Oil, power prices may be jacked up again

ISLAMABAD - The Government is actively contemplating to narrow revenue gap from increased oil and electricity prices in order to contain the deficit that, central bank chief now has alarmed, would go beyond six per cent. Governor State Bank of Pakistan Shahid Hafeiz Kardar told Senators the other day that the fiscal deficit could go beyond 6 per cent as against the target of 4.7 per cent of the GDP agreed upon with the International Monetary Fund. As the first six-month collection by the Federal Board of Revenue fell nearly Rs 50 billion short of the target of Rs 700 billion out of the revised annual target of Rs 1,604 billion, the Government was left with hardly any avenue to make it up. Total collection during the financial year 2010-11 ending June this year was bound to accumulate revenue shortfall of nearly Rs 70 that were envisaged from flood tax, increased central excise duty, and Reform General Sales Tax. All these levies with RGST on top of them as condition of the IMF were requiring legislation and are currently pending with the National Assembly having staunch opposition even from the Treasury benches. On the expenditure side the Government was simply helpless in controlling everyday growing expenses on security and war on terror. The Government has also failed in capping current expenditures as was agreed upon with the IMF and so targeted in the budget 2010-11. The development budget that was already cut down to half after the unprecedented devastating floods in July last was bound to face further cuts. Now the Government was eyeing at the remaining development funds of Rs 140 billion with the Centre. Independent economists believe that the Government would have to divert these funds as well to the current expenditure side in order to keep the deficit within the limits acceptable to the IMF.