Financial crisis grips Punjab

Short of Rs.600 billion, the government is struggling to make ends meet

LAHORE: The rise of coronavirus cases has pushed the financial situation above crisis levels in Punjab.  With a shortfall of Rs.600billion, the provincial economy appears to be in a tailspin and low on funds.

According to one official in the provincial government, the coffers are empty at the moment. “The provincial government does not have the funds to pay salaries next month,” said the official, who was speaking on the condition of anonymity.  Notifying the federal government about the financial crisis, the provincial government has requested for the release of Rs.128billion owed by the centre in arrears.



As of Monday morning, the number of confirmed COVID-19 patients stood at 7,646, steadily inching toward the 8,000 mark.   According to financial experts, the pandemic caused lower than expected collection of taxes and revenues, which has left the province cash strapped.  To deal with the crisis, the provincial government has reorganised its priority list. The finance minister said the government was focusing on dealing with the coronavirus spread in the province.

“The most important priority at the moment is to release funds to deal with coronavirus in the province,” said Finance Minister Hashim Jawan Bakht.  “Our revenue collection was 29% higher than the target before the coronavirus outbreak,” Bakht claimed. The minister reiterated the province faces a shortfall of Rs.600billion. The federal government, he said, owes Rs.128 billion in hydel profits and GST on services. “We have requested for the payments,”  said Bakht.

Desperate times

Struggling to make ends meet, the provincial government appears to be cutting corners. According to an official, the administration has declined requests for supplementary grants for projects. Out of the Rs. 62billion requested, only Rs.51billion has reached the departments. Short on cash, the provincial government has also halted 900 development projects in the province.

Rural workers paid a third of minimum wage’

While the province was expecting to collect Rs.325 billion, it will only manage to bag Rs.265 billion during this financial year due to the coronavirus outbreak. In addition to the collection shortfall, officials claim, the province has not received its entire share of the National Financial Commission award.

Delays in other federal payments coupled with low Federal Board of Revenue collection are now forcing the provincial government to tighten the purse strings.

Facing a severe shortage of cash, the province has asked for federal assistance of Rs.5billion to keep the wheels of the Metro bus service rolling in Islamabad.  To squeeze funds out of the federal exchequer, the provincial government has also demanded the payment of Rs.10billion in wheat subsidy.

Federal help

According to an insider at the finance department, the prime minister has received a briefing about the financial situation in Punjab, the most populous province in the country. The official said the finance minister has also briefed the provincial cabinet about the nature of the crippling crisis.  So far, he said, the administration has no plans to seek financial assistance from the central bank. 

Published in The Express Tribune, May 5^th, 2020.