Putting the Balochistan budget on the right course

Published: September 5, 2019
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The residential area of Gwadar port in the Arabian Sea. PHOTO: AFP

Whenever a new government assumes power, either at the centre or in a province, they often state that the economic woes are inherited from the financial challenges of previous years. The Balochistan Awami Party (BAP) led coalition government in Balochistan seems to be repeating this mantra. However, there can be no denying of the fact that the present government inherited a deficit of over Rs62 billion, in addition to billions in liabilities and unforeseen expenditures.

But what led the Balochistan government to this position, where the blame is being passed from one party to the other? The policies enforced by both the government and the bureaucracy are to blame. The promotion of tens of thousands of workers without a proper assessment of their productivity and a severely flawed grant of time scales has resulted in Balochistan’s current financial predicament. Additionally, grants and subsidies for agricultural tube-wells and wheat procurement are also deteriorating the financial health of the province.

Furthermore, there are as many as 28 autonomous bodies currently functioning under the Balochistan government which were primarily set up with the aim to help meet Balochistan’s expenditures through a generation of its own revenue. But increasing unchecked employment in these bodies are creating the same problems in these situations as the ones which are prevalent in the public sector. The dependency of these autonomous bodies on government provided bailout packages is increasing exponentially with each passing year and no mechanism is in place to look after the budgetary affairs of these autonomous bodies.

The rising trends of expenditure on salaries, grants and subsidies (Rs in billion)

Another contributing factor leading to the widening current expenditure is an increase in pension liability. Unfortunately, no previous government ever paid attention towards this financial menace, which not only exhausts a major chunk of the budget but is also increasing with each passing year. As a result, the current expenditure increases, hence creating a fiscal imbalance for the government to finance its development schemes.

In light of the aforementioned financial challenges, the onus falls upon the government to push the economy and the budget in the right direction by strengthening its foundations so that future governments do not inherit weak financial institutions. The following measures could thus help provide some much needed reform and buoyancy for Balochistan’s economy.

Firstly, Balochistan currently has a fledgling industrial and service sector, with the exception of a few industries in the Hub, Lasbella District. A lack of job opportunities in the private sector leads to a heavy dependence on the provision of government jobs. The government alone cannot meet all the job requirements in Balochistan, and both the private and public sector have to play a part in mitigating the unemployment crisis in Balochistan. The government has to outline long-term goals, regulations and incentives in order to attract investors. To help achieve this, the government should encourage the establishment of special economic zones, like the ones which have been created in Punjab. While the BAP-led coalition government deserves to be commended for setting up a project development fund and a viability gap fund to attract private investors, it should increase the money of these funds in future budgets.

Secondly, the government should set up a unit in the finance department which looks after the budgetary affairs of autonomous bodies in order to improve their compliance with the relevant corporate governance regulations, monitor their recruitment, financial management apparatus, accounting measures, and also review their performance. Moreover, a committee must be constituted to examine matters pertaining to the aforementioned time scale. They must put forth their recommendations before the provincial cabinet for approval and the financial benefits of the time scale should be extended to the extent of the salary only.

Thirdly, transparency with regards to wheat procurement based on government provided subsidy has always been questioned, with dozens of cases initiated by the anti-graft body. It is clear that the benefits of these subsidies do not appear to be reaching the masses. Therefore, wheat procurement subsidies must be suspended for some years and the market forces should be allowed to determine the price of flour.

Lastly, Balochistan also needs to reassess how it manages the pension fund. Had the Balochistan government invested the Rs10 billion each year, received under the seventh National Finance Commission (NFC) Award, the portfolio of its pension fund would have crossed Rs90 billion by now. If that policy had been implemented, more of the current budget could be allocated for developmental projects in Balochistan. Now is the time for the Balochistan government to invest at least Rs10 billion each year in its pension fund, otherwise future governments will be unable to finance either the pension fund or development projects. Moreover, an automated pension payment system, similar to the K-P model, must be set up in Balochistan and all pensioners should be brought under the system by ending manual payment, thus ensuring transparency in the expenditure.

Unfortunately, after the 18th Amendment, Balochistan lacked the political, technical and governance expertise needed to benefit from this constitutional provision. Since the passing of the 18th Amendment in 2010, previous governments took no serious initiatives to reform Balochistan’s economy. Balochistan has been unable to strengthen its own source of revenue, hence making the province suffer despite its rich natural and mineral resources. The government should take vigorous initiatives to help increase Balochistan’s revenue generation through not only the sales tax but also by letting the province mobilise its own sources of revenue. The BAP-led coalition government should face these financial challenges head on and work towards fortifying the foundations of the provincial financial management system in order to ensure a prosperous future not just for Balochistan, but for the nation as a whole.

Rehmat Ullah

Rehmat Ullah

The writer is a civil servant.

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.