K-P to launch pension reforms to cope with growing liabilities

Published: June 9, 2017


PESHAWAR: Khyber-Pakhtunkhwa (K-P) Finance Department has decided to chalk out a comprehensive strategy for smart management of the province’s rapidly increasing pension liabilities of the employees.

In a post-budget briefing on Thursday, Finance Secretary Shakeel Qadir told the media that the government was starting pension reforms this year to restructure the pension payment system in the province.

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Pension liabilities of government employees are estimated at Rs53 billion in the budget 2017-18, which is 32% more than Rs40 billion in the outgoing fiscal year.

Similarly, salaries and allowances have been raised from Rs189 billion in the current year to Rs218 billion in FY18, up 15.3%.

During his budget speech in the K-P assembly a day ago, Finance Minister Muzaffar Said had termed the rapidly increasing salary and pension liabilities a challenge for the provincial government.

Qadir admitted that the increase in the share of pensions and salaries was affecting the development programme. He said Pakistan had entered the ranks of middle-income countries, so it should adopt the pension policies and systems practised in those countries.

The finance secretary claimed that K-P was the only province in the country that had no domestic loans. However, referring to foreign loans, he said K-P had Rs195 billion in such loans and had paid Rs13 billion in mark-up and Rs11 billion in principal in the current year.

For the new fiscal year, the province will pay Rs8 billion on account of mark-up and Rs7 billion in principal.

Regarding the taxes increased in the budget, he said the province was expected to earn revenues of Rs640 million due to the changes in tax rates and inclusion of new categories.

“We need to strengthen our tax base and have good scope – for the extension of tax base – in urban immovable property tax and land tax.”

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When asked about the increasing throw-forward liabilities under the budget, Planning and Development Secretary Shahab Ali Shah could not give a satisfactory reply. He said the government had allocated 81% of the Annual Development Programme to the ongoing schemes and 19% for the new schemes. However, contrary to Shah’s claims the throw-forward liability had increased 16% from Rs488 billion in 2016-17 to Rs567 billion in 2017-18.

Published in The Express Tribune, June 9th, 2017.

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