Contradicting strategy papers: Finance minister claims larger budget for FY 2016-17

Department’s papers reveal province is in poor monetary health <br /> .

Sohail Khattak May 26, 2016
Minister for Finance Muzaffar Said speaking at a pre-budget preparatory seminar at the Civil Secretariat. PHOTO: ONLINE

PESHAWAR: Minister for Finance Muzaffar Said claimed to have pitched a larger volume for financial year 2016-17 compared to the outgoing year. This contradicts his own department’s calculations which pitched the total volume at Rs404 billion in the Budget Strategy Paper-II (BSP-II) due to the financial health of the province and expectations of dues from the federal government.

More importantly, the contradictions may indicate that the provincial government was likely to repeat the mistake of showing inflated figures. In 2015-16, the K-P government was forced to eat some humble pie as it cut the development budget.

Muzaffar and Secretary for Finance Ali Raza Bhutta were speaking at a pre-budget preparatory seminar at the Civil Secretariat. It was attended by people from the government, civil society and the media. Opposition members did not attend the seminar, but the minister claimed they had been invited.

“The coming year’s (2016-17) budget will be larger than 2015-16,” he said. The finance minister stressed that the government had not imposed any cuts on the development budget of the current year, rejecting all government handouts which shared that a financial crisis forced a reduction.

Muzaffar revealed the budget would prioritise the energy and power, health and education sectors. He hoped the federal government would release the first tranche of Rs25billion under net hydel profit over the coming week. The amount was fixed at Rs70 billion through a memorandum of understanding between the federal and provincial governments.

“We hope that the federal government, keeping in view the sensitive situation of the province, releases the Rs25 billion in the coming week.”

The minister also expected other releases of amounts owed to the province. “We hope that the federal government starts treating K-P just like it treats Punjab,” he added.

Muzaffar revealed that natural and manmade disasters ruined K-P’s infrastructure and therefore the province was entitled to special financial incentives.

About the coming budget, the finance minister claimed to generate 25,000 job slots across the province. About an increase in the salaries of government officials’, he said the decision would be made based on the federal budget. Secretary for Finance Ali Raza Bhutta shared details of development fund utilisation and amounts received from the federal government. He said authorities utilised Rs70 billion of development funds which amounted to 50% of the total Annual Development Programme for 2015-16. The secretary claimed between 80 and 84% of the money would be utilised by the end of the year.

To a question about the ongoing budget shortfall due to K-P government’s failure to generate its expected revenue of Rs31 billion from the provincial non-tax receipts, Rs51.8 from the arrears of the net hydel profit (NHP) from the federal government and Rs18 billion of the NHP for the year after uncapping and the shortfall implications on the developmental budget, Bhutta said, “The government makes adjustments in the current budget and take austerity measures to overcome the shortfall.” About the shortfall itself, he replied that “provinces cannot make deficit-budgets”.

He said the provincial government received Rs190 billion out of Rs250 billion for federal tax assignment from the centre, Rs22 billion of a total Rs30 billion for the war on terror and Rs16 billion of Rs19 billion in straight transfers.

When questioned over the disparity in the receiving of funds and the finance minister’s daily statement, Muzaffar responded by saying the statements reflected pending funds owed by the Centre to K-P under NHP.

Regarding the release of K-P’s share in NHP, which is expected to be Rs18 billion after being uncapped at Rs1.10 per kilo watt hour, Bhutta said the matter was notified on March 6 and is in process. “The Central Power Purchasing Agency has not passed the bills of Wapda for March and April.” He hoped the amount would be released when the bills are passed.

Published in The Express Tribune, May 27th, 2016.



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