PESHAWAR, March 19: The NWFP government is likely to give the next Provincial Finance Commission (PFC) award for again an interim period of one year due to the non-finalization of the new National Finance Commission (NFC) award, according to official sources. However, Section 120-H (2) of the NWFP Local Government Ordinance (LGO), 2001, stipulates three-year term for the PFC award. But the NWFP government, in line with other provinces, has never given the award for three years on the pretext it would lead to complications if the new NFC award is finalized and announced. Therefore, it handled the district governments’ funds under interim arrangements during fiscals 2002-03, 2003-04 and 2004-05. The existing PFC award will complete its one-year term on June 30, 2005. After this date, the provincial government either would be required to extend it for one more year or announced a new award. “The next NFC award is not likely to be in place before the start of the new fiscal year, therefore, the provincial government is not likely to ignore the LGO again by taking the same old stand,” said a well-placed official of the provincial government. Though the provincial government, said the sources, had not yet made a decision regarding giving the PFC award for an interim period or for three years, the chances were that it would go for giving an interim award again.
Senior finance managers of the province, when contacted, did not appear optimistic about the new NFC award being finalized before the start of the fiscal 2005-06.
“Unless we know as to what the province would be getting under the new NFC award, how can the provincial government commit itself for next three years under a PFC award given for three years,” said an official concerned.
Giving the PFC award under the current circumstances for a full three-year term would restrict their scope.
“It would deny additional resources to the district governments, as the province might get its share upward revised under the new Federal Divisible Pool in accordance with the proposals put forth, so far, for the new NFC award,” said an official source.
While the provincial government’s functionaries say that the practice is meant to safeguard the interest of the district government, officials of the district governments said that the move had caused more harm than good.
“Had the provincial government given the first PFC award for a full term of three years, it would have near completing its term on June 30, 2005,” said an official of a district government.
District account officers, contacted by this reporter, said interim awards did not leave much room for consistency in fiscal policies devised by district governments as even minor changes brought about by the provincial finance commission, under the last award, left sharp imprint on the districts’ financial health.