July 16, 2006	Sunday	Jumadi-ul-Sani 19, 1427

PESHAWAR, July 15: The NWFP government is over-optimistic about achieving higher Provincial Gross Domestic Product (PGDP) growth rate during the next four financial years, according to official sources.

The province in its fiscal management roadmap for next four years has anticipated the PGDP to grow at an annual rate of 12.8pc in the FY07 and 13.2pc in the FY08. And after touching 13.6pc in the FY09, the PGDP has been estimated to grow at 13.5pc in the FY2010.

The total size of the PGDP, that has been estimated to be Rs775bn in the current fiscal year, would rise to Rs877bn in the FY08 and to Rs996bn in the FY09, whereas, the PGDP in FY2010 would be around Rs1130bn.

In the absence of a proper mechanism to gauge and analyse the PGDP, according to official circles, the NWFP government has developed PGDP growth scenario by applying the situation analysis available from the national GDP drawn out every year by the federal government.

The NWFP’s GDP constitutes 10pc of the national GDP, said an official source, so on the basis of the national GDP growth rate targets the provincial government had drawn out a picture to determine PGDP for the next four financial years.

Though the PGDP situation analysis developed by the provincial government sets explicit goals to achieve higher Provincial Own Receipts (POR), lowering current expenditure, maintaining salary bill at a specific level through effective fiscal management, it appears to be silent about various important aspects pertaining to private sector.

"It does not provide an insight about the performance of different economic sectors including industries, agriculture, etc.," said an economic expert while commenting on the anticipated PGDP growth rates.Similarly, said the expert, it was also not clear that how much high growth rates would help in alleviating poverty and creating job opportunities during the next four years.

Provincial finance managers, when contacted, conceded that the exercise to draw out PGDP in itself did not help to get answers to many important questions.

They, however, said that based on the performance of the past couple of years, improved economic indicators reflected that the provincial economy was heading in the right direction.

"The government has been able to maintain its annual wage bill to remain 4pc of the PGDP, the PORs have grown and interest payment has decline, which shows the economy is on right track," said a finance manager of the province.

The Medium-Term Budgetary Framework (MTBF), said the official, projected the wage bill to remain 4pc of the PGDP in the FY07, 3.99pc in the FY08, 3.97pc in the FY09 and 3.96pc in FY2010.

The provincial government has been striving hard to keep its wage bill below 4pc to fulfil a condition of its loan agreement with the World Bank.

An official said that the progress in terms of improving PORs had also remained quite satisfactory because of changes in the taxation system and the province would maintain PORs at a ratio of 0.8pc of the PGDP.

Interest payments would decrease from 0.75pc of the PGDP in the FY07, 0.65pc in the FY08, 0.60pc in the FY09 and 0.55pc in the FY2010.