November 25, 2003	Tuesday	Ramazan 29, 1424

PESHAWAR, Nov 24: The NWFP government’s budgetary deficit is increasing with every passing month of the current financial year due to revenue shortfall under important internal and external revenue receipt heads, according to officials.

By the end of the first four months of the current financial year, the provincial government recorded a total revenue shortfall of over Rs2 billion after its receipts stood considerably less than the amount the province had anticipated for the period.

The gap between the actual receipts and the revenue target has been attributed to the shortfall recorded under the direct federal transfers and provincial own receipts.

The officials said that by the end of the first four months of the current fiscal year the province should have received a sum of around Rs8,124m on proportionate basis out of the total amount of Rs24,374m the province has been projected to receive from the federal divisible pool during the financial year 2003-04.

Against this, the province received around Rs6 billion, recording a shortfall of around Rs2 billion only under this important head — which makes well over 60 per cent of the actual revenue receipts the province would net by the end of the current fiscal year.

The latest release of around Rs1.8 billion made to the NWFP against its share from the federal divisible pool for the month of October took the funds released to the provincial government under this head during the first four months to slightly over Rs6 billion.

Apart from the shortfall recorded under the direct federal transfers, the province also experienced an accumulative shortfall of around Rs250 million under the provincial own receipts (PORs).

Out of the total annual PORs target of Rs3.752 billion set for the current financial year, the province was required to raise around Rs1,250 million during the first four months of the current fiscal year.

Against the proportionate target, the province’s actual receipts, according to sources, stood at about Rs1 billion, recording a shortfall of around Rs250m.

“Except for a few heads of PORs, in majority of the cases the authorities concerned failed to put up an impressive show, making the government face a shortfall under the PORs,” said an official.

According to senior government functionaries, the gap between the actual receipts and revenue target is likely to narrow during the months to come as, they expressed the hope, the situation would improve with the increase in the quantum of funds the province would receive from the federal divisible pool (FDP).

“As the Central Board of Revenue is likely to record improvement in its revenue receipts during the second quarter of the fiscal year, releases to provinces from the FDP would also record improvement,” said an officer.

However, according to the sources, in comparison with the corresponding period of the last financial year the province has received more revenue this time round under the heads of direct federal transfers and PORs — due mainly to the increase in funds being diverted from the FDP to the province(s).

Despite the fact, said the sources, the province recorded improvement in the revenue receipts as compared to the last financial year, financial woes of the provincial government lasted for most part of the first half of the current financial year in continuation with the past.

“The province could not benefit from the improvement because of rise experienced in its establishment due to 15 per cent pay raise effected in the provincial government’s 272,000 employees’ salaries,” said an officer.

The provincial government, according to conservative official estimates, is likely to experience an increase of around Rs3 billion in annual salary bill, which stood at around 17.5 billion in the last financial year.

“Though the province is said to have received over Rs6 billion under the direct federal transfers during the first four months of the current financial year, in actual fact the government received much less than this,” said the official. Actual transfers to the province — in terms of cash amount put at its disposal from the FDP — appears to be around Rs4 billion.

Out of the total releases made to the province during the first four months, an amount of slightly over Rs2 billion was adjusted against the cash development loan the province owes to the federal government after successive provincial governments, till 1997-98 financial year, borrowed loans from the Centre to finance development activities in the province.

“The province would not have undergone the financial crisis it is going through at present, if it was not subjected to forceful recovery,” said an official.

“The province could come out of the financial year if the Centre lent approval to its request for premature retirement of the expensive cash development loan in lump sum by taking inexpensive liquidity from the open market,” said the official.

The provincial government’s request for allowing it to repay the expensive loan by availing liquidity from the open market did not yield the desired results after the federal government did not pay heed to it.