Fiscal woes: ‘K-P faces Rs22b hole in budget’
Finance minister says federal government doled out lesser funds than promised.
“K-P is facing a shortage of Rs22 billion in its meagre budget due to this fluctuation, which may cause an economic crisis,” warned Haq. DESIGN-FAIZAN DAWOOD/FILE
PESHAWAR:
Khyber-Pakhtunkhwa (K-P) is facing a shortage of Rs22 billion in its current budget because of the disbursements of less-than-promised funds by the centre, said K-P Minister for Finance Sirajul Haq on Wednesday.
Addressing a news conference at the Civil Secretariat after attending the biannual meeting of the National Finance Commission (NFC) award in Islamabad on Tuesday, Haq said under the 7th NFC award, K-P’s share of the total federal divisible pool was 8.97%.
Sold short?
“For the fiscal year 2013-2014, the Ministry of Finance calculated the total volume of the divisible pool as Rs2,475 billion initially. K-P was to get around Rs222 billion of this and provincial budget estimates were also based on this figure,” said Haq.
However, for the current fiscal year the federal government’s payment to K-P remained less than the estimated amount. At times, K-P’s share was bitten into without taking the province into confidence, Haq claimed.
He explained the current year’s total volume of divisible pool later wavered between Rs2,345 billion and Rs2,270 billion and was at last fixed at Rs2,229 billion, which resulted in losses to provinces.
“K-P is facing a shortage of Rs22 billion in its meagre budget due to this fluctuation, which may cause an economic crisis,” warned Haq.
More taxes
In the budget for 2013-2014, the provincial government had decided to impose Infrastructure Development Cess, but the federal government raised objections and did not let K-P proceed with its plan, said Haq.
In Tuesday’s meeting, the federal government had assured the province of resolving all hurdles and contentions in the imposition of the levy. “Soon, K-P will have substantial sums in its treasury reserves because of this cess,” said Haq.
The senior minister further added in the Net Hydel Profits Arbitration Award, the federal and provincial governments had agreed that the centre would pay a 10% mark-up annually to K-P in case of delays in the payment of Rs110 billion in hydel profits.
“This mark-up now amounts to Rs56 billion and the federal government has agreed to pay it,” announced Haq. He added the finance ministry will take steps to make the payment after the announcement of the budget and K-P was likely to get paid in the next financial year.
Could have, would have
Talking about the excise duty on oil which the government has failed to impose for the past three years, Haq said K-P produces around 40,000 barrels of crude oil a day.
“If the government had imposed excise duty at Rs1,000 per barrel, the province would have made Rs14.6 billion annually,” he added.
“Following strenuous efforts by the K-P government, the centre has assured the province will get these funds, starting next month,” Haq claimed.
Furthermore, giving an example of the K-P government’s “sound financial management”, Haq said the province will also receive Rs758.8 million for maintaining its cash balances surplus in the third quarter of the fiscal year. In the first quarter, the province had received Rs296.9 million while in the second quarter it had received Rs 448.5 million for the same.
Published in The Express Tribune, May 22nd, 2014.
Khyber-Pakhtunkhwa (K-P) is facing a shortage of Rs22 billion in its current budget because of the disbursements of less-than-promised funds by the centre, said K-P Minister for Finance Sirajul Haq on Wednesday.
Addressing a news conference at the Civil Secretariat after attending the biannual meeting of the National Finance Commission (NFC) award in Islamabad on Tuesday, Haq said under the 7th NFC award, K-P’s share of the total federal divisible pool was 8.97%.
Sold short?
“For the fiscal year 2013-2014, the Ministry of Finance calculated the total volume of the divisible pool as Rs2,475 billion initially. K-P was to get around Rs222 billion of this and provincial budget estimates were also based on this figure,” said Haq.
However, for the current fiscal year the federal government’s payment to K-P remained less than the estimated amount. At times, K-P’s share was bitten into without taking the province into confidence, Haq claimed.
He explained the current year’s total volume of divisible pool later wavered between Rs2,345 billion and Rs2,270 billion and was at last fixed at Rs2,229 billion, which resulted in losses to provinces.
“K-P is facing a shortage of Rs22 billion in its meagre budget due to this fluctuation, which may cause an economic crisis,” warned Haq.
More taxes
In the budget for 2013-2014, the provincial government had decided to impose Infrastructure Development Cess, but the federal government raised objections and did not let K-P proceed with its plan, said Haq.
In Tuesday’s meeting, the federal government had assured the province of resolving all hurdles and contentions in the imposition of the levy. “Soon, K-P will have substantial sums in its treasury reserves because of this cess,” said Haq.
The senior minister further added in the Net Hydel Profits Arbitration Award, the federal and provincial governments had agreed that the centre would pay a 10% mark-up annually to K-P in case of delays in the payment of Rs110 billion in hydel profits.
“This mark-up now amounts to Rs56 billion and the federal government has agreed to pay it,” announced Haq. He added the finance ministry will take steps to make the payment after the announcement of the budget and K-P was likely to get paid in the next financial year.
Could have, would have
Talking about the excise duty on oil which the government has failed to impose for the past three years, Haq said K-P produces around 40,000 barrels of crude oil a day.
“If the government had imposed excise duty at Rs1,000 per barrel, the province would have made Rs14.6 billion annually,” he added.
“Following strenuous efforts by the K-P government, the centre has assured the province will get these funds, starting next month,” Haq claimed.
Furthermore, giving an example of the K-P government’s “sound financial management”, Haq said the province will also receive Rs758.8 million for maintaining its cash balances surplus in the third quarter of the fiscal year. In the first quarter, the province had received Rs296.9 million while in the second quarter it had received Rs 448.5 million for the same.
Published in The Express Tribune, May 22nd, 2014.