Fiscal failures: KMC rolls up its sleeves with budget preparation

KARACHI:

The liabilities, which the Karachi Metropolitan Corporation (KMC) owes different organisations, has topped Rs8.5 billion, an amount close to how much the municipality earns in revenue.

“KMC’s financial position is obvious,” said Administrator Muhammad Hussain Syed, addressing a meeting on next year’s budget on Saturday. “The Karachi Water and Sewerage Board (KWSB) has made a claim of Rs2.75 billion. There are other payables of Rs6 billion.”

KMC has started preparing its budget for financial year 2012-2013 with more emphasis on avoiding an exaggeration of revenue and expenditure targets, said a statement.

Despite the financial stress, Hussain said that KMC will try to avoid new taxes and charges. Rather, there is need to plug revenue leakages, he said.

In the outgoing fiscal year, which ends in June 2012, KMC has aimed at earning around Rs11 billion through its own means. It earns income from outdoor advertisements, zoos and municipal taxes.

KMC’s total budget is around Rs44.5 billion but most of it depends on grants and transfers from the federal and provincial governments.

Stressing financial problems, Hussain said that employees have been waiting for leave encashment, which they had earned back in 2004.

“We still have to pay Rs130 million for medicines, which have been bought and supplied to different hospitals.”

KMC has asked its departmental heads to submit details of the employees, vehicles and other assets so that their needs could be ascertained. The administrator has asked KMC departments to cut their expenses to bare minimum.

Karachi imposes dozens of taxes and charges on people but collection is always insufficient. “It’s all about commitment,” said a senior KMC official.  “Officials don’t think it is their responsibility to try hard to raise revenue. There is also no incentive for them even if they do. So the general attitude is, why should I care?”

Published in The Express Tribune, April 16^th, 2012.