Political crisis hits Pakistan’s budgetary exercise

May 14th, 2008 - 1:54 pm ICT by admin  

A file-photo of Nawaz Sharif

Islamabad, May 14 (IANS) The political crisis caused by the collapse of Pakistan’s ruling coalition is impacting on the country’s budget making exercise, with bureaucrats apprehending they would not be able to complete the task by the early June deadline. Pakistan’s fiscal 2008-09 begins July 1.

Finance Minister Ishaq Dar was among the nine ministers of the Pakistan Muslim League-Nawaz (PML-N) who resigned Monday after party chief Nawaz Sharif pulled out of the Pakistan Peoples Party (PPP) led coalition following differences on the reinstatement of Supreme Court and high court judges sacked by President Pervez Musharraf after declaring an emergency last November.

Prime Minister Yousaf Raza Gillani Tuesday refused to accept the resignations, saying efforts were being made to resolve the differences between the coalition partners.

In the midst of all this, “there is no guideline available to bureaucrats working on taxes and allocations for development”, The News reported Wednesday.

“The very chaos that was caused by the pronounced resolve of the PML-N to quit the cabinet had left (bureaucrats) without policy guidelines over the past fortnight,” it added.

“These are crucial days for the budget makers and no guidance from the top leaves them in a void without a vision about the requirements of the government spending and parameters for development allocations,” the newspaper maintained.

The most important decision awaiting the finance minister is on implementing a proposal to increase the general sales tax (GST) on the power and oil sectors to help meet development spending targets.

Some budget makers and their senior colleagues in the tax departments have been cautioning against increasing the tax rate on oil sector items and on electricity.

They have warned the budget makers that such an “unpopular proposal” might jeopardise the elected government’s resolve to help the people out of the inflationary trends that are already hitting essentials like flour, vegetables, meat, house-rents and construction materials.

About five years ago, there was a countrywide protest after the Central Board of Revenue announced an increase in the GST on medicines and the government had to withdraw the proposal.

This time, when the budget makers lack political guidelines, “we might make a mistake that would be hard to rectify”, The News quoted a senior bureaucrat as saying.

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