Austerity measures undertaken by the government to cope with the ramifications posed by devastating floods last year will result in expenditure reduction of Rs187 billion that would enable the fiscal deficit to be reduced to 5.3 per cent of the GDP during the current fiscal year.
An official source said that despite the expenditure cut, supplementary grants increased to Rs386.6 billion during the current fiscal year. Out of which Rs284 billion was doled out only for the power sector subsidies. The supplementary grant for security services was Rs30 billion.
An addition supplementary grant of Rs31 billion was borne on interest payments, as foreign inflows dried up and the government had to borrow from the banks, which were not budgeted. The increase in mark up by one per cent by the State Bank of Pakistan during the current fiscal year also resulted in increase in interest payments. To meet extra expenditures, he said, the government took austerity measures, like slashing the public sector development programme (PSDP) by Rs100 billion, while the austerity measures implemented from March 15 resulted in saving Rs20 billion.
A saving of Rs15 billion was made from the Benazir Income Support Programme that was allocated Rs50 billion for the current fiscal year. The Finance Ministry, also managed to cut Rs7.0 billion from the Prime Minister managed the Rs25 billion Peoples Works Programme, carried out of the instructions of mighty parliamentarians. The releases amounted to Rs18 billion during the current fiscal year.
However, he said, that the expenditure cuts would be savings as these have been utilised in other areas. If the expenditures were not reduced then the government had to borrow from the banks that could have raised the fiscal deficit to eight per cent of the GDP.
Elaborating on cash assistance for flood affectees he said Rs32 billion have been provided in cash while Rs8.0 billion assistance was provided under the Rabi crop initiative that have resulted in bumper Rabi crops and revival of the livelihoods in the affected areas. After the release of $193 million in assistance from the United States another cash installment of Rs20,000 to one million flood affected families would be released in next few days.
