Peshawar: Khyber Pakhtunkhwa’s Finance Minister Taimur Khan Jhagra withdrew his commitment of providing provincial surplus for this fiscal year, putting International Monetary Fund’s (IMF) programme at stake.

In a letter to Finance Minister Miftah Ismail, Jhagra said that provincial government had signed a memorandum of understanding in “greater national interest.” However, KP finance minister refused to implement IMF conditions and cited several reasons for withdrawing commitment which includes a budget allocation for former Federally Administered Tribal Area, commitment to monthly net hydel profits (NHP) transfers, monsoon flooding among other things.

“We estimate that overall impact of not resolving these issues is actually to create a Rs 100 billion unfunded liability in Khyber Pakhtunkhwa budget,” stated letter. It further added that monsoon flooding has further worsened situation of province and caused destruction in Swat, DI Khan and Tank. “Cost in terms of rescue, relief, rehabilitation and building back is likely to run into tens of billions,” it stated.

Provincial finance minister said that these conditions without resolution make it “impossible” to leave a surplus.  To commit to monthly NHP transfers based on MoU signed between federal government and Government of Khyber Pakhtunkhwa in 2016. Incidentally, this MoU was signed during previous PML-N.

For federal government to immediately revive National Finance Commission (NFC), so that these issues can be resolved more permanently.

For federal government to also commit to immediately engage and resolve other financial issues with Government of Khyber Pakhtunkhwa. These include but are not limited to; clearing outstanding liabilities to Pakhtunkwa Pakhtunkhwa Energy Development Organisation (PEDO); resolving issues of energy wheeling; resolving issue of WACOG and availability of natural gas to province in line with Article 158, financing of PESCO to develop transmission and distribution infrastructure in province and commitment of federal government to not delay execution of provincially funded PESCO and TESCO projects and not substituting Federal Excise Duty with petroleum levy without provincial consent, as this amounts to unilaterally reducing size of provincial transfers from total quantum of federal collections.

Published in The Daily National Courier, August, 27 2022

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