PESHAWAR: The Khyber Pakhtunkhwa finance department’s initial projections have reduced the size of the next provincial budget by seven per cent compared with the current fiscal’s.

However, the projections shown in the Budget Strategy Paper–I prepared by the department say the current budget’s size went up due to the large size of foreign loans for the Peshawar Bus Rapid Transit project and the government’s over-pitched revenue and borrowings in the current budget.

The BSP document approved by the cabinet recently offers the insights of the economic managers into the province’s fiscal modeling.

The province’s current budget values Rs603 billion wherein Rs208 billion has been earmarked for the annual development programme (ADP).

However, the BSP projections for the budget 2018-19 show a downward trend for both the budget and development programme.

Budget Strategy Paper–I also cuts foreign assistance down to Rs20bn from Rs82bn

The BSP pitches the budget size for the fiscal 2018-19 at Rs563 billion and revises the ADP’s size downward to Rs128 billion.

Of this, the provincial component of the development programme has been reduced from Rs98 billion to Rs75 billion for the current year, while the district ADP has been pitched at Rs32 billion up from Rs28 billion for the current year.

The projections for foreign project assistance, which mostly involves foreign loans and grants, have been considerably revised downward to Rs20 billion compared to Rs82 billion of the current fiscal.

Also, estimates for the next two years show foreign loan component of the budget further shrinking to Rs14.92 billion.

In the current budget, KP government has secured Rs49 billion Asian Development Bank loan for the construction of the Peshawar BRT project.

The breakup of the estimated receipts shows that the province is hopeful of receiving Rs394 billion from its share of federal taxes, which is up from its current share of Rs326 billion.

1 per cent of the divisible pool, which the province’s receives to compensate for its losses in the war on terror has been projected at Rs44 billion, up from Rs39.17 billion for the current year, while province’s straight transfers have been projected at Rs29.82 billion.

The document shows that the finance department has critically reviewed the province’s revenue, which has been projected at Rs37.29 billion, down from the Rs45.21 billion target for the current year.

Apparently, this downward revision has been done while keeping in view the dismal performance of the province’s tax collectors, who have consistently missed their targets for three years in a row. The document notes that the finance department was excluding Rs8 billion revenue target under the commercialisation of government property during the next fiscal, as no realisation could be made during current year under this subject head.

The document says that the province would generate Rs21.6 billion from tax revenue and Rs15.7 billion in non-tax revenue.

The BSP projects five per cent growth in profits from hydro electricity generation due to the additional generation in the province. NHP proceeds for the next year have been projected at Rs21.8 billion, up from Rs20.7 billion for the current year.

The analysis of the current budget shows that during the first half of current fiscal (July to December), the province witnessed a shortfall of Rs55 billion against the revenue estimates. Of this, foreign loans and grants witnessed a shortage of Rs29 billion, while the general revenue receipts recorded a shortfall of Rs21 billion.

The BSP says in the first half of the year, the district development funds witnessed utilisation of one per cent of the budget estimates, while foreign-aided projects witnessed the use of only two per cent of the total of budget estimates.

Published in Dawn, January 13th, 2018