With a gross deficit of over Rs three billion, the NWFP budget for the financial 02-03 is, by and large, a continuation of the out-going fiscal’s budgetary plan.
The over Rs 44 billion revenue receipts budget 01-02 recorded a whopping Rs10 billion shortfall with the total revenue receipts of the province for the out-going financial year settling at Rs34 billion.
The province experienced over Rs2 billion shortfall in the direct federal transfers due to the Central Board of Revenue’s (CBR) failure to meet its initially set Rs454 billion revenue target.
Besides, the province recorded a shortfall of over Rs8 billion under the net hydel profit head shown in its budget document for FY 01-02 as ‘unallocable’.
The new financial year’s budget does not appear to be a different story. The provincial finance managers have reflected over Rs10.9 billion as ‘unallocable’ because of over Rs9.9 billion likely short-fall on account of the net hydel profit proceeds.
Whereas, the budget document clearly states that the province would get the capped net hydel profit share amount of Rs six billion in line with the last 10 years, the budget reflects the higher side figure of Rs15.9 billion share for 02-03 to reserve the Frontier’s right as per A.G.N.Kazi Formula.
Hence, the Rs46.06 billion revenue receipts of the province would end up at around Rs 36 billion when the new financial year comes to end June 30 next.
The CBR’s failure to meet he revenue target during the last several years and the continued silence adopted by Islamabad ignoring the NWFP’s stand on the net hydel profit dispute with Wapda hardly leaves any hope for the province to raise what it has claimed.
The 1997 National Finance Commission (NFC) award, originally scheduled to end on June 30, 2002 - did not deliver what was indicated.
The Oct 12, 1999 military coup did not make any difference as far as provincial governments’ financial woes are concerned.
Neither the revenue projections, reflected for the five year operations of the NFC award, appeared to be realistic nor any of the other objectives laid down under it could be met. The question arises as to who is to be blamed for faulty resource generation and distribution in fulfilment of the constitutional provisions? Certainly, the sitting military government and the one before it could not be absolved of the responsibility for this total failure of the NFC award.
Whereas, the present government and its predecessor failed to make the CBR achieve the annual revenue target in addition to heir failure to expand the tax base, provincial governments were made to face the music.
The province was released Rs4.29 billion - out of its total annual capped share amount of Rs 6 billion net hydel profit - four days prior to the close of the out-going financial year.
For most part of the last financial year the provincial government kept crying for its share amount. But silence adopted on the issue adopted by the Wapda and the federal government caused major deviations in the budgetary plans.
As a result, the government could not release developmental funds to its departments and the newly formed district governments in time creating a hub of issues concerning the timely and effective utilization of the amount.
There does not appear to be an end to the phenomena of the NWFP’s reliance on the external resources, even, in the near future. Rather, the provincial finance managers over the period of last few years have been trying to borrow more from the international lending agencies.
Apart from taking loans between Rs 4 billion to Rs 5 billion annually from the international lending sources for developmental activities ever since the Nawaz Sharif government stopped issuing cash development loans to provinces, the NWFP has, this time round, showed another figure of Rs 5.4 billion IDA loan to partly finance the resource gap in the annual development programme and the gross Rs 3 billion deficit.
Up til now the province has been obtaining loans only to finance its development activities, now it would be taking the same for meeting the financial requirements of its large high establishment which eats up to 50 per cent of the total annual revenue receipts under the heads of salary, pension and other perks and privileges.
For how long the province would survive on loans? The provincial government has come up with a three-year medium term roll over programme which envisages wide ranging reforms in all the sub-sectors of the provincial public sector.
The programme had been introduced in the out-going financial year’s budget underlying a host of goals and objectives to bring about a much wanted positive change in the public sector.
It has once again been reproduced in the new financial year’s budget document after having been refined and fine tuned by the provincial government to qualify for the world bank loan. The finance minister, in his post budget press conference felt the need to clarify that the reform programme had been developed by the government on its own without any assistance from any of the international lending agencies - a point rejected by the insiders.
He said that the province would avail US 90 m soft term loan during the 02-03 financial year involving 0.75 per cent service charges whereas the exchange rate risk would be taken care by the federal government.
The province might also get the same amount of money during the next two financial years if the reforms stay on course.
Expecting extra ordinary positive results from the reforms programme, the minister in his budget speech said that it would help change the destiny of the people of NWFP during the next three years - something which could not be done during the over 50 year chequered history of this country.
