KP hamstrung by low revenue inflow as cash balance drops to Rs25b

PESHAWAR: Hamstrung by low inflow of revenue, Khyber Pakhtunkhwa has been left with Rs25 billion cash balance that is hardly sufficient for its monthly current and development expenditures.

It has been observed that over the last six months of the current financial year 2018-19, the province faced a slouch in the revenue receipts from both the external and internal inlets.

As a whole the province received Rs229 billion in the first two quarters (July-December) of the current fiscal year and spent Rs203 billion during the period leaving the province with Rs25 billion balance, which the financial managers believed was not sufficient for the province to meet its financial obligations.

The provincial kitty in the corresponding period (July-December) of the previous year 2017-18 had a cash balance of Rs40 billion as its expenditure stood at Rs188.7 billion against the receipts of Rs228.7 billion during the two quarters.

The cash balance as of December 31, 2018 remained Rs14.391 billion which, according to the document of the provincial Finance Department, is due to some pendency of booking of expenditure.

The main sore points in the context of the receipts of the province remained the sluggish inflow revenue from Net Hydel Profits (NHP), its arrears and the province’s revenues from its own resources.

Its federal transfers for the first two quarters were estimated at Rs491 billion of which it received Rs195.9 billion that included Rs163 billion of the Federal Tax Assignment (FTA) against the projected Rs360.5 billion, Rs19.7 billion of war subvention against the Rs43.3 billion, Rs12.3 billion straight transfers which were estimated at Rs22.3 billion.

When it comes to the province’s own receipts, the Finance Department document reflected a bleak scenario regarding the revenue collection from its own resources. It recorded own receipts at Rs13.2 billion, while the department was expecting to receive Rs41.3 billion from its revenue resources during the current fiscal year.

It suggested that the province received Rs13.1 billion for the Foreign Projects Assistance (FPA) and only Rs0.5 billion for the Public Sector Development Programme (PSDP).

However, it could spend only Rs1.9 billion of the Rs71.1 billion FPA that comes to just 3 percent of the funds released for the component which is pitched at Rs12 billion during the last two quarters.

The current expenditure that includes salary, pension, other non-salary and capital expenditure remained Rs163 billion against the releases of Rs262 billion while it released Rs43.2 billion of the Rs79.6 billion provincial Annual Development Programme (ADP) and its expenditure during the July-December quarters remained Rs24.6 billion which comes to 31 percent of the uplift fund released during the period.

The Finance Department has encompassed releases of Rs14.1 billion of the allocated Rs29.3 billion of the district ADP. However, development expenditure of the districts stood at Rs13.1 billion during the first six months of the financial year.

The document showed that both the current and development expenditures, on the whole, remained 33 percent during the first two quarters of the current fiscal year, which, as advocated by Finance Secretary Shakeel Qadir Khan, is not anything discouraging.

“There is no problem with the federal transfers except for the NHP payment. The revenue receipts will be up to 95 percent by the end of fiscal and 5 percent is a normal slippage,” he said.

However, about the province’s own receipts, he said that these were still low, but the shortage was for the reasons and they were working on it. “The same will improve once the tax on telecoms companies was restored,” he added.

The finance secretary said that the Khyber Pakhtunkhwa Revenue Authority had geared up efforts to expand the tax net by including more innovative sectors in it.