Balochistan felt comfortable during the three-year military rule when the provincial government faced no shortage of funds as there was a constant flow of resources during all this period.

All the mega projects- the Gwadar Port, the Mirani Dam, the Kacchi Canal, the Coastal Highway, Quetta Water Supply and Sanitation Project--were initiated by the President, General Pervez Musharraf himself. The chief economist of the province says that the President pumped in more than Rs143 billions in the provincial economy.

However, Balochistan always faced shortage of funds during its various political rules and former chief ministers were found running from pillar to post for getting money to pay salary bills of its nearly 120,000 employees.

With the restoration of democracy, the provincial government found itself back to square one after its managers made unrealistic announcements without doing the necessary homework prior to the federal budget.

The provincial government was shocked when it got only Rs17 billion during the current financial year--the same amount it had received a year earlier. There was no routine 15 per cent increase. As revenue from the natural gas, Balochistan got less than half the amount paid to Sindh as 'development surcharge' and other heads.

The first thing the provincial leaders did was to invade the Prime Minister's Secretariat along with a team of Quetta-based newsmen covering the federal budget in Islamabad.

The federal finance minister then suggested a way out by obtaining a $100 million loan for Balochistan from the Asian Development Bank, and later they returned to the provincial capital overjoyed thinking that the financial crisis was over.

All this happened in the first week of the federal budget in June last. The provincial government prepared its annual development programme for the year 2003-04 on the basis of expectations of the ADB loan.

When the finance managers tried to obtain the amount, they were told by the ADB officials that their request is under process and it would take six to eight months or more to finalise the matter.

This was a shocking news for the finance managers as their whole structure of annual development programme was based on that loan. It was from that day that they started indiscriminate borrowings from the State Bank and the overdraft crossed all the legal and prescribed limits.

The provincial government was supposed to draw merely Rs800 million from the State Bank as loan or overdraft on concessional lending rates in a single fiscal year whereas it used this right indiscriminately and drew over Rs3 billion till a few weeks ago.

The reason was to meet the demand for cash flow for the government to run the day to day affairs and payment of salaries to the provincial employees. The leaders were involved in exchange of bitter words with the ministry of finance threatening to stop the salaries of the employees and continue the development plans. It was the main motivating force for the provincial government to resort to massive spending by getting overdraft from the SBP. They disregarded the warning from the SBP and the federal ministry of finance and continued drawing overdraft.

The main problem was that the provincial government misconstrued the whole financial management and with a commitment from both the federal finance minister and the ADB, they included massive programmes under the Annual Development Programme (ADP) and swelled its size to Rs8.5 billion, an unmanageable size of the ADP in recent years.

It may be pointed out here that the provincial government is involved in debt servicing at a total cost of Rs 6 billion or slightly more on yearly basis. The ADB loan raised the prospects to pay some costly loan and reduce the debt burden when Balochistan gets the $100 million soft credit from the ADB.

However, the provincial government gets some relief as a score of foreign governments and development agencies came to its rescue, financing a number of prestigious projects. The Asian Development Bank is currently financing the inter-linkage under the Road Sector Development Programme by spending more than Rs8 billions. It is meant to connect Gwadar with the rest of Mekran, Chaman, Rato Dero and other inter-linkages of road network.

Similarly, a score of friendly countries are also financing a number of development projects accelerating the pace of economic development in Balochistan.

On the other hand, the rate of utilization of development funds is mere 11 per cent. The Governor of Balochistan, Mr. Owais Ahmed Ghani, confirmed it while talking to newsmen a few weeks back. However, the Provincial Finance Minister, Syed Ehsan Shah, told Dawn that the figures were misleading. He thought that the ratio of fund utilization might be around 20 per cent.

What are the reasons for meagre utilization of funds in Balochistan? According to independent economists, the government has kept the ADP wide open for the whole year making all the time changes, adding new schemes and dropping approved ones. To this date, the ADP is not final in Balochistan, the independent economists said.

In brief, the Balochistan budget proved to be a nightmare becoming a complete disaster at the end of the year. The government has increased the debt burden, unable to solve the problem of mass unemployment or poverty.

The provincial government did provide a few hundred jobs in health and education sectors.However, the prospect for the next budget are good to compensate the shortfall in inflow of resources.

According to the projected figure, Balochistan may get around Rs 20 billion more in the next fiscal year following the announcement of the National Finance Commission Award.

There will be a substantial increase in gas development surcharge from where Balochistan would get 60 per cent and Sindh merely 40 percent, reversing the previous formula in which Sindh got more in the last budget.

There is Rs 15 billion already deposited on account of gas development surcharge. Similarly, there is expected to be a substantial increase in the share of Balochistan if the tax pool is divided in the ratio of 48:52 between the provinces and the centre.

The Provincial Finance Minister, Syed Ehsan Shah, and other financial managers of the province are making all possible efforts to get maximum resources for the province in the National Finance Commission Award.

In this connection Balochistan has presented a formula demanding that other indicators than population should also be included in the new distribution formula. It proposed that backwardness, area, poverty and revenue should also form part of the formula.

It is predicted that if the Balochistan formula is accepted then the province would get enough resources for its speedy development. However, they said that distribution of resources on only population bases would not help Balochistan to get any boost while other two small provinces would also be losers. Only Punjab will get maximum share from the federal resources.