KARACHI, April 30 The Sindh government would have at its disposal an accumulated amount of Rs25 billion by June next to offset the mounting burden of liabilities of the provident fund of its employees, pension fund and a social relief fund for disadvantaged and vulnerable segments of population.

An official document ‘Budget Analysis 2007-08’ informs that the Sindh government during the last six years (from 2002-03 to 2006-07) instituted and accumulated a fund of Rs12.95 billion provident fund, Rs9.76 billion social security fund and Rs2.14 billion pension fund.

All these funds were mobilised because the provident fund liability of Sindh went up from a small amount of Rs12 million in 1971-72 to Rs32.95 billion in 2006-07.

The number of employees has swelled to almost 450,000 now from less than 30,000 after Sindh emerged as a province on the map of Pakistan following dissolution of infamous ‘One Unit’ in 1970.

During the first Pakistan People’s Party government from 1972-77, the provident fund liability of the province increased by more than five times to Rs68 million mainly because of increase in the number of employees.

The provident fund liability further increased by Rs768 million during Martial Law and quasi martial law governments from 1977 to 1987.

In 1991-92, the total liability of the provident fund was more than Rs3 billion which swelled to Rs6.5 billion in 1996-97, Rs17.45 billion in 2001-02 and finally to Rs39.95 billion.

In the next one or two years, the officials in the Sindh government fear provident fund liability may touch Rs50 billion as the present elected government appears to be all set to offer 40,000 new jobs.

Not only the provident fund, but on a rough average, the government is paying 15 per cent interest a year on the accumulated liability.

Interest rate during 1971 to 1976 was only nine per cent, when the number of government employees was much less and provident fund was also a small amount.

The interest rate surged to 20 per cent a year for a decade from 1986-97 to 1995-96 and drained a big amount of resources from the budget, compelling the successive governments to go for borrowing from State Bank of Pakistan which too added to liabilities.

The interest rate was 21 per cent on accumulated provident fund during 1996-97 to 1999-2000, but came down to an average of 13 per cent during 2001-05.

Officials now report interest rate going up to 14 per cent in 07-08.

Along with provident fund, the Sindh government also carries pension liabilities of its employees.

The official document reveals the growth of Sindh government expenditure on pension by over 12 per cent during 2002-03 to 2005-06.

The pension allocation for 2007-08 shows a growth of 40.64 per cent over 06-07, from Rs5.60 billion to Rs7.88 billion in the current fiscal year.

While the provident fund is treated as a debt liability of the province, pension is not treated as such, and is not included in more than Rs126.17 billion debt portfolio of Sindh.

Officials in the Sindh government want the previous government to be given a credit for working out a long-term strategy to deal with mounting liabilities of its employees by instituting special funds.

A Sindh General Provident Investment Fund (SGPIF) was given approval in May last year, and a seed money of Rs2 billion has already been provided.

This fund will be supple-

mented annually by the net receipts of GPF contribution of government employees.

The Sindh government would continue to make annual contribution of Rs2 billion for next 10 to 15 years to meet entire GPF liabilities.

According to the strategy, the SGPIF will be invested in profitable avenues on advice of professional management.

“Let’s hope the new government will appoint a prudent management to operate the fund and benefit its employees,” a retired bureaucrat remarked.

On same lines, the Sindh government also instituted a Sindh Pension Fund in 2003 with initial seed money of Rs1.2 billion. By June next, the amount of pension fund will grow to Rs12.95 billion. A Fund Management Board has been set up, which is headed by finance minister and includes the Sindh chief secretary and other bureaucrats with one representative drawn from Institute of Chartered Accountants of Pakistan.

The government also instituted a Sindh Social Relief Fund in 2005 with a seed money of Rs3 billion. The fund would grow to Rs9.76 billion.

A high-powered committee, headed by the chief secretary, decides on investment from this fund.

“There are many things to say against the previous coalition, but it is also a fact that in a span of five years, the government paid accumulated interest of Rs7.67 billion and adjusted entire State Bank of Pakistan’s outstanding loan, prematurely retired Rs15.59 billion expensive capital development loans and also instituted about Rs25 billion new funds,” a retired bureaucrat summed up the account.

The new government has taken over with an accusation on the previous government that investment of development funds has not been transparent.