The caretaker government of Khyber Pakhtunkhwa (KP) has announced it will not pay salaries ahead of Eidul Fitr due to a lack of funds. Finance Minister Himayatullah Khan disclosed that the province required Rs48 billion to pay its employees before the upcoming Eidul Fitr festival, but the government was too cash-strapped to do so. Khan added that the province’s revenue shortfall amounted to Rs90 billion, while unions of government employees opposed the salary payment in advance, fearing they would face financial difficulties next month.
Khan also complained that the province didn’t receive any payment from the federal government due to net hydel profit. According to him, the province generated six per cent of its revenue, and the center had to pay Rs62 billion hydel profit dues. Khan revealed that the International Monetary Fund had set the condition of framing rules for the imposition of general sales tax on goods and services for a loan. The companies registered in cities including Karachi and Lahore would pay taxes to the respective provinces, but the National Tax Commission agreed that the tax would be equally distributed among provinces.
In response to this, the cabinet has approved the formulation of rules for the Sales Tax on Services Act, 2022, which would help KP collect an additional Rs5 billion annually. Caretaker Chief Minister Mohammad Azam Khan has also requested Rs238 billion in “federal transfers” to KP from the centre, adding that the province had written several letters and held multiple meetings with the federal government on the matter. The chief minister hoped that Prime Minister Shehbaz Sharif would help the province claim its due payments from the centre.
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Despite the financial challenges, the caretaker government has taken several austerity measures, and needless expenses are being controlled. In the cabinet meeting, the chief minister directed authorities to finalise proposed economic measures to improve the province’s economic condition and put them to the cabinet in its next meeting for approval.
