Ambitious development projects in limbo as K-P faces financial crunch

Provincial CM Khattak and cabinet continue tug of war with provincial finance department

PESHAWAR: Amid a surge in its developmental work portfolio, the Khyber-Pakhtunkhwa (K-P) government once again is going through a financial crunch as the province lacks resources to fund its projects, said officials.

The provincial Annual Development Programme (ADP) for the current fiscal year was Rs161 billion but as per revised allocations, the ADP portfolio has swelled to Rs175.3 billion – a rise of Rs14.3 billion.



According to official sources, a major portion of the ADP is being used for the Swat Expressway, a multi-billion rupees project.

The allocation for roads sector has been increased from Rs11.5 billion to Rs22.8 billion while Rs20.8 billion have also been released, according to figures the finance department submitted in the K-P assembly.

Similarly, an additional allocation of Rs0.5 billion each for information and health sectors, and Rs0.3 billion each for finance and local government have been made by the K-P government for their individual developmental portfolios.

The provincial government, however, is now struggling to achieve its revenue targets set for the current fiscal year.

According to the details of the fiscal operation issued by the federal finance ministry, during the first six months of the year 2016-17, the K-P government has only received Rs7.04 billion in provincial tax receipts and Rs3.6 billion in non-tax receipts. Its target for provincial tax and non-tax receipts is Rs18.17 billion and Rs31.3 billion respectively.

With the current portfolio, the K-P government will face a shortfall of more than Rs20 billion in revenue targets, while the total budget shortfall will be over Rs50 billion, said official sources.

“Definitely it (the shortfall) will hit our development funds and we have to freeze funds for developmental projects to meet the running expenditures of the province,” an official said on condition of anonymity.

The provincial government is yet to draw a Rs12 billion loan – reflected in the budget – from domestic banks to meet its developmental portfolio along with borrowing Rs15 billion from the K-P Energy Development Fund.

The K-P Chief Minister Pervez Khattak, and his cabinet, have already been in a tug of war with the provincial finance department. Rumours about the removal of a few federal bureaucrats, including K-P’s Finance Secretary Ali Raza Bhutta and Additional Chief Secretary Azam Khan, are circulating in the Peshawar’s Civil Secretariat – the hub of provincial government machinery.



Home and Tribal Affairs Secretary Shakeel Qadir has been asked by the provincial government to replace K-P’s finance secretary but a decision on it has been delayed after the finance minister Muzaffar Said intervened, sources confirmed.

“The removal of Bhutta from the office will not end the province's financial crunch,” said another source quoting Said.

CM Khattak has long been pressing Bhutta to release discretionary funds and money needed for the umbrella schemes in the ADP. But the finance secretary has been resisting the move since the Supreme Court (SC) imposed a ban on discretionary funds.

During a meeting of the K-P Energy Development Fund that was held on April 10, Khattak seemed upset with Bhutta for not releasing the discretionary funds.

“Bhutta told the K-P chief minister that the province is facing a financial crisis and his department has no money,” an official, who also attended the meeting, said quoting the finance secretary.

The official added, Bhutta also informed Khattak that K-P’s Planning and Development Department should review the ADP and that if the departments surrender money then it could be given to the umbrella schemes.

The K-P government also faced financial issues last year in the wake of irrational calculations and demands. A number of schemes from the ADP were also dropped to stabilise the province’s financial health.