Rs50bn Sukuk bonds to be floated: FY12 GDP target scaled down to 3.6pc

ZAHEER ABBASI

ISLAMABAB: The government has revised downward Gross Domestic Products (GDP) target for the current fiscal year - from 4.2 to 3.6 percent - and decided to float Rs50 billion Sukuk bonds in the domestic market against Motorway (M-2) to mobilise money to cope with the challenge of fiscal deficit.

Sources in the Finance Ministry said the government would be able to keep the fiscal deficit below 5 percent if projected inflows of $ 800 million on account of PTCL privatisation and equal amount through auctioning of 3G licences materialised during the current fiscal year. The sources expressed the hope that the government would be able to contain the budget deficit to around 2.5 percent of the GDP for the six months of the current fiscal year.

The government has been able to contain the budgetary expenditure at 38 percent in the first five months compared to 42.5 percent for the same period of last year and are trying to limit it to 42 percent for the first six month against 50 percent for the same period of previous year. The sources claimed that total expenditure during the first five months stood at Rs 866 billion including Rs 311 billion interest payment, Rs 187 billion defence and Rs 368 billion other expenditure.

In reply to a question whether the government was releasing development funds to contain the fiscal deficit or not, the sources said target of Rs 100 billion, 40 percent PSDP releases, would be achieved by the end of December 2011. So, it is not true that the government restricted releases of development funds for this purpose. The sources said revenue target of Rs1952 billion has not been revised downward and even on Rs1558 billion base of last year, the revenue for the current fiscal year should reach Rs 1838 billion. Revenue measures taken in March 2011 would give additional Rs70 billion in the current fiscal year.

About Coalition Support Fund (CSF), he said that it was neither assistance nor aid to Pakistan but its right because the money has already been spent and $ 800 million inflows had been estimated by the government in the budget for the current fiscal year. He hoped that $400 million would be materialised in the current fiscal year because the US has completed all the process. He said the US owed $2.5 billion to Pakistan for CSF and explained the reasons for accumulated amount in historic prospect that how US had been accepting and releasing from the beginning only 60 percent to 65 percent of the billed amount and remaining 35 percent claims have not been accepted for different reasons.

The government is also optimistic to receive $800 million stuck-up on account of privatisation proceeds from Etisalat in the ongoing fiscal year to manage the fiscal deficit at desirable level arguing that issue of transfer of properties to Etisalat is at advanced stage and all the properties are expected to be transferred to the company before June 2012. The sources said the process has been accelerated to complete the bidding process for auctioning of 3G licences in March 2012 and Rs.50 billion would also be raised by offering Sukuk bonds against Rs.250 billion worth motorway.

The sources said highest Rs.48 billion subsidy was given to the power sector during the first five months and disbursement of Rs.20 billion under Benazir Income Support Programme (BISP) would be completed by December 31, 2011.

Import bill was estimated on $75 per barrel oil price in international market but, escalated to $105 per barrel to $110 per barrel. The increase in oil price of $40 per barrel was being faced by the economy in the form of balance of payment because increase in import bill was swelling largely on account of oil bill. However, he said positive indicators are growth in remittance and decline in Sensitive Price Indicators (SPI) inflation.