LAHORE: Triggered by the unfold of the Covid-19 virus, Punjab’s monetary woes seem to have crossed the pink line. Struggling to pay its staff, pensioners, and an extended listing of excellent payments, the provincial authorities is begging for a lifeline. In a last-ditch try to forestall a fee default, the province is now borrowing a whopping Rs.115 billion from the federal coffers.
Based on one official on the cash-strapped provincial finance division, out of the Rs 115 billion, Punjab is prone to obtain Rs. 70 billion from the federal authorities. “The loan will allow the provincial administration to pay salaries, pension and keep the government running for some time,” mentioned the official, talking on the situation of anonymity.
A pointy discount in income assortment, coupled with different elements, has triggered a monetary disaster for probably the most populous province. If there have been any probabilities of restoration, consultants mentioned they had been blown away by the arrival of the Covid-19 well being disaster, which has introduced the nation’s financial exercise to a grinding halt.
Consultants imagine Chief Minister Usman Buzdar’s authorities was struggling to fulfill its tax assortment targets lengthy earlier than the Covid-19 disaster pressured it to close the provincial economic system. “Covid-19 may have accelerated the crisis,” mentioned one skilled.
The province has been struggling to make ends meet because of the Rs 660 billion shortfall underneath the Nationwide Finance Fee (NFC) Award. To deal with its fiscal deficit, the Buzdar administration has requested Islamabad to clear its excellent dues.
Based on officers, the centre owes Punjab Rs. 128 billion in arrears.
Because of agreements with the International Monetary Fund (IMF), the provincial administration’s arms seem like tied. The agreements the Washington D.C. based mostly lender stop an overdraft from the central financial institution, which leaves the Buzdar administration with no choice however to hunt a mortgage from the federal authorities.
Compelled to chop corners by the crippling disaster, the administration has positioned a brief maintain on all improvement funds. In consequence, greater than 900 improvement tasks are on maintain till the province makes a monetary restoration.
Financially, the province has struggled for a while. Based on one skilled, Punjab owes over Rs 900 billion to international lenders and establishments. Underneath present circumstances, the skilled mentioned, the province will be unable to ship the upcoming fiscal funds, which is due subsequent month.
Consultants imagine Covid-19 curbs have dealt a double whammy to the provincial economic system. “It has brought the economy to a standstill and also limited the tax collection,” mentioned one skilled.
Printed in The Categorical Tribune, Might 23rd, 2020.