PESHAWAR, July 10: NWFP’s total liabilities on account of gratuity fund stood at well over Rs7bn at the close of the outgoing financial year, recording a sharp increase during the last few years, sources told Dawn.

The provincial government’s GP fund liability is increasing by around Rs1bn every year, according to the GP fund position reflected - for the first time - in the provincial government’s budget documents pertaining to the 2002-03 financial year.

The liability is recording increase due to the fact that the money raised through gratuity is used - as borrowing - by the provincial government to meet its expenditure requirements.

The government, said the sources, needed to adopt the course due to financial crisis it had been in for the last several years.

The GP fund liability of the provincial government, according to the province’s budget documents, has registered an alarming increase rising from Rs134m in the 1990-91 financial year to Rs7.12bn at the close of the 2002-03 financial year due to the government’s compulsion to borrow money from this official fund to off-set the impact of the financial squeeze it faces every year.

During the last financial year the government’s GP fund liability rose by over Rs700m getting increased from the total liability of Rs6.408bn at the end of the 2000-01 financial year to Rs7.12bn at the close of the 2001-2 financial year.

Before that, the government’s liabilities under this one head rose by Rs900m getting increased from Rs5.48bn at the close of the 1999-00 financial year to Rs 6.408 bn at the end of the 2000-01 financial year.

Unable to get sufficient amount of funds from the Federal Divisible Pool due to Central Board of Revenue’s failure to improve revenue generation in addition to non-payment of the net hydel profit share to the NWFP on regular basis by Wapda, said the sources, compelled the successive provincial governments to rely on borrowings — even from its employees’ GP fund account.

“Using money from the GP fund account has been a common practice of successive provincial governments since the 1990-91 financial year — due mainly to the financial constraints during all these years,” said the official sources.

The province, according to its budget documents, received about Rs1.9bn as gratuity from its serving employees during the 2000-01 financial year whereas an amount of Rs1.2bn was distributed among its retired servicemen under the same head during the same period.

Similarly, in the 1999-2000 financial year, the provincial government received Rs1.99bn and disbursed Rs1.07bn.

Not only that the provincial government’s total debt is increasing every year due to compulsory borrowing from the GP fund account, provincial government’s debt servicing to pay the interest is also eating up considerable amount of precious funds every year, according to sources.

The budget documents reveal that the government paid over Rs1.18bn interest over and above the loan it availed from the GP fund account. Similarly, over Rs1.056bn went down the drain under the same head during the 2000-01 financial year.

Whereas for the current financial year the provincial government has specified an amount of Rs1.15bn only to pay the interest pertaining to the borrowing from the GP fund account.

“The situation is likely to become very serious in the not- far-away future due to the government’s inability to maintain the GP fund at its original level - by repaying the principal amount by 100 per cent,” said the sources.