LAHORE: When the caretaker government took charge in Punjab, it inherited serious issues related to cash flows including Rs71 billion payments.

The issue persists as a number of cheques/instruments issued by various provincial departments or organisations could not be cleared by June, according to the minister for finance, and excise & taxation.

The main reasons are share from the Federal Divisible Pool distributed according to the NFC formula and provincial budget formulated on the basis of revenue receipts forecast by the federal government. There is thus a gap of Rs136 billion. Out of this, Rs44bn have been paid in the first week of July. And now the remaining unpaid amount is Rs90.95 billion.

“Moreover, despite government’s advice to the SBP to make payments on June 30, the SBP did not allow payments on the last day of the fiscal year. This also resulted in non-payment of a large number of cheques. In the consolidated budget statement, the Federal Government made an unwarranted and unrealistic entry of Rs347 billion as ‘Estimated Provincial Surplus’ without any consultation with the provinces. This was done to contain the consolidated fiscal deficit at 4.1% of the GDP,” Minister Syed Zia Haider Rizvi claimed while giving a briefing to media on the province’s financial position here on Thursday.

He said suspension of taxes levied on telecommunication sector in the light of the Supreme Court’s verdict was another factor that caused such issues. Despite all this, the caretakers neither stopped release of salaries nor squeezed work on the ongoing public welfare projects initiated by the outgoing government.

The Orange Line project is an initiative of the whole country and its payment will be made accordingly.

“At present our first priority is the payment of salaries to the government officials and timely payment of claims amounting less than Rs5 billion. The claims over Rs5 million have been placed at third priority so that maximum number of payments could be made to the people doing work with less investment. Therefore, Finance Department, after being asked by Chief Minister Syed Hasan Askari had requested the State Bank of Pakistan to ensure such payments,” the minister explained.

The finance minister told the journalists that the government was taking up the issue of entire payment of Punjab’s share in the NFC Award and receiving of sales tax on telecommunication services. Similarly, the issue of additional salaries by different banks like public-sector companies has also been noticed. In addition to it, payments through other banks along with Punjab Bank is under consideration and all the relevant rules and regulations will be followed in this regard.

“We have also been advised by the CM to ensure earliest release of payments against cheques issued by public sector and autonomous bodies. For this purpose, all the departments have been directed to collect details of their non-paid payments by July 15 so that payments could be immediately made after the approval of supplementary grant by July 21,” he maintained.

Replying to a question, Mr Rizvi said there was a difference of Rs136 billion in payments made by the PML-N led federal government to Punjab. A sum of Rs44 billion had been paid in the first week of July while the remaining amount of Rs90 billion to 95 billion is still pending.

Clarifying a misconception about the release of funds to the local governments, he said the funds for them were not frozen, but being paid gradually. “The caretaker government can neither release any loan nor make recruitments as it can only propose a regulatory system which will also be shared with the media,” he said.

Published in Dawn, July 06th, 2018