the parliamentary committees.
Sources in the Finance Ministry said they expected to present the budget to the federal cabinet and the parliament on June 10, but this appeared to be difficult given the latest situation on the ground.
Even if the NEC is constituted and called on June 8 immediately after the prime minister’s return, it would be a very tight schedule for presenting the Economic Survey and the budget on June 9 and 10, respectively, they said.
They, however, pointed out that the macroeconomic plan and development agenda was not approved by the NEC in 2018 when three chief ministers had walked out and boycotted the NEC meeting presided over by the then prime minister Shahid Khaqan Abbasi, and the PSDP and the budget of the following year was selectively revised by the preceding PTI government.
