Austerity drive unlikely to deliver

ISLAMABAD Much trumpeted austerity drive of the Government coupled with downsizing of the Federal Cabinet would hardly save any significant amount of money that can enable it to avoid a cut in development budget. In fact the Government has not made any estimate or target to be achieved from this exercise that the Federal Cabinet in its last meeting decided to carry out, a senior government official said requesting anonymity. In terms of saving revenues, the austerity drive and efforts towards good governance would not serve any purpose, he added. Actual austerity measures that could really matter in terms of saving the current expenditures was putting a limit on the provision of perks with no limits including fuel and telephone bills. According to the official, all ministers and secretaries are entitled to unlimited use of fuel and mobile phones during the month. No one at the helm of affairs was even to propose a limit on the provision of utilities at the expense of national exchequer, he added. The Government has committed with the International Monetary Fund to save a significant amount of current expenditures from the austerity drive by cutting the size of the Federal Cabinet. In fact the idea was to save money for financing the ongoing war on terror, which has been costing beyond the estimates of the budget 2009-10, the official said. Rather than cutting the current expenditures as agreed with the IMF, the Government is to follow an easy path of applying a cut in the development budget, he added. According to the officials, the cut in the development budget would eventually affect the overall revenue collection as well. Since you know the spending on developmental projects carry a reasonable amount of tax that comes back to the Government in terms of revenue collection, the official explained. Finance Minister Shaukat Tarin has already announced that the Government would have to cut the development budget for financing not only the war on terror but also the subsidies on electricity and fertilisers. There is only a bleak hope that the Government would get financing from the United States under the KLB Act within the current financial year that might reduce the size of the cut to be applied on the development budget of 2009-2010.

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