PESHAWAR, Jan 31: The federal government has released additional funds to provinces on account of federal tax assignment in accordance with their respective share under the federal divisible pool (FDP) for the last financial year, official sources told Dawn.
The NWFP recently received a sum of about Rs1.9 billion against its last financial year's share under the FDP," said an official of the provincial government. The province, said the sources, was released the funds on the basis of its 13.82 per cent share under the total national population.
All other provinces, according to official sources, have also been released funds under the same head on the basis of their share determined under the National Finance Commission (NFC) award.
According to sources, additional funds were distributed among the federating units in accordance with the NFC formula after the federal government finalized its revenue accounts for the last financial year.
The Frontier province had initially been projected to receive Rs24.37 billion on account of federal tax assignment, Rs406 million as general sales tax (provincial) and Rs1.1 billion on account of 'additionality' of 2.5 per cent general sales tax in the 2003-04 financial year - making a total of Rs25.9 billion.
Against those projections, the NWFP received a total of Rs25.5 billion under the three heads by the end of last year, the official sources said. However, a couple of months ago, the province was released an additional sum of Rs1.9 billion by the federal government as its share from the FDP for 2003-04.
"Like the NWFP, other provinces have also been released additional funds," said a well-placed source. The disbursement of additional funds enabled the NWFP government to partially offset its current year's budgetary deficit.
"The extra funds came as a timely help," a finance manager remarked. Though the provincial government had started the current year in a comfortable position, having been released Rs5 billion by a foreign donor agency under a loan agreement, it had to avail itself of State Bank's overdraft facility after its cash balance in its major bank account went into the negative a couple of months after the start of the year.
However, the funds provided a much-needed fiscal space to the province which, according to the sources, had to look for financial resources to meet its greater expenditure requirements which jumped to a higher level because of the federal government's decision to give a 15 per cent salary raise to the public sector employees.
The province, according to the sources, relied on the SBP's overdraft facility for most part of the year's first half after it prepaid part of its expensive cash development loan to the federal government at the start of the year to reduce its liabilities.
