KP faces Rs22bn budget shortfall

PESHAWAR: As the annual budget for the next fiscal year is round the corner, Khyber Pakhtunkhwa finance minister Sirajul Haq on Wednesday said the province was facing serious shortfall of Rs22 billion due to the ‘one-sided’ variation in the total divisible pool of resources. “The monetary condition of the province can worsen if the centre doesn’t release the Rs22 billion share of Khyber Pakhtunkhwa before the end of current financial year. The province has already suffered a lot due to militancy,” the minister told a news conference here on Wednesday. He said the issue was taken up in the biannual meeting of the National Finance Commission (NFC) in Islamabad on Tuesday, where federal finance minister Ishaq Dar was in the chair. “During the meeting, I took up various issues, including delay in the payment of arrears on account of net hydel profit, delay in the imposition of excise duty on oil and imposition of the infrastructure development cess,” he said. Siraj says situation will worsen if centre doesn’t pay arrears Mr Haq said Khyber Pakhtunkhwa would be in position to give loans to other provinces if the centre ensured the timely payment of arrears. “Delay in the payment of arrears including on account of NFC and net hydel profit can adversely affect the pace of development in the province. The lukewarm response of the centre has disappointed us,” he said, adding that the coalition government utilised all legal options and democratic forums to protect the rights of the province. The minister said initially, the finance ministry had estimated the total volume of divisible receipts at Rs2,475 billion under which the province was due to get Rs222.09 billion and that the budget was prepared in light of those estimates. He said payments during the current financial year remained below the target and the federal government also cut down the target of total divisible receipts from time to time without taking provinces into confidence. “At one stage it was fixed at Rs2,345 billion, Rs2,270 billion and at last at Rs2,229 billion,” he said. Mr Haq said under NFC, the share of the provinces in total divisible pool was 57.5 per cent and population basis the share of Khyber KP faces Rs22bn budget shortfall Pakhtunkhwa was 14.62 per cent. He said under the head of the war on terrorism, its share in the total divisible receipts was one per cent, which was 1.8 per cent of the total share of the province and that was still outstanding. The minister said the total share of Khyber Pakhtunkhwa in the federal divisible pool was 8.97 per cent of the receipts. He said under the Finance Act 2013, the Khyber Pakhtunkhwa government had decided imposition of infrastructure development cess and all arrangements were finalised but it could not be implemented due to the objections of the federal government. Mr Haq said the federal minister had promised early resolution of all outstanding matters and the immediate removal of all hurdles to the levy of cess to help generate the maximum receipts for the province. He said soon after the meeting, the relevant authorities had been informed of the progress, while the provincial excise and taxation department and that the Federal Board of Revenue had been informed in written to removal hurdles in this regard. The minister said he had raised the issue of non-payment of Rs138 billion arrears on account of the net hydel profit and urged the federal minister to resolve the issue permanently. “According to the arbitration award, the centre has to pay Rs138 billion arrears on account of net hydel profit, while under the AGN Qazi formula, the federal government owes Rs475 billion to Khyber Pakhtunkhwa,” he said, adding that the province was subjected to the unbecoming treatment. Mr Haq said after the 18th Constitutional Amendment, excise duty on oil was to be imposed under Article 161(1)(b) of the Constitution but after the lapse of three years, it was not levied. He said under the formula in question, Khyber Pakhtunkhwa could receive Rs14.6 billion per annum as it produced 40,000 barrel oil per day, half of the country’s total production. Published in Dawn, May 22nd, 2014