Punjab Government’s financial condition was sound during first half of financial year 2011-12. Government released development funds to the tune of Rs125 billion in the first six months of current fiscal. Out of these funds, an amount of Rs50 billion was utilised. The spokesman of Punjab government said the government did not receive any new loan from SBP during the last two years. The older loan is being repaid according to agreement signed with SBP. Further, the government has been opening each month with a surplus. January 2012 was opened with a surplus of Rs8 billion.
The spokesman said that due to structural mismatch between federal receipts (which are 80 per cent of the total receipts of the provincial government) and provincial expenditure, government of Pakistan has allowed a uniform and formula based overdraft limits to all provinces. As the Federal receipts are received in tranches, the first on the 17th of the month and the second on the last day of the month, the provinces have to seek recourse to the overdraft as major provincial expenditures viz salary and pension are payable on the first day of the month. However, this overdraft is adjusted at the time of receipt of federal tranches. He said that each month is opened with a surplus since January, 2011 i.e. for the last twelve months. The receivable amount from the federal government is between Rs25-30 billion. If these funds are received lump sum and future receipts of NFC Award from the federal government are received in time there may not even be any requirement to access the overdraft. He said federal government has borrowed an amount of Rs826.0 billion during the current financial year from SBP and commercial banks to meet its fiscal deficit. This deficit is approximately equal to four per cent of gross domestic product against the annual target of 4.6 per cent.
