ISLAMABAD: The Centre’s reluctance to release the committed development and non-development funds has put PTI-led Azad Jammu and Kashmir (AJK) government in a tough situation to deal with the brewing financial crisis.

AJK Prime Minister Tanveer Ilyas on Saturday held a meeting with Finance Minister Ishaq Dar but failed to secure any assurance for the release of the budgetary funds. The funds withheld related to increases in salaries and pensions of AJK employees in the budget for the current fiscal year, releases of development grants, and a subsidy amount on wheat flour.

At the same time, AJK is still awaiting the 4G auction proceeds amounting to Rs5 billion from Pakistan Telecommunication Authority.

A well-placed source privy to the meeting told Dawn that the AJK premier apprised the finance minister of the AJK’s economic health in the wake of non-releases of the committed amount. However, Mr Dar was non-committal in the meeting, the source said.

The PMLN-led coalition government in Budget 2022-23 reduced the recurrent budget of the AJK government by Rs15bn against the committed amount of Rs74.32bn. However, the PTI government agitated against this unlawful reduction. As a result, the federal government agreed to take the burden of an increase in salary and pensions.

As per agreement with the federal government, the financial impact of an increase in salaries and pension is Rs15bn for employees of AJK. Despite several requests, the finance ministry of the federal government has yet to release this amount to AJK.

On the development grants, the finance ministry has released only Rs9.2bn in the first eight months of FY23 against the total amount of Rs28.5bn. This amount did not include the inflation factor, which would add another Rs7bn to the total Annual Development Plan for 2022-23.

The federal government has also withheld Rs4.5bn for the last quarter of FY22. The AJK has requested the finance ministry for an amount of Rs26bn for FY23 over and above the released amount to fulfil its budgetary requirements.

AJK government allocated Rs3.8bn to provide subsidised wheat flour to people in FY23. However, Pakistan Agricultural Storage & Services Corporation Limited (Passcp) has provided imported costly wheat as a result the subsidy amount was jacked up by Rs10bn.

Published in Dawn, February 26th, 2023