Punjab govt losses soar to Rs660b

Federal authorities approached for assistance as revenue shortfall mounts

Muhammad Ilyas May 08, 2020

LAHORE: The Punjab government is facing severe financial difficulties amid the coronavirus crisis with the shortfall increasing to Rs660 billion because of decreased revenue share from the federation and a freeze on provincial taxes.

As an overdraft from the State Bank is also not available due to agreements with the International Monetary Fund (IMF), the provincial authorities have once again approached the federal government for financial assistance.

Sources in the Punjab Finance Department said that due to less collection by the Federal Board of Revenue (FBR) and freezing of Punjab's taxes, the loss suffered by the province has increased from Rs600 billion to Rs660 billion.

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The severe financial crisis faced by the Punjab government may make it difficult for it to pay the salaries of employees in the coming months.

In addition to demanding financial assistance from the federation, the provincial government has also started withdrawing funds from all its departments, which could not be utilised during the current financial year.

It is expected that deduction will be made in the annual budgets of all government departments in the coming days to enable the Punjab government to accumulate funds to continue providing relief to the people during the lockdown imposed because of the coronavirus pandemic.

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The Punjab government had set a development budget of Rs350 billion but it is expected that Rs190 billion will be spent by the end of the current financial year. The remaining funds will be withdrawn by the finance department so that they can be used for other tasks.

The sources said the Punjab government had earlier demanded financial assistance from the federal government to meet its expenses and carry out relief activities but had not received a positive response so far.

The sources said the Punjab government was to receive Rs1,700 billion during the financial year under the National Finance Commission (NFC) award. But this amount is now expected to be reduced to Rs1,094 billion due to the lockdown as in the current scenario the federation is receiving less revenue from the FBR every month for distribution among the provinces.

Punjab is also getting its share from the Ehsaas programme of the federal government.

The sources said Punjab’s bureaucrats will inform the federal government about the situation in an important meeting that is likely to be held soon.

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While briefing a meeting chaired by the chief minister, Punjab Finance Minister Hashim Javan Bakht and Finance Secretary Abdullah Sunmbul said the province’s financial difficulties have increased. The financial crisis will make it difficult to implement the development plan, pay salaries to government employees and meet other necessary expenditures, he said. The chief minister was informed that the Punjab government needs immediate financial assistance to get out of the financial crisis.

The province is facing a tax shortfall of Rs150 billion. The Punjab government has not been able to generate the expected revenue, while payments made by the federation are also less than the budget estimates. The province’s economy has come to a standstill due to the revenue shortfall.

The sources said the chief minister will soon contact the federal government in this regard. He will meet Prime Minister Imran Khan, brief him on the current economic situation in Punjab and demand immediate help so that things can be run smoothly.

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The Punjab government will demand Rs128 billion owed from the federation in hydroelectric profit, tax share and other accounts so that Punjab can solve its economic problems. The sources said the Punjab government would also brief the federal finance ministry on the situation. The Punjab government wants the economy to move on after overcoming the coronavirus crisis so that people's problems may end.

Published in The Express Tribune, May 8th, 2020.