The Federal government is in hot water on overall fiscal deficit due to increasing current expenditure and depleting cash balance position of the provincial governments, it is learnt.

Sources quoted Finance Secretary Dr Waqar Masood, who presided over the meeting of the provincial Finance Secretaries along with Special Secretary Finance Asad Amin, as saying that the provinces have to take steps and make concerted efforts to reverse the current trend of depleting cash balance position in the coming months.

An official who requested anonymity said that he was gravely concerned about the overall fiscal deficit and depleting cash balance position of the provinces.

The meeting reviewed federal and provincial fiscal operation for the first six months of the current fiscal year with Additional Finance Secretary of Punjab informing that the trend of current expenditure in Punjab was slightly higher during July-December 2011-12 compared to the same period of last year.

He said that historic trend of current expenditure is 45 percent in first half of the year and 55 percent in the second half.

He said that in the financial year 2011-12, the figures of provisional spending of current expenditures up to December, 2011 are Rs 207 billion, which is 47 percent and reflecting a two percent increase as compared to the historic trend and was a matter of concern for the economic managers.

Additional Finance Secretary was quoted as attributing the rise in government expenditure to increase in pay and pensions.

The Secretary Finance is said to have expressed his concern and asked the provinces to try to contain the pace of expenditure, especially the current expenditure.

Finance Secretaries of other provinces also briefed the meeting about the targets of receipts and expenditure for the first six months of the current fiscal year.

The meeting of financial secretaries also held discussion on cash balance position during the period under review and position of Punjab was relatively more dissatisfactory.

Punjab's Additional Finance Secretary (Budget) informed the meeting that his province was expecting more transfer from the federal government which would improve the provincial cash balance position if transfers were made in line with the collection of Rs 841 billion by the Federal Board of Revenue (FBR) up to December 2011.

Sources said that Sindh Special Secretary Finance reportedly stated composite cash balance position was Rs 5 billion during July-December 2011-12 compared to Rs 78 billion for the same period last year.

An official who attended the meeting told this correspondent that Secretary Finance Dr Waqar Masood and Special Secretary Finance Asad Amin were gravely concerned about the overall fiscal deficit and underlined the need that all provinces are required to put in place concerted efforts to reverse the depleting cash balance position in the coming months.

Finance Secretary Sindh informed the meeting that his province had to incur an expenditure of Rs 23 billion outside budget for making payments to the Police and Rangers.

Additionally, he said, huge cost was also incurred on the rehabilitation of flood affectees which led to increase in the volume of current expenditure, but despite all these the province was not in red.

Copyright Business Recorder, 2012

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