PESHAWAR: The Khyber Pakhtunkhwa finance department on Friday withdrew the ‘additional austerity measures’ notified just three days ago.

A notification issued here said the additional austerity measures issued for 2017-18 on Sept 12 may be considered as withdrawn until ‘further orders’.

The austerity measures are part of the provincial budget and that they are approved by the provincial cabinet together with the provincial budget to save money.

Official justifies sudden move citing ‘better’ financial position as the reason

However, Tuesday’s notification was a departure from the norm as such guidelines are not usually issued after the approval of austerity steps.

The wording of the Tuesday notification hinted at the return of the province’s perennial cash starvation.

“These additional measures will be applicable till the improvement of the ways and means [section] position of the provincial government,” the notification read.

The ‘ways and means’ section of the finance department keeps tabs on the money coming into and going out of the provincial government’s coffers.

It reads that in order to streamline the management in public account and observe fiscal discipline in expenditure, the competent authority was issuing the additional austerity measures.

The notification had spelt out a complete ban on purchase of plants, machinery, vehicles, equipment and hiring for development project, further recruitments, up-gradations, restricting of posts or grant of any additional allowances.

It had also banned the maintenance of repair of government buildings except flood affected ones and also prohibiting the non-development schemes.

“Release of development budget may be restricted to the bare minimum on case to case basis,” it read, besides putting across the board 25 percent cut on the budget allocations.

It also imposed 25 per cent reduction in POL ceilings of all elected public and government functionaries besides banning use of unauthorised, un-entitled vehicles and air-conditioners.

Though the later notification did not cite reasons for the former’s withdrawal, a senior finance department official told Dawn that the measures were approved by the KP chief minister in case there was a financial crunch.

“Now, the situation of our exchequer has improved and that is why we have withdrawn it (further austerity measures notification) for the time being,” he said.

Sources told Dawn that the provincial government had been facing the shortage of cash for some weeks due to the declining federal transfers.

A source told Dawn that the provincial government’s reserves had fallen to a dangerous level towards the end of August.

He said the provincial government’s coffers had plummeted to over Rs300 million towards the August end but at the start of Sept, the federal government transferred a tranche of over Rs10 billion to the provincial kitty and thus, improving its situation.

“In near future, the Water and Power Development Authority is also likely to deposit another tranche of dues in the provincial exchequer,” he said, adding that the recent cash inflows had improved the situation to some extent.

Another source said the centre had yet to pay Rs15 billion of the NHP arrears, which was to be paid in the last fiscal.

However, another official said the province was not out of the woods yet as tranches of few billions of rupees were not going to resolve its woes.

“The province’s salary and pension bill alone comes close to Rs20 billion,” he said.

The official said the province also required Rs5 billion to foot the Swat Motorway construction bill alone.

During a recent news conference, KP finance minister Muzaffar Said parried several questions about the austerity measures and said the provincial government had released 50 percent of development funds at the start of the year.

He accused the federal government of the province’s financial woes.

The minister said the province was continually asking the centre to release its due share in funds for distribution among all departments besides doing justice to the ADP allocations. “That is the reason that we are demanding of the centre to announce ninth NFC Award and give billions of rupees worth of dues,” he said.

Published in Dawn, September 16th, 2017