PESHAWAR, June 19: The NWFP government on Sunday presented its budget for the 2005-06 financial year, projecting its total revenue and capital receipts at about Rs63 billion and showing a net deficit of Rs2.3 billion between its total income and expenditures.
According to APP, the Rs86.507 billion budget has no new taxes.
The projected receipts include Rs58.4 billion revenue receipts and Rs5.23 billion capital receipts.
The claim about capital receipts is based on the possibility of the provincial government getting the third tranche of the World Bank’s structural adjustment credit (SAC-III).
Presenting the budget in the NWFP Assembly, Minister for Finance, Planning and Development Sirajul Haq claimed that on revenue accounts, there would be a Rs7.3 billion surplus.
Though the government has projected the net deficit at Rs2.3 billion, the gap between expenditures and receipts would be wider as certain important expenditures, like debt servicing and wheat subsidy, have not been calculated.
More than 95 per cent of the revenue receipts would come from the federal government and the Water and Power Development Authority as the provincial government has projected its own revenue at Rs4.47 billion.
An amount of Rs34.9 billion would come from the federal divisible pool of which Rs1.7 billion would go directly to district governments as the district support fund (DSF).
In addition to Rs5 billion projected on account of subvention, which the NWFP receives to offset its under-development in accordance with the existing National Finance Commission award, the provincial government expects Rs5 billion from the federal government as special grant.
The grant would help the provincial government to partly meet its growing requirements on account of salary and pension. It expects an increase of Rs6.5 billion on account of salary and pension because of the federal government’s decision to give a pay raise to public sector employees.
Like in the previous financial year, the provincial government has estimated its receipts on account of net hydel profit at Rs8 billion although it has not been assured either by the federal government or Wapda that it would get more than Rs6 billion during the next financial year. This would result in a shortfall of Rs2 billion under this head.
An amount of Rs979 million would be provided to the province on account of straight transfers which included royalty on crude gas and oil and gas development surcharge, excise duty on natural gas and general sales tax (provincial).
The province would accrue a deficit of Rs4.5 billion because of the gap between its expected capital receipts and capital expenditure against food and non-food accounts.
It expects to raise total receipts of about Rs10 billion against the two accounts, whereas it expenditure would settle at about Rs14.5 billion.
Similarly, the province would suffer a shortfall of Rs1.2 billion as it expects to raise Rs2.5 billion on account of current capital receipts classified as ‘others’, whereas its expenditure has been estimated at Rs3.7 billion.
Out of the Rs5.2 billion capital receipts coming from the World Bank, the province has decided to prematurely retire Rs2.1 billion expensive cash development loans payable to the federal government.
In all, the government intends to prematurely retire expensive loans to the tune of Rs3.24 billion during the 2005-06 financial year.
Apart from diverting Rs2.1 billion from the SAC-III funding, the government intends to borrow Rs1.14 billion from different sources for prematurely retiring the expensive debt for which it has developed a strategy which envisages prepayment of expensive loans of Rs15 billion over the next six financial years.
However, this would largely depend on the federal government as it has been discouraging the provinces to prematurely retire their expensive loans.
Though in its ‘budget summary’ the government has allocated Rs3.6 billion for making payments against its domestic and foreign loans, according to its white paper, it would retire Rs1.46 billion principal loans and Rs7.8 billion interests for which the federal government has already intimated its schedule to the province for the new financial year.
According to the current expenditure estimates, the major chunk of the provincial resources would go to the salary and pension bill which would consume over 50 per cent of the revenue receipts.
The tax-cut announced under the provincial government’s recently announced agriculture policy, poverty tax exemption for owners of small houses in urban areas have been given a formal cover under the NWFP finance bill 2005-06.
Services provided by marriage halls were exempted from payment of sales tax (provincial). Similarly, beauty parlours, beauty clinics, slimming clinics, laundries and dry cleaners have also been excluded from the net of sales tax (provincial).
PESHAWAR, June 19: The NWFP government on Sunday presented its budget for the 2005-06 financial year, projecting its total revenue and capital receipts at about Rs63 billion and showing a net deficit of Rs2.3 billion between its total income and expenditures.
