LAHORE - Punjab caretaker government is facing a serious crunch of cash flow mainly due to less transfer of provincial NFC share by the federal government and shortfall in tax collection at local level by the Punjab Revenue Authority.

"In view of this critical situation, it is anticipated by the Punjab Finance Department that this year, some cheques/instruments will remain unpaid, observed Caretaker Minister for Finance and Excise and Taxation Zia Haider Rizvi.

He said that Punjab formulated its budget on the basis of estimates of Rs4,013 billion to be given by the Federal government but the centre could not collect the promised amount and also withheld Punjab provincial share. Resultantly, several cheques/instruments issued by various departments or organizations of government of the Punjab could not be cleared. He said provinces heavily depend on share from the Federal Divisible Pool distributed according to the NFC formula.

The provincial budget is formulated on the basis of revenue receipts forecasted by the federal government. This estimate is officially communicated to the provinces. He said that there was a gap of Rs 136 billion provided by the centre to Punjab. Out of which only Rs44 billion have been paid in the first week of July. The remaining unpaid amount is Rs90-95 billion.

Moreover, despite government of the Punjab's advice to SBP to make payments on 30th June 2018, the SBP did not make payments on the last day of the fiscal year on the instructions of the federal government. This also resulted in non-payment of a large number of cheques. Punjab government is taking up this issue with both SBP and federal government.

In the consolidated budget statement, the federal government made an unwarranted and unrealistic entry of Rs347billion as "Estimated Provincial Surplus" without any consultation with the provinces. This was done to contain the consolidated fiscal deficit at 4.1 percent of the GDP.

While giving a briefing to the media about the poor financial position of Punjab, the provincial minister said that the caretaker government was facing the issue of payment of 71 billion rupees dues when it took reigns of the government, as the centre did not pay complete share of NFC Award nor the taxes were received according to estimates.

He said that "The major reason of it is the suspension of taxes levied on telecommunication sector in the light of Supreme Court verdict. Despite that, salaries are not stopped nor are the public welfare projects of the outgoing government have been affected. As far as the orange line project is concern, it is an initiative of the whole country and its payment will be made in this regard." He said that first priority is payment of salaries of the government officials and timely payment of claims amounting less than Rs5 billion.

The claims which are more than five million are placed at third position so that maximum number of payments could be made to the people doing work with less investment.

Following the instructions of the chief minister, the Finance Department has directed the State Bank of Pakistan to pay under this formula and the bank remained opened on June 30 as well. The issue of complete payment of Punjab's share in the NFC Award and the receiving of sales tax on telecommunication services is being raised. Similarly, issue of additional salaries by different banks like public sector companies has also been noticed.

In addition to it, payments through other banks along with Punjab Bank is under consideration and all the relevant rules and regulations will be followed in this regard.

He said that all departments were directed to collect the details of their non-paid payments by July 15 so that payments could be immediately made after the approval of supplementary grant by July 21.

Clarifying the misconception about the funds of local government, he said that funds of local governments have not been frozen but are being paid gradually.

The provincial government is pursuing the federal government to release Punjab's due share within the month of July to ensure full payment of liabilities.