BUDGET 2020-21: Rs923bn KP budget focuses on health, tax relief

Published June 20, 2020
THIS TV grab shows Taimur Saleem Jhagra presenting the budget.
THIS TV grab shows Taimur Saleem Jhagra presenting the budget.

PESHAWAR: The Khyber Pakhtunkhwa government on Friday unveiled the Rs923 billion budget for the financial year 2020-21 which focuses on improvement in the health sector and tax relief for businesses hit hard by the Covid-19 pandemic.

KP Minister for Finance Taimur Saleem Jhagra presented the budget in the provincial assembly. He told Dawn that fundamentally the biggest challenge in the wake of Covid-19 was to anchor fixed costs of the government. He said the cost of unfunded pensions was huge; Rs86bn allocation for pension in 2020-21 was one per cent back in 2005 that has now risen to 15pc.

“This is true at the Centre and in other provinces. I have put in a provision for borrowing; at this point we do not need to be shy of borrowing Rs47bn for development or social service spending,” he said.

Budget documents estimate the province’s overall expenditure at Rs923bn, which includes Rs739bn for settled districts and Rs184bn for merged districts. Revenue estimates put the federal transfers at Rs477.5bn, which includes the province’s share in the divisible pool, straight transfers and 1pc share from the divisible pool for war on terror.

Expenditure estimates for the next fiscal have been pitched at Rs923bn — Rs593b current revenue expenditure, Rs12bn current capital expenditure and Rs318bn development outlay. An amount of Rs360bn has been set aside for salary and pension and Rs88bn for current expenditures in the merged districts.

Rs318bn set aside for uplift projects, Rs124bn for health and Rs39bn for education; no increase in salary of govt employees; no new tax imposed; Rs24bn earmarked for tackling Covid-19

The documents note that the expenditure of Rs593bn was 12pc higher than last year’s budgeted figure of Rs526bn.

Despite no increase in salary of government employees for the next fiscal year, the overall pay bill will jump by 7pc due to new hiring. “Pension bill will increase by an astronomical 23 per cent,” the budget documents note, adding that it is imperative that the KP government introduces reforms to mitigate the rate of increase, failure of which will result in an unsustainable financial position.

The development outlay of Rs318bn is more than Rs100bn higher than the revised estimate of Rs220bn for the current fiscal.

He said the government’s first priority was health system. He said that besides the historic health budget, the government also earmarked Rs24bn emergency fund to tackle Covid-19. He said the government had neither imposed any new tax in the budget nor increased the rate of the existing tax to give stimulus to the economy.

He said the KP government allocated Rs124bn for the health sector, including Rs24.4bn for health-related development schemes, of which Rs13.8bn would be spent in the settled districts and Rs10.6bn in the merged districts. He said the province would also hire 30,000 healthcare workers.

An amount of Rs39bn for has been set aside for the education sector.

Jhagra said KP would become the first province to give universal health coverage to all citizens and to this effect a contract was likely to be signed in July. An allocation of Rs10bn had been made for this purpose, he added.

Published in Dawn, June 20th, 2020

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