Govt plans to boost health, social sectors in upcoming budget | Pakistan Today

Govt plans to boost health, social sectors in upcoming budget

–Centre likely to allocate Rs200 billion for social safety programmes

ISLAMABAD:  To counter the adverse impact of the coronavirus, the federal government on Friday decided to give priority to the social as well as health sectors in the next budget for the fiscal year 2020-21.

The decision was taken at a meeting chaired by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh with regard to the upcoming budget that would be focused on the social safety net, food security, agriculture (locust control), health security, higher education among others.

In this context, the government is likely to allocate Rs200 billion for social safety programmes and the economic team has also requested the International Monetary Fund (IMF) not to include the corona related expenses in the ongoing program.

During the meeting, the debt wing of the Ministry of Finance (MoF) shared the perspective on the budget deficit projections as well as borrowing plans for foreign and domestic components of debt.

It said that the T-bills and bonds dominating domestic debt borrowing had witnessed a decline in the cost of debt financing due to robust debt management strategy.

The meeting was further apprised that the choice of timing of tapping the money markets and quantum of debt raising have helped in reshaping the maturity structure of debt portfolios. Growing market confidence has led to saving in borrowing costs for the government as banks are now dominant participants in auctions.

It was also highlighted that the debt to GDP ratio has been distorted due to economic compression. Shaikh instructed his team that the option of tapping sharia-compliant bonds might also be exercised to diversify the portfolio.

The commerce adviser said that debt managers must keep an eye on the yield curve inversion and its implications on borrowing choices in a macroeconomic climate dominated by recessionary headwinds.

Dr Ishrat Husain highlighted the significance of broadening the investors’ base in the pursuit of better price discovery.

The finance secretary shared plans on further expenditure squeeze, rationalising all domains of current expenditure, including running of the civil government, interest payments, subsidies and other related expenditures. A plan was shared to divert current expenditure savings to the corona stimulus financing.

He also shared the proposal of disbursement of electricity subsidy to subsistence consumers through Ehsaas, damage control in PSEs, including their selective turnaround and scope of their management outsourcing through PPP modalities.

The team deliberated on the transfer of four tertiary care hospitals from provinces to the federation in the backdrop of new NFC talks, as the act would place additional recurring liabilities worth Rs27 billion per year on the platter of the federal government.

The ongoing work on the right-sizing of the federal government by the PM’s Task Force under Dr Ishrat Husain was also appreciated.

The finance experts also stressed the need to prioritise financing arrangements for Covid-19 related expenditures as an adjustment from IMF is available during this window of short duration.