K-P mulls drastic steps to prevent bankruptcy

Govt may resort to withdrawal of 35% pay raise or 25% cut in salaries of govt employees

PESHAWAR:

The caretaker Khyber-Pakhtunkhwa cabinet would meet here on Thursday (today) to approve a mini budget for the next four months, not only to keep the government running but to also save the province from bankruptcy, source said on Wednesday.

In June, the interim government announced Rs462 billion budget for four months – July-October – using its powers under Article 126 of the Constitution. However, since the elections could not take place in that period, the government required approval of the budget for next four months.

The provincial government would take the advice from a similar measures adopted by the caretaker Punjab government. For the November 2023-February 2024 period, according to sources, the budget outlay would be around Rs500 billion.

Chief Minister Azam Khan would chair the cabinet meeting, which would review and approve the revenue and development estimates, including the Annual Development Programme for the next four months, worth around Rs71 billion.

Official sources said that three options were actively being considered by the caretaker set up to save money and prevent the province from bankruptcy. These measures include savings from the salaries of the government employees, and elimination of certain allowances.

“Strict measures are expected, including withdrawal of 35% increase in the salaries of the government employees which will save Rs9 billion,” said an official. “As the second option, a 25% cut is proposed in the salaries of the public sector employees, which could lead to Rs8 billion savings,” the official added.

“There has been a third option put forward to the caretaker government which is the elimination of executive, health, professional and all other allowances to save the precious financial resources,” he said, adding that this will save Rs2 billion per month.

According to the sources, privy to the government’s budget-making exercise, no new taxes would be imposed. Also, there would be no changes in the rates of the property tax introduced by the previous Pakistan Tehreek-e-Insaf (PTI) government, they added.

Read also: K-P seeks Punjab’s advice on mini-budget

In the outgoing budget, the caretaker government had increased salaries of government employees and eight different types of allowances. Overall, it increased the salaries of employees by 35% and the pension of retired employees by 17.5%.

The increase placed an additional burden of Rs41.351 billion on the provincial coffers. However, because of non-payment of the provincial dues by the Centre and an overall weak financial situation of the province made this burden unbearable for the government.

The current budgetary allocations would end on October 31. Therefore, it is now incumbent upon the provincial government to approve fresh budget, otherwise, the government would not be able to allocate funds for its current and development expenditures.

“The Finance Department has already finalised the arrangements for the mini-budget. It has also sought direction from the Punjab government, which is facing a similar situation due to the delay in the general elections,” the official told The Express Tribune on condition of anonymity.

“The government is interested to know what the Punjab government is doing to deal with the situation arising from the delay in elections in the country. The provincial government has been in constant contact with the federal government too, because release of funds from the Centre enables it to handle financial matters efficiently,” the official continued.

“The provincial government is faced with a severe financial crisis, which is probably the worst in its history. And the situation will improve once the federal government releases the funds,” the sources added.

In May, caretaker K-P Chief Minister Muhammad Azam Khan expressed his unwavering commitment to overcoming the prevailing financial crisis in the province. He had emphasised that the provincial government was making extensive efforts to address the situation effectively.