PESHAWAR: The caretaker government of Khyber Pakhtunkhwa on Thursday decided that it won’t pay next salary ahead of Eidul Fitr due to the unavailability of funds.

Finance minister Himayatullah Khan told reporters following a cabinet meeting here that the provincial government required Rs48 billion to pay its employees before the imminent post-Ramazan Eid festival but it was too cash-strapped to do so.

“Our [KP’s revenue] shortfall totals Rs90 billion,” he said.

Mr Himayatullah said that different unions of government employees had opposed the salary payment in advance fearing that officials would face serious financial issues in the next month.

Minister claims province’s revenue shortfall totals Rs90 billion

The minister complained that the province didn’t receive a single penny from the federal government on account of net hydel profit.

He said that the province generated six per cent of its revenue by itself and that the centre had to pay Rs62 billion hydel profit dues to it.

Mr Himayatullah said that for loan, the International Monetary Fund had set the condition of framing rules for the imposition of general sales tax on goods and services.

He said that the companies registered in cities including Karachi and Lahore would pay taxes to the respective provinces, but the National Tax Commission agreed that that tax would be equally distributed to provinces.

The minister said that tax issues had been resolved for IMF loan deal.

“The cabinet has approved the formulation of rules for the Sales Tax on Services Act, 2022, which will help KP collect an additional revenue of Rs5 billion annually,” he said.

Earlier, caretaker Chief Minister Mohammad Azam Khan chaired the cabinet meeting, according a statement issued by the Chief Minister’s House.

Mr Khan said that Rs238 billion worth “federal transfers” to KP were due by the centre.

He said that the provincial government had written several letters to the federal government and even held multiple meeting on the issue.

The chief minister said that he hoped that Prime Minister Shehbaz Sharif would help the province claim its due payments from the centre.

He said that the caretaker government had taken several austerity measures in view of its financial issues, while needless expenses were also being controlled.

In the cabinet meeting, the caretaker chief minister directed authorities to finalise the proposed economic measures to improve the province’s economic condition and put them to the cabinet in its next meeting for approval.

Besides members of the caretaker cabinet, the chief secretary, additional chief secretary and administrative secretaries of the relevant departments also attended the meeting.

Published in Dawn, April 14th, 2023