PESHAWAR, Feb 6: The Frontier government's budgetary deficit climbed to a new height at the close of the sixth month of fiscal 2003-04, due to the shortfall recorded under the head of federal tax assignment, according to official sources.

Officially maintained data of the provincial revenue receipts, duly confirmed by senior government functionaries, showed that the budgetary deficit stood at around Rs3.5 billion at the end of the first half of the current fiscal year.

Revenue shortfall, according to sources, caused serious discrepancies and distortions in the provincial government's budgetary plan, particularly in the expenditure component, as the government lacked the much-wanted fiscal space to spend funds in line with the plan it had originally chalked out for the current financial year.

"Revenue shortfall caused serious financial crisis for the provincial government forcing it to heavily rely on the help from the State Bank for the most part of the first half of the current fiscal year," said a high-ranking official of the provincial government.

The province received about Rs10 billion under the federal tax assignment during the first six months, making the government to face a shortfall of around Rs2.2 billion only under this head.

In its current revenue receipts budget for 2003-04, the provincial government has projected to receive Rs24.374 billion on account of federal tax assignment. However, the disbursement made to the province under the federal tax assignment head during the first six months left it with little chance to get the amount it had projected for the current financial year.

This would require the Centre to release another amount of Rs14 billion during the second half 2003-04, to ensure that the province receives what it had projected under the federal tax assignment.

"Though chances appear to be thin, in view of the last financial year, one can hope for the best," said a senior finance manager of the province.

Though the federal government is not bound to make monthly disbursements to provinces from the federal divisible pool on proportionate basis, the NWFP government calculates it budgetary deficit on proportionate basis by dividing total revenue receipts, in each head of revenue, in 12 monthly instalments.

According to official sources, out of the total Rs10 billion released to the province during the first half of the current financial year, a hefty amount of Rs3. 5 billion was recovered from it through book adjustments against the total cash development loan (CDL) the province is supposed to pay to the Centre.

The federal government, said the sources, recovers about Rs550 million every month through book adjustments against the over Rs75 billion CDL province owes to repay to the Centre.

Monthly book adjustments of about Rs3.5 billion, according to sources, left the provincial government to receive in cash a total amount of around Rs6.5 billion in six months making things much more difficult for the provincial government which, said the sources, needed over Rs1 billion at the start of every month to pay salary and pension to its serving and retired employees, respectively.

"On more than one occasion, the government had to take loans from the State Bank against its ways-and-means facility to pay monthly salary and pension after its own kitty ran short of required funds," conceded an official on request of anonymity.