July 06, 2006	Thursday	Jumadi-ul-Sani 9, 1427

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PESHAWAR, July 5: The NWFP government’s mid-term budgetary framework (MTBF) has forecast that the fiscal deficit will grow significantly during the next four financial years mainly because of the progressive annual increase under the wage and pension bills.

The MTBF — roadmap for fiscal operations — projects the gap between the total revenue receipts and overall expenditure to grow consistently during the next four financial years starting from 2006-07.

Sources said that the provincial government has estimated that the total revenue receipts would grow from Rs68.6 billion in 2006-07 financial year to Rs76.2 billion in the 2007-08 financial year, Rs85.4 billion in the 2008-09 financial year and Rs95.7 billion in the 2009-10.

The government has projected the total revenue receipts, including grants, to grow at an annual rate of 11.1 per cent in the 2007-08 financial year, 12 per cent and 12.1 per cent during the next two financial years.

Federal tax assignments have been estimated to grow at an annual growth rate of 13 per cent throughout the last three financial years. Similarly, transfers from the federal government on account of provincial share under the 2.5 per cent General Sales Tax specified each year for the four federating units has also been estimated to increase at an annual growth rate of 13 per cent.

Province’s receipts, estimated at Rs5.8 billion for the 2006-07 financial year, have been projected to grow at an annual growth rate of 13.2 per cent in the 2007-08 financial year, 13.6 per cent in the 2008-09 fiscal year and 13.5 per cent in the 2009-10 financial year.

In this way, the provincial government has projected its own receipts to climb at Rs8.5 billion during the 2009-10 financial year.

Proceeds on account of net hydel profit, which makes substantial proportion of the total annual revenue receipts, have been projected at Rs6 billion against the projection of Rs8 billion reflected under the current financial year’s budget.

The government has been projecting net hydel profits proceeds at Rs8 billion for the last three fiscal years in its attempts to make Water and Power Development Authority (Wapda) to raise the annual capped share amount of the province by Rs2 billion.

Official sources said that the provincial government has not made the same claim in its MTBF, because realistic fiscal projections (on the revenue receipts and expenditure) have to be made to plan the fiscal discourse on rational grounds.

Provincial revenue receipts have been projected to get significant support from progressive increase on account of subvention/special grants to be provided by the federal government to help federating units offset under development in their less developed areas.

Subvention has been estimated to increase from Rs9.7 billion in the 2006-07 financial year to Rs10.98 billion in the 2007-08 fiscal year, Rs12.4 billion in the 2008-09 financial year and Rs 14 billion in the 2009-10 financial year.

EXPENDITURE: Against the total annual revenue receipts which have been estimated to grow between 11.1 per cent and 12.1 per cent during the next four financial years, the annual expenditure has been projected to grow at a faster pace.

It would render the province to experience substantial increase in its fiscal deficit every year. MTBF forecasts total expenditure of the province to grow from Rs71.4 billion in the 2006-07 financial year to Rs79.5 billion in the 2007-08 financial year, Rs89.5 billion in the 2008-09 financial year and Rs101.5 billion in the 2009-10 financial year.

It would leave the province to experience fiscal deficit of Rs2.79 billion in the 2006-07 financial year, Rs3.3 billion in the 2007-08 financial year, Rs4.1 billion in the 2008-09 financial year and Rs5.7 billion in the 2009-10 financial year.

Though the growth of fiscal deficit has much to do with increase in salary bill, projected increase in development outlay would also play a significant role in enlarging the gap between annual revenue receipts and total expenditure.

Wage bill of the province has been projected to increase from Rs30.1 billion in the 2006-07 financial year to Rs35 billion in the 2007-08 financial year, Rs 39.6 billion in the 2008-09 financial year and Rs44.7 billion in the 2009-10 financial year.

The overall current expenditure (non-developmental expenditure) has been projected to grow from Rs51.5 billion in the 2006-07 financial year to Rs56.7 billion in the 2007-08 financial year, Rs63 billion in the 2008-09 financial year and Rs70.1 billion in the 2009-10 financial year.

Development expenditure has been projected to grow from Rs19.9 billion in the 2006-08 financial year to Rs22.78 billion in the 2007-08 financial year, Rs26.4 billion in the 2008-09 financial year and Rs31.4 billion in the 2009-10 financial year.