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Budget 2022-23: NEC sets 5% GDP growth rate target for next fiscal year
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- NEC approves national development outlay of Rs2.184tr.
- Approves slashing limit of approving schemes for CDWP from Rs10b to Rs7.5b.
- Okays funding of SDGs Achievement Programme at Rs70b to be executed through parliamentarians in coming budget.
ISLAMABAD: Amid the difficulties faced by the economic team in convincing PM Shehbaz Sharif to restrict the GDP growth target to 5% for avoiding overheating of the economy, the National Economic Council (NEC) on Wednesday approved a national development outlay of Rs2.184 trillion and a macroeconomic framework, including inflation of 11.5% for the next budget.
The NEC also granted approval for slashing down the limit of approving schemes for the Central Development Working Party (CDWP) from Rs10 billion to Rs7.5 billion and Departmental Development Working Party (DDWP) from Rs2 billion to Rs1 billion.
The NEC approved funding of the Sustainable Development Goals (SDGs) Achievement Programme at Rs70 billion to be executed through parliamentarians in the coming budget. It is ironic that the Planning Ministry did not incorporate figures of imports and exports in its macroeconomic framework for the next budget while the current account deficit (CAD) was put at 2.2% of the GDP, equivalent to $9.5 billion for the next financial year.
The macroeconomic framework for 2022-23 seeks that the size of GDP in dollar terms might go up to $414 billion for the next fiscal year. The GDP size in rupee term is projected to go up Rs78 trillion in the next budget. Minister for Finance Miftah Ismail had projected that the gross external financing requirements of $41 billion for next budget, including debt servicing of $21.9 billion, $12 billion current account deficit and remaining for building up of foreign currency reserves.
The NEC, which met under Prime Minister Shehbaz Sharif in the chair and was participated by federal ministers and chief ministers here at the PM Office on Wednesday, directed the authorities concerned to distribute the Public Sector Development Programme (PSDP) allocation of Rs800 billion at the federal level on the basis of 60:40 ratio of funds between the ongoing and new schemes respectively.
The Ministry of Planning proposed PSDP allocations on the basis of 80:20 ratio between the ongoing and new schemes for the next budget. The chief minister proposed that it should be distributed at the ratio of 75:25% between the ongoing and new schemes. However, finally it was decided that the PSDP funding would be divided into 60:40 ratio on ongoing and new schemes. After the NEC, the Planning Commission was forced to bring major changes into the PSDP allocations to provide 40% funding to new projects in the next fiscal year.
The premier insisted that the GDP growth should be fixed on higher side and target should be envisaged at 6% for the next budget. Federal Secretary Finance Hamid Yaqoob argued that it would have to be aligned with other macroeconomic targets and under the IMF programme, it would become problematic. Minister of State for Finance Aisha Ghous Pasha argued in the cabinet meeting that there was overheating of the economy, so the macroeconomics should be aligned with the objective to avoid such developments.
The NEC approved allocation of Rs2.184 trillion for National Development Plan for the next budget 2022-23, including a federal development outlay of Rs800 billion and provincial development plans of Rs1,384 billion. KP’s Minister for Finance asked in the NEC meeting for increasing funding for FATA in the next budget. The government allocated Rs52 billion for FATA areas in the coming financial year.
The NEC approved a macroeconomic framework for the next budget with a real GDP growth rate target of 5% against 5.97% for the outgoing fiscal year ending on June 30, 2022.
The government has projected that inflation will remain in double digits but expected to remain in the range of 11.5% but many economists have termed that the government made projections on lower side in the context of stabilisation programme being pursued under the advice of the IMF programme to withdraw fuel and energy subsidies and then raising taxation in the coming budget. The federal Public Sector Development Programme (PSDP) for outgoing fiscal year 2021-22 was revised downward from Rs900 billion to Rs550 billion and in the working paper, it was projected that the actual utilisation of PSDP funds would be standing at Rs498 billion till end June 2022.
The government inserted Mainline-1 (ML-1) as part of the PSDP and made allocation of just Rs5 billion in the next budget. The government allocated Rs18 billion for the Diamer Bhasha Dam (for dam part) and Rs7 billion for land acquisition for Bhasha Dam. The total cost of the Bhasha Dam is estimated at Rs479.686 billion. For ERRA, the government made zero allocation in the next budget.
Out of Rs 800 billion allocation for the PSDP for 2022-23, the government earmarked Rs433 billion for infrastructure, including Rs84 billion for energy, Rs227 billion for transport and communication, Rs83 billion for water and Rs39 billion for physical planning and housing sector. The government made allocation of Rs144 billion for social sector in the coming budget against an allocation of Rs103 billion in the outgoing fiscal year. Out of the total, Rs144 billion allocation for social sector, the government earmarked Rs23 billion for health & population, Rs45 billion for education, including Higher Education Commission (HEC), SDGs achievement programme Rs70 billion and others Rs16 billion. For provinces and special areas AJK and GB, the government made allocation of Rs96 billion and merged districts of KP Rs50 billion. The government allocated Rs 16 billion for governance, food and agriculture Rs13 billion and industries Rs5 billion.
The large multipurpose dams particularly Diamer Bhasha, Momand, Dasu, Naigaj dams, K-IV and command area projects have been adequately funded. Whereas, small scale provincial nature dams, drainage schemes etc. were discouraged for financing except those located in less developed districts/areas. An amount of Rs83 billion has been proposed for the sector.
The focus of the federal government is on core projects on infrastructure, including PPP mode projects. The ongoing projects of major roads for industrial linkages, promoting trade and commerce in the country have been assigned due priority for funding like projects of NHA, railways, maritime affairs, etc. for modernisation of infrastructure, inter-provincial/ regional connectivity, including initiatives under CPEC. New schemes in the sector have been discouraged unless critical. The allocation of Rs202 billion have been proposed.
The focus remained on projects of power evacuation, expansion and improving transmission and distribution system to minimise line losses and circular debt. Projects for supply of power to newly-established SEZs have been financed adequately. Besides, appropriate rupee cover against foreign funded projects has also been provided to self-financed power sector schemes.
Higher education is one the priority sectors of the federal government to meet the challenges of 21st Century. The emphasis was on completion of ongoing projects with adequate funding. New projects of universities have been discouraged unless those located in marginalised areas. An amount of Rs42 billion has been proposed.
Health sector remained priority post COVID-19 to provide improved health services, prevention and control of communicable diseases, production of medical devices, vaccination and capacity enhancement of institutions including provision of primary and tertiary healthcare facilities. An allocation of Rs23 billion has been proposed for the sector.
The subject of education stands devolved after 18th Amendment in the Constitution of Pakistan. Nevertheless, the federal government is making interventions in the sector for funding projects for improvement of uniform education system. Rs3 billion have been proposed for this sector.
To train the manpower in emerging technologies, establishment of incubators and accelerators to enhance the capabilities of researchers and research institutes for innovation and creation of knowledge products, focus of E-governance, IT enabled citizen services, promotion of IT software products, IT experts, freelancing, IT oriented startups and entrepreneurship, launching of 5G service in near future, information technology driven new initiatives are being promoted for young professionals, laptop distribution among university/college students to orientate and facilitate IT is also included in the PSDP. Rs38 billion have been proposed for this.
For modernisation and mechanisation of agriculture sector, productivity enhancement of major crops production through efficient irrigation practices, provision of laser land levelling machines, reduction in cost of agricultural inputs/ production by adopting right combination of fertilisers and certified seeds, promote agro-based industry to enhance export of value added agri based products are the initiatives incorporated into the PSDP, Rs13 billion have been proposed.
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In a unanimous verdict, a five-member bench of the Supreme Court on Monday declared civilians’ trials in military courts null and void as it admitted the petitions challenging the trial of civilians involved in the May 9 riots triggered by the arrest of Pakistan Tehreek-e-Insaf (PTI) chief Imran Khan in a corruption case.
The five-member apex court bench — headed by Justice Ijaz Ul Ahsan, and comprising Justice Munib Akhtar, Justice Yahya Afridi, Justice Sayyed Mazahar Ali Akbar Naqvi and Justice Ayesha Malik — heard the petitions filed by the PTI chief and others on Monday.
The larger bench in its short verdict ordered that 102 accused arrested under the Army Act be tried in the criminal court and ruled that the trial of any civilian if held in military court has been declared null and void.
The apex court had reserved the verdict earlier today after Attorney General of Pakistan (AGP) Mansoor Usman Awan completed his arguments centred around the domain and scope of the military courts to try the civilians under the Army Act.
At the outset of the hearing today, petitioner lawyer Salman Akram Raja told the bench that trials of civilians already commenced before the top court’s verdict in the matter.
Responding to this, Justice Ahsan said the method of conducting proceedings of the case would be settled after Attorney General of Pakistan (AGP) Mansoor Usman Awan completed his arguments.
Presenting his arguments, the AGP said he would explain to the court why a constitutional amendment was necessary to form military courts in 2015 to try the terrorists.
Responding to Justice Ahsan’s query, AGP Awan said the accused who were tried in military courts were local as well as foreign nationals.
He said the accused would be tried under Section 2 (1) (D) of the Official Secrets Act and a trial under the Army Act would fulfill all the requirements of a criminal case.
“The trial of the May 9 accused will be held in line with the procedure of a criminal court,” the AGP said.
The AGP said the 21st Amendment was passed because the terrorists did not fall in the ambit of the Army Act.
“Amendment was necessary for the trial of terrorists [then] why amendment not required for the civilians? At the time of the 21st constitutional amendment, did the accused attack the army or installations?” inquired Justice Ahsan.
AGP Awan replied that the 21st Amendment included a provision to try accused involved in attacking restricted areas.
“How do civilians come under the ambit of the Army Act?” Justice Ahsan asked the AGP.
Justice Malik asked AGP Awan to explain what does Article 8 of the Constitution say. “According to Article 8, legislation against fundamental rights cannot be sustained,” the AGP responded.
Justice Malik observed that the Army Act was enacted to establish discipline in the forces. “How can the law of discipline in the armed forces be applied to civilians?” she inquired.
The AGP responded by saying that discipline of the forces is an internal matter while obstructing armed forces from discharging duties is a separate issue.
He said any person facing the charges under the Army Act can be tried in military courts.
“The laws you [AGP] are referring to are related to army discipline,” Justice Ahsan said.
Justice Malik inquired whether the provision of fundamental rights be left to the will of Parliament.
“The Constitution ensures the provision of fundamental rights at all costs,” she added.
If the court opened this door then even a traffic signal violator will be deprived of his fundamental rights, Justice Malik said.
The AGP told the bench that court-martial is not an established court under Article 175 of the Constitution.
At which, Justice Ahsan said court martials are not under Article 175 but are courts established under the Constitution and Law.
After hearing the arguments, the bench reserved the verdict on the petitions.
A day earlier, the federal government informed the apex court that the military trials of civilians had already commenced.
After concluding the hearing, Justice Ahsan hinted at issuing a short order on the petitions.
The government told the court about the development related to trials in the military court in a miscellaneous application following orders of the top court on August 3, highlighting that at least 102 people were taken into custody due to their involvement in the attacks on military installations and establishments.
Suspects express confidence in mly courts
The same day, expressing their “faith and confidence” in military authorities, nine of the May 9 suspects — who are currently in army’s custody — moved the Supreme Court, seeking an order for their trial in the military court be proceeded and concluded expeditiously to “meet the ends of justice”.
Nine out of more than 100 suspects, who were in the army’s custody, filed their petitions in the apex court via an advocate-on-record.
The May 9 riots were triggered almost across the country after former prime minister Imran Khan’s — who was removed from office via a vote of no confidence in April last year — arrest in the £190 million settlement case. Hundreds of PTI workers and senior leaders were put behind bars for their involvement in violence and attacks on military installations.
Last hearing
In response to the move by the then-government and military to try the May 9 protestors in military courts, PTI Chairman Imran Khan, former chief justice Jawwad S Khawaja, lawyer Aitzaz Ahsan, and five civil society members, including Pakistan Institute of Labour Education and Research (Piler) Executive Director Karamat Ali, requested the apex court to declare the military trials “unconstitutional”.
The initial hearings were marred by objections on the bench formation and recusals by the judges. Eventually, the six-member bench heard the petitions.
However, in the last hearing on August 3, the then-chief justice Umar Ata Bandial said the apex court would stop the country’s army from resorting to any unconstitutional moves while hearing the pleas challenging the trial of civilians in military courts.
A six-member bench, led by the CJP and comprising Justice Ijaz Ul Ahsan, Justice Munib Akhtar, Justice Yahya Afridi, Justice Sayyed Mazahar Ali Akbar Naqvi, and Justice Ayesha Malik, heard the case.
In the last hearing, the case was adjourned indefinitely after the Attorney General for Pakistan (AGP) Mansoor Usman Awan assured the then CJP that the military trials would not proceed without informing the apex court.
- Tariff may go up by 173% for non-protected domestic consumers.
- Petroleum Division to push for implementation of hike from Oct 1.
- Circular debt to increase by Rs15bn if hike implemented from today.
ISLAMABAD: The Economic Coordination Committee (ECC) will meet today (Monday) to green-light the plan to hike the gas tariff, a key part of the International Monetary Fund (IMF) conditions, including a zero hike in the gas circular debt for the ongoing financial year 2023-24, reported The News.
The government is likely to increase the local gas tariff up to 173% for non-protected domestic consumers, 136.4% for commercial, 86.4% for export and 117% for the non-export industry.
Since there is no budgeted subsidy for even domestic, commercial, and industrial sectors, the high-end consumers will provide cross-subsidies to low-end consumers.
The government’s failure to hike the gas prices from July 1 has forced it to incur a loss of Rs50 billion during the July-September in the gas sector. But the losses will be bridged when the government moves ahead with the increase in the gas tariff which would give enough monetary space to recover with the loss.
As per the publication, the IMF has been taken onboard on this point. It has been informed that the gas prices would be increased in such a manner that it would not increase the circular debt during this financial year, which right now stands at Rs2.9 trillion.
However, now the Petroleum Division will try to ensure that the gas tariff hike is implemented from October 1. If the government decides to implement the hike from today onwards then the circular debt would increase by Rs15 billion.
But there would be no increase in the gas tariff from January 1, 2024, a further gas tariff increase would be implemented as under the law, the review of gas prices is carried out bi-annually.
The cement sector will have to purchase the gas 193.3% higher than the current cost, making it the biggest bearer of the brunt, from 1,500 per MMBtu to Rs4,400 per MMBtu.
The CNG sector, will face the second-highest increase in gas tariff by 143.8% from Rs1,805 per MMBtu to Rs4,400.
If the hike is approved, then it means that cement prices will skyrocket and CNG will be much more expensive than petrol.
The government, however, does not plan on increasing the tariff for tandoors which would ensure that roti prices remain stable.
The summary prepared by the petroleum ministry that is to be pitched today in the ECC meeting shows it has not spared the four protected domestic consumer categories as ostensibly it has not proposed to increase their gas tariffs but hiked their monthly fixed charges from Rs10 to Rs400 per month.
More importantly, the Petroleum Division has also proposed to escalate the per month fixed charges for the first 4 non-protected domestic consumers by 117.4% to Rs1,000 from Rs460 per month from their gas tariffs increase by 50-150%. Also, to be increased are per month fixed charges for the remaining 4 non-protected domestic consumers, by 334.78%, to Rs2,000 from Rs460 per month part, increasing their gas tariff by 100%-173%.
The summary states that SNGPL will now offer a blend of natural gas and RLNG in a 20:80 ratio to non-export industry out of the estimated volumes for industrial consumers, both process and captive, as per petitions filed by SNGPL to OGRA for revenue determination.
The blend offered by the Sui companies shall be reviewed every quarter based on the availability of natural gas and RLNG. And SSGC shall offer a blend of NG and RLNG of 90:10 out of the estimated volumes for industrial consumers, both process and captive, as per petitions filed by SSGC to OGRA for revenue determination.
Coming to the export industry, the summary says that currently, there is a wide price disparity between the industry operating on SSGCL and SNGPL networks. Industry in the north (operating on the SNGPL network) consumes a 50:50 blend of indigenous and RLNG for 9 months (Mar to Nov) and 100% RLNG for 3 months (Dec-Feb), averaging to the current tariff of $9.6/MMBtu (Rs2,790) over the year.
On the other hand, process connections of the industry in the south (operating on SSGCL) are being charged at Rs1,100/MMBtu. SSGC has recently started a supply of blend in the proportion of 75:25 for captive use of gas, which approximates $5.9/MMBtu (Rs1,710).
- PSDP listed projects to be presented before CCER for review.
- Finance minister to chair CCER meeting upon return from Morocco.
- “Exercise to abandon provincial projects underway,” top official says.
ISLAMABAD: The Special Investment Facilitation Council (SIFC) has decided to only finance extremely important development projects in the provinces with 50% of funds allocated by the federal government and provinces each, The News reported.
The Planning Ministry has, meanwhile, identified all the Public Sector Development Programmes (PSDP) listed projects to be presented before the Cabinet Committee on Economic Revival (CCER) with its aims to scrap all such schemes and save Rs314 billion under the austerity drive.
Finance Minister Dr Shamshad Akhtar, following her return from Morocco where she is attending the annual meetings of the World Bank and International Monetary Fund (IMF), will be chairing the CCER meeting.
“The exercise to abandon the provincial nature projects from PSDP list is underway,” a top government official said on Thursday.
It was decided in the last SIFC’s Apex Committee meeting that development projects of provincial nature would only be executed in the future through the cost-sharing of 50%:50% of funds borne by both the Centre and provinces. “If the provincial government does not bear 50% cost on an equal basis, the Centre will not provide its share of funding,” another top official source confirmed while talking to The News.
One senior official said the decision had already been taken up by the Executive Committee of the National Economic Council (ECNEC). The SIFC’s Executive Committee is scheduled to meet early next week to undertake all spadework for tabling it before the apex committee under the chairmanship of Caretaker Prime Minister Anwar-ul-Haq Kakar in the coming weeks.
So far, the SIFC has remained unable to finalise much-awaited multi-billion dollar transactions for attracting investments but it is making all-out efforts to lure foreign investors in areas of mining, IT, agriculture, and others.
One of the future SIFC agendas for considering mechanisms for corporate farming lies on the table. Although some initial work was done during the tenure of late Gen (retd) Musharraf, still there is a need to undertake its basic framework in a detailed manner before striking pacts with international investors. However, it is critical to hire technical experts for drafting international agreements and steering the negotiations against the backdrop of several past agreements ending up in disputes due to a lack of technical capacity.
Meanwhile, different ministries/divisions have been directed to undertake steps under the austerity plans to ensure savings. The Ministry of Finance instructed all its wings and attached departments to review all the foreign visits and banned all those deemed necessary next week.
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