Pakistan: Khyber Pakhtunkhwa caretaker govt reaches edge of default amid financial crisis

Islamabad [Pakistan], April 14 : The Khyber Pakhtunkhwa's caretaker government in Pakistan has been facing a severe financial crisis and has reached the edge of default, The News International reported. Khyber Pakhtunkhwa's government is facing a deficit of Pakist Rupees (PKR) 110 billion in the current month with regards to salaries, pensions, development budget and non-salary budget.

Currently, Khyber Pakhtunkhwa has only PKR 13 billion in its provincial kitty. The Finance Department has refused to give salary and pension for the month of April in advance on account of Eid to government employees, as per the news report. An emergency meeting of Khyber Pakhtunkhwa's caretaker government was called to discuss advance payment of salaries and pensions to government employees on account of Eid.

The released 50 per cent which is about PKR 35 billion of the ADP has been partially de-punched due to the non-availability of funds. Furthermore, payments of the flour subsidy amounting to PKR 20 billion and provision of a monthly non-salary budget of PKR 9.6 billion per month for the essential services are also due, The News International reported.

Pakistan's federal government owes PKR 238 billion to the Khyber Pakhtunkhwa government. Finance Secretary Muhammad Ayaz said that the Khyber Pakhtunkhwa government has been receiving regular payments under the NFC. However, Ayaz further said that the arrears accumulated so far and double salaries this month cannot be paid.

"We are finding it difficult to pay salaries, today we have requested a provincial cabinet meeting just for this one agenda point to decide whether we should pay the salaries before Eid or on the 1st of next month," Muhammad Ayaz told The News International.

Muhammad Ayaz has also sent a note to the chief secretary saying that the finance department be permitted to pay the salary and pension for the month of April 2023 on the first working day of the subsequent month, not before Eid, as per the news report.

The note said the salary and pension are required to be paid in advance to the government employees and pensioners five days prior to the festival in light of provisions of Note of Rule 217 of Federal Treasury Rules (Vol.1) provides that if a religious festival like Eidul Fitr, Eidul Azha, falls within the last 10 days of a month.

The provincial exchequer has been facing stress for the past year which is reflected by the fact that 50 per cent released amount of the ADP has been partially de-punched due to the non-availability of funds, as per the news report.

The secretary said that considering payment of advance salary and pension during April will push the Khyber Pakhtunkhwa government towards default even if flour subsidy and non-salary payments are delayed. As per the news report, the finance department of the provincial government is not in a position to pay advance salary and pension.

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