PESHAWAR, May 25: Participants at a pre-budget seminar were told here on Wednesday that the NWFP government was not in a position to finance its next fiscal year’s annual development programme due to a shortage of funds. “In case the new national finance commission (NFC) award is not put in place, the province will face difficulties in budget making,” said the minister for finance, planning and development, Sirajul Haq, who chaired the pre-budget seminar organised by the Essential Institutional Reforms Operationalization Programme (Eirop).

“Still we aren’t saying that the province will not prepare next year’s budget. We will face a lot of problems if the new award is not put in place and the provinces’ share is not considerably increased,” said the minister.

The seminar was arranged with the aim of eliciting proposals from industrialists, representatives of the business community and media, public representatives and private sector economists on the next financial year’s budget and ADP.

Secretary finance department, NWFP, Zia-ur-Rehman and secretary planning and development department, NWFP, Manzoor Hussain Shah made presentations on the provincial government’s financial health and development programme, respectively.

The secretary finance said that the province experienced difficulties in implementing its current financial year’s budget because of a budgetary deficit of Rs7 billion to Rs8 billion. He said that the province was likely to get Rs6 billion in net hydel profit, instead of the projected figure of Rs8 billion, allowing it to accrue a net shortfall of Rs2 billion under one head only.

Similarly, he added, the province would get Rs5.2 billion as a third loan installment from the World Bank during the next financial year in place of the current fiscal year, leaving it with a shortfall of another Rs5.2 billion under its receipts estimated for the current financial year.

Besides, the province would get over Rs500 million less than the projected amount on account of its share from the subvention pool - created exclusively for the NWFP and Balochistan to provide them with extra resources to offset under-development.

The federal government, he added, had projected to give Rs4.5 billion to the province on account of subvention during the current financial year but the figure was not likely to exceed Rs3.89 billion.

“The province would not be in a position to arrange funds to finance the local component of its annual development programme (ADP) for the 2005-06 financial year if the net hydel profit share is not increased and disbursements from the federal divisible pool (FDP) continue to be made in accordance with the current NFC award,” said Mr Rehman.

Earlier, Manzoor Hussain Shah briefed the participants of the seminar about the achievements made by the provincial government against its current financial year’s ADP and the priorities set forth for the next fiscal year’s development programme.

He said the volume of the next financial year’s ADP would be 20 per cent higher than the current fiscal year’s ADP under which, he claimed, some 445 ongoing development schemes would stand completed by the end of the current financial year.

The government, he added, had made a policy for the next financial year to allocate 70 per cent of the development funds to ongoing development schemes, 20 per cent to foreign-funded development projects as counterpart funding and 10 per cent to new schemes.

The pre-budget seminar was seen as unique in the fiscal history of the province, including for the first time representatives from divergent segments of society that had never been consulted before about the provincial budget.