K-P faces Rs131 billion loss from Covid-19

Centre owes the province approximately Rs90b

PESHAWAR: Even though the province had made progress in almost all economic departments by the turn of the year, the novel coronavirus (Covid-19) pandemic has eroded around Rs131 billion from the provincial economy.

With negative growth and a deficit budget expected, the government vowed that it will not impact its development projects.

This was disclosed by the Khyber-Pakhtunkhwa (K-P) Finance Minister Taimur Saleem Jhagra on Friday while addressing a joint news conference along with Adviser to Chief Minister on Information Ajmal Wazir about the budget for the fiscal year 2020-21 in Peshawar.

“We are preparing the provincial budget in challenging circumstances,” Jhagra said.

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He noted that until April, things were progressing almost per plan. They had seen a 12% increase in revenues received from the centre, Rs294 billion, up from Rs261 billion last year. Revenues generated by the K-P Revenue Authority were up 73% from Rs8.1 billion last year to Rs14 billion until April this year. Even non-tax revenues had seen a slight uptick, rising from Rs9.1 billion last year to Rs9.6 billion this year.

However, owing to the Covid-19 pandemic, he said that their revenues had taken a hit. In the settled areas, he said that pre-Covid-19 estimated share of Federal Board of Revenue (FBR) receipts of Rs540 billion had fallen to Rs442 billion per current estimates - a loss of around Rs100 billion. In the merged areas, he said that the Rs131 billion pre-Covid estimates were down to just Rs100 billion, a loss of Rs31 billion. To compound the problem, revenue estimates for both these areas were already trailing budgetary estimates.

Jhagra conceded that the biggest challenge the province was facing economically was the less than expected revenues due to Covid-19.

One of the toughest blows, he said, was that the centre had halted the monthly net hydel profit payments worth Rs30 billion.

The finance minister said that in their original budget plans for the fiscal year 2019-20, they had planned to save around Rs20 billion by reforming the pensions system. Instead, he said that the province is facing a deficit of over Rs100 billion - which includes Rs60 billion in payments from the centre.

On expenditures, Jhagra said that they intend to spend around Rs85 billion (out of the Rs108 billion allocated) under the Annual Development Programme (ADP) for settled districts, Rs40 billion for the merged tribal districts and Rs50 billion in foreign aid will be spent before the end of the fiscal year.

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Claiming that not even a single rupee will be allowed to lapse, the finance minister said that the province was preparing for an overdraft to complete development projects. He, however, did hint that development budget could face some cuts next year.

For the next financial year, he said that they will be making a special allocation for Covid-19 which will drive up the health budget to record levels.

Promising not to impose any new taxes in the upcoming budget, Jhagra said that they will try to maximise available public money by further cutting costs and introducing tax reforms while expanding the tax base. He further called on the federal government to directly pay the NHP dues. 

Published in The Express Tribune, June 6^th, 2020.