In compliance with the IMF condition, the interim government has decided to cut down its expenditures in order to slash its budget deficit, reported 24NewsHD TV channel on Friday.
According to sources in the finance ministry, the federal government has decided not to undertake any new development project during the current fiscal year, it will only complete the already launched programmes.
In order to fix the country’s budget deficit, the IMF has asked the government to bring down its expenditures. Complying with it, the government has decided to reduce its expenses.
Sources said that the ministry took this decision keeping in view the difficult economic condition of the country.
The ministry has decided to collect 50% from provinces as their cost-sharing in the PSDP, sources said adding that the Special Investment Facilitation Council has already endorsed the idea.
The federal government will also collect a share from provinces in the gas, wheat and fertilizers subsidies in proportion to their population.
Sources said that wheat and urea fertilizers were imported at the request of provincial governments. The Trading Corporation of Pakistan's commodity import liabilities are more than Rs2,000 billion.
Provincial governments have not paid their share for the past several years. The government is working on the law to collect share from provinces in development projects and all subsidies.
The Ministry of Finance is also working on changes in the National Finance Commission Award.
Finance Minister Dr. Shamshad Akhtar has asked the provinces to take steps to reduce their expenses.
Sources said that the federal government wants to slash its expenditures drastically before its forthcoming negotiations with the IMF in November.
Under the IMF loan programme, the provinces have to show a surplus of Rs600 billion this fiscal year.
Sources said if the IMF approves, Pakistan will receive another tranche of $700 million.
Reporter Waqas Azeem