ISLAMABAD (April 30 2008): The unadjusted budget figures for fiscal year 2007-08, as presented by Finance Minister Ishaq Dar during the first Cabinet meeting on April 9 constitute 'financial engineering', according to well placed sources. "One of the major flaws in the analysis of the unadjusted figures was failure of the Finance Minister to disclose the $800-900 million financing committed by the US for logistic support for Pakistan's war on terror.

This amount would be part of non-tax revenue," analysts argued. An economic analyst told Business Recorder here on Tuesday that if the new government prepared its case against the previous government on assumptions of outflows, it must, in all fairness, also mention expected inflows. "It is not fair if we inform the public about the slippages, and not the expected income," the analyst said.

The Finance Minister in the Cabinet meeting had given Rs 443 billion as the projected domestic interest payment, in contrast to the budgeted amount of Rs 318.2 billion. However, this discrepancy between the budgeted and the projected amount was, according to former Minister of State Umar Ayub Khan, the fault of policies of the governments between the years 1996 and 1999.

Umar in his budget speech last year had announced that during the current fiscal year and up till 2009-10 there would be a significant rise in deficit financing, because high interest-bearing Defence Savings Certificates would mature this year and would require Rs 80 billion in 2007-08 and Rs 163 billion next fiscal year.

The present Finance Minister had also projected wheat subsidy at Rs 45 billion as an amount not budgeted, as a wheat crisis was not anticipated at the time of the budget. However, according to sources, subsidy on wheat was unlikely to exceed Rs 20-25 billion. In addition, the projected subsidy of Rs 123 billion to Wapda was unlikely, given that till February this year only Rs 34.5 billion subsidy is given.

Copyright Business Recorder, 2008