PESHAWAR: The interim provincial cabinet is expected to approve Thursday [today] a Rs200 billion budget which will tide the province over for first four months of the new fiscal year until the next government can be sworn in and pass a budget for the rest of the fiscal year.
The Khyber-Pakhtunkhwa (K-P) Caretaker Chief Minister Justice (retd) Dost Mohammad on Tuesday had granted his in-principle approval to the Rs199.15 billion budget but will be formalised after securing approval from the caretaker provincial cabinet.
For the four months from July to October, the provincial government will have access to an estimated Rs145.8 billion for current expenditures. A major chunk of this will be spent in paying salaries of employees and pensions of retired employees. The former is expected to cost the government Rs84.2 billion, while the latter will set the government back by a further Rs20 billion.
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A further Rs3 billion will be used for debt servicing while a billion rupees will be used to pay subsidies.
Around Rs53.1 billion has been earmarked for development projects.
According to government documents, a copy of which is available with The Express Tribune, a sum of Rs9.8 billion has been set aside for the local body government. A further Rs24.4 billion has been earmarked for provincial developmental schemes and Rs18.9 billion as foreign aid or foreign project assistance.
The developmental funds earmarked for the upcoming fiscal year show a 23 per cent decline when compared to the first four months of the outgoing fiscal year of 2017-18 when Rs69.3 billion was allocated.
Similarly, there was a 25 per cent decline in the provincial developmental funds earmarked for the first four months of the incoming fiscal year with Rs24.4 billion allocated, compared to Rs32.7 billion allocated for the first four months of 2017-18.
Foreign aid also fell by 31 per cent in the first four months of 2018-19 with Rs18.9 billion earmarked, compared to Rs27.3 billion earmarked for 2017-18.
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The total outlay for the 2018-19 is estimated at Rs603 billion. a major portion of the budget comprises federal transfers worth Rs469.9 billion, Rs41 billion in provincial own receipts (which have fallen nine per cent from Rs45.2 billion of the outgoing fiscal year), Rs24 billion in savings and Rs56.8 billion of foreign project assistance.
The caretaker chief minister had also formally agreed to a 10 per cent increase in the salaries and pensions of provincial government employees.
Government documents further show that the former Pakistan Tehreek-e-Insaf (PTI) led K-P government did nothing to rationalise the exponential growth in pensions and salaries, leaving a rapidly-inflating balloon which can burst in the near future.
Salary expenditures were increased by 16 per cent in the outgoing fiscal year of 2017-18, while, the pension outlay was increased by 13 per cent thus reducing the fiscal space for developmental projects. As a result of these increases, the province’s wage bill is expected to be a hefty Rs253 billion in 2018-19, up from Rs214 billion in the outgoing 2017-18.
Similarly, the pension billion is estimated to be Rs60 billion in 2018-19, up from Rs53 billion in 2017-18.
The PTI government’s massive recruitment and regularisation drives during its government, which saw some 128,000 employees added to the wage bill from 2013-14.
Moreover, it also gave into up-gradation demands of thousands of employees including police officers, school teachers, employees and officers working in every department of the government.
“The exponential growth in the human resource strength coupled with up-gradation directly increases the salary bill and it will certainly emerge in the pension outlay too,” remarked an official of the K-P government dealing with fiscal matters.
The K-P finance department projects that if the pension bill is allowed to grow at the current pace, it could inflate to Rs170 billion over the next 10 years.
“We would be only paying salaries and pensions and will have no money left for developmental and operational expenditures,” said the official while requesting not to be named.
The finance department has taken measures to rationalise the pensions, creating an automated pension system and computerising records. This has eliminated ghost pensioners and reduced the number of pensioners from 170,000 to 135,000 saving the exchequer massive sums annually.
However, the official said that future governments have to take the matter seriously and find a permanent solution for the pension bill which the former PTI government could not.
For government employees, a 10 per cent increase in ad-hoc relief allowance on running along with 50 per cent increase in house rent allowance is proposed.
Similarly, pensions are proposed to be increased by 10 per cent and the minimum pension for pensioners over 75 years of age is proposed to be raised to Rs15,000. The minimum pension is also proposed to be raised from Rs6,000 to Rs10,000.
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