RIZWAN BHATTI

KARACHI: The provincial development spending fell 7.4 percent during the first quarter (July-Sep) of fiscal year (FY18). The trend is against the persistent increase recorded during three previous years.

According to State Bank of Pakistan (SBP) in contrast to the trends in recent years, provincial current expenditures increased while development spending declined. Probably, lower receipts from federal revenue might have affected provincial development spending, it added.

SBP in its recent report has revealed that the provincial expenditures side has registered notable 17.6 percent increase in Q1FY18 compared to 6.1 percent in the corresponding period last year. This was mainly driven by 25.7 percent increase in the current expenditures. Overall provincial expenditures (current and development) surged to Rs 493 in July-Sep of FY18 compared to Rs 419 billion in same period of last fiscal year, showing an increase of Rs 77 billion.

On the other hand, during the period under review, provincial development expenditures have been declined by 7.4 percent, against persistent increase recorded during three previous years. Provincial development expenditures fell Rs 7.6 billion to Rs 95.4 billion down from Rs 103 billion. Punjab has spent Rs 65.7 billion, Sindh Rs 19.3 billion, KPK Rs 9.8 billion and Balochistan Rs 0.7 billion on account of development during the first half of this fiscal year.

Current expenditures of the provinces were recorded at Rs 397 billion in Q1FY18 up from Rs 316 billion. The province-wise analysis shows that within current expenditures, against the past pattern, provinces spent relatively more on environment protection, public order and safety affairs, recreation, culture, housing and community amenities and general public service.

Meanwhile, the provinces’ combined surplus declined some 20 percent during the first quarter of this fiscal year (FY18) mainly due to lower revenue growth and higher expenditures.

According to SBP, the provinces have posted a combined surplus of Rs 86.2 billion during the July-Sep of FY18 compared to Rs 108.5 billion in the corresponding period of last year, depicting a decline of Rs 22 billon.

This surplus in first quarter of this fiscal year was one fourth of the annual target of Rs 347.3 billion and primarily came from Balochistan followed by Punjab. Both, slower growth in provincial revenues and a surge in provincial expenditures, contributed to a lower surplus during Q1FY18, SBP reported.

The overall provincial revenue grew at a slower pace of 9.0 percent in Q1FY18 compared to 36.5 percent increase in the corresponding period of last year. This slowdown is attributed to the sluggish growth in provincial share in federal revenue and decline in federal loans and transfers, respectively.

According to SBP, provincial own revenue collection reported a significant improvement in Q1-FY18 and showing a 43.7 percent growth as compared to the previous corresponding period. The quarter-wise analysis shows General Sales Tax on Services (GSTS) and property taxes were the major revenue spinners. Basically, the 2 percent Capital Value Tax (CVT) and the 3 percent Property Registration Tax in Punjab have been merged w.e.f. July 1st, 2017 except Lahore. This has helped the property taxation to be improved in Punjab especially in Q1-FY18.

The provincial non-tax revenue, however, rebounded from the slow growth reported in the corresponding period of last year.