PESHAWAR, Dec 28: The provincial government has failed to make any investment in the GP (general provident) fund during the first six months of the current financial year due to shortage of funds.
The government is required to divert a certain amount from its funds to different types of funds the province has been maintaining for quite some time, particularly, the GP fund of its around 280,000 employees.
Although, the first six months of the current financial year are about to come to an end, the government has not been able to make any investment in the GP fund simply because of its inability to spare funds for the purpose.
“At least, at this moment it is not possible for the government to divert funds as it is passing through dire straits,” said a senior government official.
The official was optimistic that the government might be able to make some investment in the GP fund by the end of the current financial year when its financial position was expected to show some signs of improvement.
He said the provincial government should have invested Rs7 billion in the GP fund by now.
“Whenever the provincial government’s cash balance in the account number one goes into negative and it needs funds to meet necessary expenditures, borrowing from the GP fund has always been the first choice,” said another officer.
According to an official document, the provincial government’s liabilities towards the GP fund stood at around Rs7.5 billion by the close of the 2001-02 financial year.
It was in 1991-92 when the then government had decided to set up a separate fund titled “NWFP GP Investment Fund Board” with an aim to invest certain fund in it against the amount the government was supposed to pay under the GP fund account.
By the end of the last financial year, the government had transferred a total of Rs1.85 billion since the NWFP GP Investment Fund Board was established in early 1991-92.
The amount has risen to over Rs4.6 billion because of a total interest earning of Rs2.8 billion during this period.
Some official sources said that the resource crunch experienced recently by the province compelled it to borrow funds from the GP Investment Fund Board.
However, senior functionaries of the provincial finance department, when contacted, rejected the impression and termed it incorrect.
According to the official documents, the provincial government was supposed to pay over Rs1.13 billion on account of interest — for the financial year of 2002-03 — against its GP fund’s total liabilities of Rs7.5 billion as on June 30, 2002.
The government’s total liabilities under this head, according to sources, are likely to surpass the Rs10 billion mark by the end of the current financial year.
The government’s inability to make considerable investment in the GP fund had not only resulted in piling up of its liabilities for the last several years, the situation was also causing budgetary distortions and accounting complications for its staff, said a source.
Increasing strain on the provincial kitty because of piling up of GP fund liabilities was one of the reasons which compelled the government to adopt a contractual employment policy, according to an official.
“The need to establish a separate fund had been felt to avoid effects of the GP fund’s liability on the provincial government, but the same objective could not be achieved because of the fact that the government has been borrowing money, off and on, from the GP board fund to meet its obligatory expenditure requirements,” said a well-placed official.