Those who follow the economic reports and indicators closely will remember that the government was setting great store in the sale of 3G licences as a means of limiting the budget deficit in this financial year. It was projected (though ‘fervently hoped’ may be a more accurate description than ‘projected’) that the sale of 3G licences would raise about a 150 billion dollars. This now looks doubtful, and if the sale does not happen in this FY then the budget deficit targets are going to be missed. There has been some reduction in the budget deficit this FY, mainly on the back of increased FBR intakes, and there was an impressive growth of 50.4 percent on non-tax revenues. However the sum collected by the FBR to the end of December 2011 falls short of the target of Rs1,953.3 billion. The GDP growth target of 4.2 percent in FY 2011-12 is looking problematic because of shortages of gas and electricity, high global oil prices and a decline in the price of agricultural products globally. Given the complexities and uncertainties of global markets generally it was perhaps unwise to put so many fiscal eggs in the 3G basket – which now seem to be having difficulty hatching.

The spanner in the works comes courtesy of the Auction Supervisory Committee (ASC) which is overseeing the sale of the 3G licences. The ASC has refused to accept the companies nominated for consideration for consultancy by the Pakistan Telecommunications Authority (PTA) due to alleged discrepancies in the selection process. A recent meeting of the ASC, chaired by Finance Minister Hafeez Shaikh, said it could not shortlist companies for consultancy because of “serious flaws in the selection process”. The PTA had listed four candidates out of 12, and that contrary to the ASC direction that an evaluation committee be formed to finally shortlist the candidates, the PTA had bypassed the process and done its own shortlisting sans evaluation committee. Given the importance of the 3G-licence sale one might have thought that all the parties would have played by the book, but apparently not. The entire process now awaits a date for proceeding to the next step and the target date of June 30 looks increasingly improbable. The ASC itself may disband rather than be associated with a flawed or suspect process. Note to government – never count your chickens before they are hatched.