The bilateral as well as multilateral donors including Asian Development Bank (ADB) and World Bank (WB) have stopped release of aid by linking it with restoration of International Monetary Fund (IMF) stand-by arrangement suspended programme.
"There will be no supplementary grant for anyone either Prime Minister or any other ministry," said Secretary Finance Dr Waqar Masood while briefing National Assembly Standing Committee on Railways, adding that "bilateral as well as multilateral donors including ADB and World Bank are demanding restoration of the suspended IMF stand-by arrangement programme prior to disbursement of financial resources."
Dr Waqar Masood said the Finance Ministry had released supplementary grants during first six months and was trying to find ways of savings to keep budget deficit in control so that the IMF stand-by programme could be restored. "After linkage of bilateral and multilateral releases of funds with restoration of the IMF suspended programme, we have received meagre amount from external resources during first six months of current financial year," Masood said, adding that "we are depending on domestic borrowing.
He maintained that borrowing from the State Bank of Pakistan was the last option but it would result in increase in inflation that would affect the whole country. "We have brought down the domestic borrowing from Rs 300 billion to Rs 80 billion by December 31, 2010," he said, adding that many factors had contributed to increasing budget deficit.
He said that devastated floods had resulted in economic challenges for the country. "We have spent Rs 30 billion to Rs 35 billion on payment of first instalment of Rs 20,000 per flood affected family," he said, adding that "we have received no money for reconstruction programme of flood affected families. The subsidy on power tariff has also added to the financial woes. "The government has paid Rs 100 billion tariff differentials to Pakistan Electric Power Company (Pepco) so far," he said, adding that it was additional burden. Dr Waqar further said that Pakistan was also facing security issues on external as well as internal fronts that required financing.
Planning Commission Secretary Sohail Ahmad said development budget had faced a cut of Rs 100 billion due to financial constraints. "The overall development budget has been reduced from Rs 280 billion earmarked in budget of ongoing financial year to Rs 180 billion," he said, adding that development budget earmarked for Railways has also been reduced from Rs 13.6 billion to Rs 7.3 billion. The government has released Rs 2.1 billion and the remaining amount will also be released.
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