PESHAWAR, Dec 9: The provincial government is likely to cut down its development expenditure and spending on account of repair and maintenance in view of the financial implications owing to the 15 per cent salary raise, official sources said.
NWFP’s annual salary bill is most likely to experience an increase of around Rs2.5 billion rising from the last financial year’s level of over Rs17.5 billion due to the 15 per cent pay raise effected from July 1, 2003, in line with a decision of the federal government.
“The provincial expenditure experienced an alarming increase only under one head without getting resource base expanded,” said an official source.
The situation, said the official, had become extremely difficult for the provincial government which received more than 90 per cent of its total annual revenue receipts jointly from the federal government and the Water and Power Development Authority (Wapda).
The NWFP government has more than 272,000 employees. The annual salary bill accounts for around 50 per cent of the total annual revenue receipts.
Official sources said that the federal government’s decision of effecting 15 per cent pay raise dearly cost the cash strapped provincial government.
The province, added a finance manager, did not have enough fiscal space to finance the increase from its own resources. “It would either need to borrow funds from the open market or cut down its development expenditure,” said a well placed official.
The matter, maintained the sources, had also been taken up with the federal government at appropriate level to seek its help.
“But it is not likely to yield desired results as the provincial government would have to do something on its own.”
The situation, according to an other official source, has negatively affected the provincial government’s expenditure under the head of repair and maintenance and the maintenance of roads and provincial highways appeared to be the ultimate casualties of the decision. “From where the provincial government would arrange funds when it neither has fiscal space nor cushion to absorb the additional pressure caused by the pay raise decision,” said the finance manager, and added: “The ultimate choice is to divert funds from one head to the other.”
Salary, said the sources, formed the provincial government’s most essential obligation to meet at the start of every month, hence, the government could only manage the situation by diverting funds from a head which rested low on the priority list.
“Whenever it comes to arrange funds from within the available resources to meet any obligatory expenditure, the repair and maintenance (roads) head happens to be the ultimate choice,” said an other officer.
Dilapidated roads and concerned provincial authorities’ inactiveness, said the sources, were the direct consequence of the cut the provincial finance managers had applied to expenditure.
Information gathered from various officers of the departments concerned revealed that the provincial government was in a difficult position. As on the one hand it had to effect the 15 per cent pay raise, whereas on the other it was required to curtail its expenditure in line with a World Bank loan conditions.
The sources said the NWFP was not the only province which experienced difficulties due to the federal government’s decision. Rather, the pay raise lend negative impact equally to all the remaining three provinces.
“The issue has recently been taken up with the federal government by representatives of all the four provinces,” said a finance manager.
None of the four provinces, said an official concerned, was in a position to easily swallow the 15 per cent pay raise owing to paucity of funds.
“This issue is set to be discussed by the National Finance Commission,” said the official.