PESHAWAR, Aug 20: NWFP government apprehends that the budget deficit persisting for the last several years may continue without any let-up during the next four financial years, according to official sources.

“The provincial government does not expect any let up in the situation,” said a functionary of the provincial government.

In view of the poor performance of the current NFC during its last five-year operations, the provincial government appears to be apprehensive about the future government’s chances of overcoming budget deficit through internal resources.

The province received around Rs83bn less than the amount it was projected to get jointly under the heads of direct federal transfers and net hydel profit during the five-year term of the NFC, lapsed on June 30 last.

The sources said that if the new NFC — expected in the near future — does not appear to be much different than the existing one then the NWFP should not expect any let-up in the situation.

The Medium Term Budgetary Framework (MTBF) envisages the budget deficit at over Rs5.8bn during the 2002-03 financial year, Rs6.19bn during the 2003-04 financial year, Rs6.04bn during the 2004-05 financial year. However, the budgetary deficit is expected to slide down to Rs4.2bn in the 2005-06 financial year.

The MTBF suggests that the impending budget deficit would be overcome by the World Bank loan the first tranche of Rs5.4bn has recently been released to the province.

If the future government ensures implementation of the provincial reforms programme in letter and spirit the province may also be released the other two tranches of Rs5.4bn and Rs5bn for the 2003-04 financial year and 2004-05 financial year, respectively.

The government, said the sources, hoped that by repaying some of the most expensive loans, the future NWFP government would be able to reduce the budgetary deficit by around Rs1.5bn during the 2005-06 financial year in comparison with the deficit to be recorded during the 2002-03 financial year.

The MTBF apprehends that the province may under go budgetary deficit of Rs4.2bn during the 2005-06 financial year.