PTI’s KP govt tries to torpedo IMF deal

ISLAMABAD/PESHAWAR: Citing non-payment of arrears of around Rs100 billion by the federal government, the Khyber Pakhtunkhwa government has refused to implement the IMF loan precondition for the surplus budget.

This move by the KP government may wreck the IMF agreement. Finance Minister Taimur Saleem Jhagra has sent a letter to Federal Minister for Finance Miftah Ismail and hinted at forwarding a copy of the same to the IMF.

Jhagra said in a tweet he wrote the letter only to the finance minister. Jhagra said the federal government had committed to resolving major financial issues in the last meeting held on July 6, 2021.

“In return, as committed, I obtained the authorisation of the Chief Minister, for the province of Khyber Pakhtunkhwa to sign on to the MoU and did so within 24 hours. The KP government did this in the greater national interest. However, in contrast to this, in the intervening period of almost two months, we have been unable to get time to meet either with the minister or the secretary, even once, despite repeated requests,” said Jhagra.

“Let me remind you of the criticality of the issues. Perhaps most importantly, to resolve the budget allocations for ex-FATA, which, in the absence of an updated NFC Award, are decided at the discretion of the federal government. The existing funds for ex-FATA are also insufficient to meet the monthly salary expenditure of the employees.”

“Another unresolved is the issue of financing the transition to the health care programme for former FATA residents, in which the federal government unilaterally deprived six million former FATA residents of health insurance. Adequate budget should be ensured to meet the requirements of TDPs”, the letter said.

Taimur said the federal government should also commit to immediately engage and resolve other financial issues with the KP government. These include, but are not limited to, clearing outstanding liabilities to the Pakhtunkhwa Energy Development Organization (PEDO), resolving the issues of energy wheeling, resolving the issue of WACOG, and the availability of natural gas to the province in line with Article 158, financing of PESCO to develop transmission and distribution infrastructure in the province; and the commitment of the federal government to not delay execution of provincially funded PESCO and TESCO projects, and not substituting the Federal Excise Duty with the Petroleum levy without provincial consent, as this amounts to unilaterally reducing the size of provincial transfers from the total quantum of federal collections.

“We estimate that the overall impact of not resolving these issues is actually to create a Rs100 billion unfunded liability in the KP budget. Now, to make the situation even more challenging, the monsoonal flooding that we are currently facing, as we speak has wreaked destruction in Swat, DI Khan, and Tank, but that may over the next few hours and days make the damage from this year’s flooding greater than the super-floods of 2010”, he said.

Jhagra said the cost in terms of rescue, relief, rehabilitation, and building back was likely to run into tens of billions. In these conditions and without resolution the issues highlighted previously, for the province of Khyber Pakhtunkhwa to leave a surplus will be next to impossible, he concluded.

Meanwhile, PTI Senior Vice President and former information minister Fawad Chaudhry said on Thursday the Punjab and Khyber Pakhtunkhwa (KP) governments might not be part of the programme.

Talking to a news channel, Fawad said the IMF programme depended on the agreement that the provincial governments will provide the tax collected to the federal government. However, if the provincial governments were to withdraw from the agreement, the IMF deal would collapse, claimed Fawad.

It is pertinent to mention that the IMF Executive Board is likely to meet on August 29 to decide on $1.1 billion funding for Pakistan. Federal Minister of Finance and Revenue Miftah Ismail Friday claimed that the IMF Executive Board will approve the programme on August 29.