White Paper 2021-22
White Paper 2021-22
Finance Department
White Paper
Budget FY 2021-22
White Paper is an articulate interpretation of the Annual Budget that primarily highlights the Revenues and Expenditures of the Province. It
further outlines the strategic direction, policies, and progammes of the Provincial Government. A focused overview of macroeconomic
conditions, in light of the prevalent situation, sets the context of this White Paper.
The Budget preparation for Fiscal Year 2021-22 is based on extensive review and analysis of the Provincial economy and is primarily aimed
to stimulate economic recovery of the province, along with, management of the COVID-19 pandemic. During the highly rigorous process of
budget making, Finance Department continued to implement and ensure principles of Inclusive Budgeting, to promote participatory
governance, financial transparency and increased accountability. Representatives of the civil society, academia, media, non-governmental
organizations, businesses and financial institutions were formally engaged and proposals were received regarding key interventions in socio-
economic sectors particularly Education, Health, Social Protection, Agriculture, Industry and Information Technology. These proposals have
been reflected in the Budget 2021-22. Further, allocations, based on the Provincial Government’s mission of Strengthened Economy, Equitable
Growth, Human and Infrastructure Development etc. have also been prioritized.
Focus has been directed towards enhancing fiscal space by improving Provincial Own Source Revenue, rationalizing expenditure using strict
fiscal discipline, and premeditated development across the Province. Ideas of linking levying of taxation with benefits derived by the taxpayers
have been explored. Several taxes have been rationalized to capture true potential and update the existing system, moreover, documentation
of economy and tax compliance has been incentivized to expand the tax base. Further, austerity measures and hard budget constraints have
been imposed to ensure efficient and productive utilization of scarce resources.
With an economy recovering rapidly after COVID-19 crisis, the out-going Financial Year has been enormously challenging for the entire Finance
Department team. Budget making in such a situation is a gargantuan exercise requiring teamwork followed with consistent motivation, hard
work and due diligence. I would, therefore, like to take this opportunity to appreciate the continuous and untiring efforts put in by the entire
team working on the Budget. As for the compilation of the White Paper, I would like to acknowledge the efforts of the entire team; in particular
Mujahid Sherdil (SSF-Budget & Resources), Nauman Yousef (AFS-Budget), Bilawal Abro (DS-Resource-1), Saifullah Dogar (Consultant),
Farhan Abbas and Hammad Uddin Khan (IDAP).The Finance Team relied heavily on the wise counsel of Makhdoom Hashim Jawan Bakht,
Finance Minister, throughout the effort.
Page I
TABLE OF CONTENTS
01 Page 01 02 Page 11
03 Page 27 04 Page 35
05 Page 49 06 Page 53
07 Page 65 08 Page 73
Page V
PRAL Pakistan Revenue Automation (Pvt.) Limited SNG Sub-National Governance Programme
PSDP Public Sector Development Programs SPPAP Southern Punjab Poverty Alleviation Project
PSDP Punjab Skills Development Project S&GAD Services & General Administration Department
PSIC Punjab Small Industries Corporation TEVTA Technical Education and Vocational Training
PSPA Punjab Social Protection Authority Authority
PSPC Punjab Saaf Pani Company TFCs Term Finance Certificates
RIMS Restaurant Invoice Monitoring System TMAs Town Municipal Administrators
RE Revised Estimate TRU Tax Reform Unit
RLNG Regasified Liquefied Natural Gas UIPT Urban Immovable Property Tax
SBP State Bank of Pakistan UNICEF United Nations Children Fund
SBS Sector Budget Support WDD Women Development Department
SED School Education Department
SDG Sustainable Development Goals
Page VI
FINANCIAL SNAPSHOT OF THE PROVINCE FY 2021-22 Receipts / Inputs
110 million
Population
36%
Urban vs. Rural
64% Population PKR 123.4 bn
Economic Affairs
PKR 835.1 bn
General Public Service
PKR 189.7 bn
Public Order & Safety Affairs
PKR 560.0 bn
Development Expenditure
PKR 175.7 bn
Health
Programs / Outputs
Page VIII
EXECUTIVE SUMMARY
Pakistan’s economy is on the path to a strong recovery, despite the protracted COVID-19 pandemic. GDP growth for FY2021
is estimated at 3.94% with contribution from all three major sectors agriculture, industrial and services. The Government’s
prudent yet evidence based policies prioritizing macroeconomic stability, containment of COVID-19 spread and protecting the
most vulnerable segments of society, have enabled Pakistan’s v-shaped economic recovery and kept the impact of COVID-
19 in check. Timings and imposition of smart lockdowns, targeted incentives for construction sector, augmented with monetary
stimulus helped lifting up the growth in industrial and services sectors. The introduction of business responsive policies and
Pakistan’s advance in the “doing business” ranking has reinstated investor confidence leading to a significant increase in
investment.
Punjab, having a central reinforced role in the performance and development of the national economy, played a critical role in
the recovery of the national economy through contribution in all major sectors. Government of the Punjab calibrated its policies
and strategies with the COVID-19 pandemic and developed a comprehensive response to COVID-19 through the Responsive
Investment in Social Protection and Economic Stimulus (RISE) Punjab. Well-designed, targeted interventions helped in
stimulating Provincial economic recovery and restricting the COVID-19 impact to the minimum, in spite of huge resource
constraints. Extension of massive tax relief measures, worth more than PKR50 billion, aimed at businesses and sectors most
hit by COVID-19, provided support to recover economic losses for survival in critical times. Even in such tough conditions, tax
base widened, tax compliance increased and economic transaction improved due to targeted reduction of rates and tax
incentives for several service sectors. It is important to mention that Government of the Punjab has delicately balanced
provision of relief, resource generation, and disbursement for COVID-19 containment, social protection and essential
development. Substantial public investment was made in key social sectors like health, education.
Budget 2021-22 has been designed with the ambition to sustain and accelerate the current economic growth rate. The total
General Revenue Receipts of Government of the Punjab have been pitched at PKR 2,088.3 billion; including Federal Divisible
Pool transfers of PKR 1,683.7 billion and Provincial Revenues of PKR 404.6 billion. The Current Expenditure of the
Government has been pitched at PKR 1427.9 billion. During the CFY 2020-21, Government of the Punjab enforced a strict
monitoring regime on expenditure with prudent spending. Expenditure on Health sector and allied services is expected to
grow. Federal Government’s priority program of provision of low cost housing to public as well as a boost to construction
sector in general has also been kept in attention.
Development priorities and government spending for Annual Development Program, 2020-21 were guided by Punjab Growth
Strategy 2023 and Punjab Spatial Strategy 2047. Priority areas were Livelihood security through social protection schemes;
investments to fill health infrastructure gaps, ensuring food security; education and human capital development along with
support to the MSME sector. Government of the Punjab aims to accelerate the growth momentum gained during the CFY,
therefore, Annual Development Programme 2021-22 has been developed with the aim of increasing economic growth, job
creation and productivity. This explains the increase in size of the Annual Development Program to PKR 560 billion. The
guiding principles adopted for ADP 2021-22 include economic growth led investment, inclusive & balanced regional
development, transformation of agriculture sector, human development through skills development, enabling environment for
private sector resource mobilization, and targeted investments in priority projects through Economic Revival
Programme. Focus on regional equalization for the development of South Punjab will also support the development of the
backward areas of the Province. Some of the critical priorities for South Punjab include education and health, Infrastructure
linkages/connectivity, Agriculture, Industrial and Urban development.
Punjab has amplified its commitment in expanding economic cooperation with China since inception of CPEC. After catering
infrastructure, energy and connectivity, focus has now shifted towards industrial, agricultural and socio-economic cooperation.
To further strengthen CPEC development in the province, Government of the Punjab is developing CPEC Strategy for Punjab,
which is expected to be launched in the upcoming fiscal year, which will outline the roadmap to capture the maximum potential
of this partnership with China and will mainly focus on development of strategies and plans in key cooperation areas of CPEC
Long Term Plan 2030.
Page IX
Further, the Government is determined to capitalize full potential of Public Private Partnerships (PPPs) in Punjab. Enactment
of PPP Act 2019 facilitates the private sector investment along with mobilization of private finance and improved infrastructure
delivery. At the development front, for FY 2021-22, a range of PPP project proposals, are under revision, pertaining to CETPs,
Special Economic Zones, roads and transportation and real estate development.
Government of the Punjab has also made significant progress in calibrating its policies and frameworks with the Sustainable
Development Goals (SDGs) while pledging adequate resources for the implementation of the 2030 Agenda for Sustainable
Development. The targets include strengthening of data availability at the provincial/district level for supervision and decision
making, formulation of sector-specific SDGs localization plans, vulnerability assessment of South Punjab region and
development of South Punjab Regional Development Forum.
Punjab has been further striving for a strong PFM system, through reforms, to ensure most efficient use of resources. Few of
the significant initiatives undertaken in the previous years include the creation of Punjab Revenue Authority, the establishment
of Punjab Pension Fund, Debt Management Unit, Corporate Finance Unit, and the introduction of Medium-Term Budget
Framework, Citizens budget and e-payments of taxes. Consequently, a marked improvement in the own-source revenue,
fiscal responsibility, and quality of technical input for strategic and operational levels decision making, has been observed.
Further, Finance Department, in collaboration with State Bank of Pakistan and Accountant General Punjab, is also working
on the Treasury Single Account framework. It is expected to help in attaining improvement in the liquidity position of the
government, allowing the government to optimize resource utilization. It shall further enable the government to consolidate
and manage cash position, lowering debt servicing costs and reducing the fiscal deficit at the national level.
To enhance fiscal space through Own Source Revenue, the Government is undertaking several tax related reforms involving
taxes such as Electricity Duty, Urban Immovable Property Tax, Motor Vehicle Tax etc. Efforts have also been made to include
new taxes under purview of Epay Punjab. One such important initiative is E-Abyana which is expected to facilitate farmers to
pay Abyana through electronic payments, and improve quality of assessments and transparency in billing system leading to
enhanced revenue generation.
Page X
Following tables provide the key fiscal numbers for Budget 2020-21:
Budget at a Glance
(PKR Billion)
BE RE BE
CLASSIFICATION
2020-21 2020-21 2021-22
A - CURRENT BUDGET
General Revenue Receipts 1,750.0 1712.7 2088.3
Current Revenue Expenditure 1,318.3 1314.9 1,427.9
A- Net Revenue Account – Surplus (+) / Deficit (-) 431.7 397.8 660.4
B- CURRENT CAPITAL BUDGET
Current Capital Receipts (A/C-I) 111.6 73.5 79.2
Current Capital Expenditure (A/C-I) 128.4 87.2 119.8
B- Net Capital Account - Surplus (+) / Deficit (-) (16.8) (13.7) (40.6)
C- Surplus for Development (A+B) 414.9 384.1 619.8
D - ADP Resources
Foreign Assistance for Projects 47.1 30.9 65.2
E- TOTAL RESOURCES (C+D) 462.0 415.0 685.0
F - Annual Development Program 337.0 375.2 560.0
Estimated Provincial Surplus /Deficit (E-F) 125.0 39.8 125
Page XI
(PKR Billion)
BE BE
DESCRIPTION DESCRIPTION
2021-22 2021-22
A - GENERAL REVENUE RECEIPTS A - CURRENT REVENUE EXPENDITURE
General Revenue Receipts 2088.3 General Revenue Expenditure 1,427.9
Divisible Pool Transfers 1,683.7 01 - General Public Service 835.1
Provincial Tax Revenue 272.6 02 - Public Order and Safety Affairs 189.7
Provincial Non-Tax Revenue 132.0 03 - Economic Affairs 123.4
Straight Transfers (Excl. excise duty on NG) 7.4 04 - Environment Protection 0.5
Net Hydel Profit 12.5 05 - Housing and Community Amenities 11.9
Net Hydel Profit Arrears 12.5 06 - Health 175.7
Federal Grants 2.4 07 - Recreational, Culture and Religion 4.3
Provincial Own Non-Tax Revenue 97.2 08 - Education Affairs and Services 77.2
09 - Social Protection 10.1
B - CURRENT CAPITAL RECEIPTS B - CURRENT CAPITAL EXPENDITURE
CAPITAL RECEIPTS 499.5 CAPITAL EXPENDITURE 540.1
Recoveries of Loans and Advances (A/C-I) 3.1 Public Debt -
Debt (A/C-I) 51.1 Repayment of Principal 54.2
Innovative Financing including PPP mode 25.0 Investments 40.0
Recoveries of Investment-State Trading (A/C-II) 217.4 Loans and Advances (Principal) 25.6
Cash Credit Accommodation (A/C-II) 202.9 State Trading in Medical Stores 0.0
State Trading (Wheat) (A/C -II) 273.1
Repayment of Commercial Bank Loans (A/C - II) 147.2
C- DEVELOPMENT RECEIPTS C- DEVELOPMENT EXPENDITURE
Foreign Project Assistance 65.2 Annual Development Program 560.0
Core ADP 515.6
Other Development Initiatives 44.4
Total Receipts A/C-I 2232.7 Total Expenditure A/C-I 2107.7
Total Receipts A/C-II 420.3 Total Expenditure A/C-II 420.3
Provincial Surplus 125.0
Total Provincial Consolidated Fund 2,653.0 Total Provincial Consolidated Fund 2,653.0
Page XII
Chapter I – Macroeconomic Review and Outlook
A
fter showing contraction of 0.47% in FY2020 as the onset of
COVID-19 pandemic aggravated the effects of policy options
under the IMF’s stabilization program, Pakistan’s economy
GDP Growth
has made strong recovery in FY2021 despite facing the
secondary and tertiary waves of COVID-19. GDP growth for FY2021 is
estimated at 3.94%, significantly higher than the original target of 2.1%
and IMF’s forecast of 1.5%. The economic expansion has been broad-
based with all three major sectors viz., agriculture, industrial and
services, contributing to the GDP growth. Prudent economic policies
have enabled strong recovery without compromising macroeconomic FY 2020 FY 2021
-0.47%
stability and protected the most vulnerable segments of the society Pakistan’s GPD estimated
while a combination of non-pharmaceutical interventions and
vaccination drive have helped Pakistan keep the health crisis of COVID- 3.94%
19 well under control.
FY 2020 FY 2021
Revised Target Actual Debt/GDP Consolidated
79.7% Fiscal Balance
Real GDP Growth (%) -0.47 2.10 3.94
(%GDP)
Inflation (%) 10.7 6.5 8.8 Jul-May'21 -3.5%
Current
Consolidated Fiscal Primary
-8.1 -7.0 -3.5 Jul-Mar'21 A/C
Balance (%GDP) Fiscal
Primary Fiscal Balance
-1.8 -0.5 1.0 Jul-Mar'21 Balance
Balance (%GDP) (%GDP)
(%GDP)
Current A/C Balance 0.2%
-1.7 -1.6 0.2 Jul-Apr'21 1.0%
(%GDP)
Debt/GDP 87.6 87.7 79.7 Mar'21
Page 1
Chapter I – Macroeconomic Review and Outlook
Economic growth
Pakistan’s real GDP growth fell to -0.47% in FY2020, which was the second year of economic contraction in the country’s history, after FY1952.
While contractionary macroeconomic policies were already in play as part
of IMF’s stabilization program, the arrival of COVID-19 pandemic towards
Agriculture 2.8%
The Annual Plan for FY2021 envisaged GDP growth of 2.1% based on
Government’s contributions from agriculture (2.8%), industry (0.1%) and services (2.6%).
special However, prudent policies and timely interventions of the government
incentives made economic contraction short and shallow with high frequency data
started showing signs of recovery early into FY2021. While IMF had
projected Pakistan’s GDP growth rate at 1.5% for the fiscal year FY2021,
provisional estimates by the National Accounts Committee placed the
GDP growth for the year at 3.94%. Disaggregated data suggests that the
growth has been well supported by all major sectors including agriculture,
industry and services. Except for cotton, all major crops showed
significant increases with wheat production touching all-time high. The
government’s special incentives for construction sector complemented by
SBP’s monetary stimulus helped lift the growth in industrial and services
sectors albeit intermittent lockdowns continuing through the year.
National CPI averaged 8.83% during July-May’21 compared to 10.94% in the same period of the preceding fiscal year. Core inflation on the
other hand showed some softening during FY2021. Urban core inflation averaged 5.9% in Jul-May’21 versus 7.6% in the same period for the
preceding year. Likewise, rural core inflation came in at 7.6% in Jul-May’21 as against 8.7% in the same period of the preceding year.
Page 2
Chapter I – Macroeconomic Review and Outlook
Balance of Payments
Export Proceeds Current Account
The Annual Plan for FY2021 in the evolving situation of the pandemic
Surplus
envisaged export growth of 1.5% and import growth of 1.1% while current 2019-20 $0.8 Billion
account deficit at 1.6% of GDP with the underlying assumptions of
modest global recovery and subdued domestic demand. However, the
external sector performance recovered quickly as the global demand
bounced back. Pakistan’s exports increased by 6.5% in Jul-Apr’21 from
the level in Jul-Apr’20. On the other hand, instead of decreasing,
Trade Deficit
$4.7 Billion
2020-21
Pakistan’s imports also increased by 13.5% over the same period
leading to a higher trade deficit. However, the current account posted a
Pakistan Exports increased by
surplus of $0.8 billion in July-April’21, as compared to a deficit of $4.7 6.5%
billion in the corresponding period last year. This improvement is
contributed by all components except the deterioration in trade imbalance. Increase in remittances contributed 87% or $4.5 billion of this
improvement.
2019-20 2020-21
Percent Change
(Jul-Apr) (Jul-Apr)
External Sector
Remittances ($ billion) 18.8 24.2 29.0
Exports FOB ($ billion) 19.7 21.0 6.5
Imports FOB ($billion) 37.3 42.3 13.5
Current Account Balance ($ billion) -4.7 0.8
Current Account Balance
-2.1 0.3
(Percent of GDP)
FDI ($ million) 2301.3 1553.4 32.5
Portfolio Investment –Public ($ million) -234.5 2463.1
Total Foreign Investment ($ million)
1884.1 3736.4 98.3
(FDI & Portfolio Investment)
18.598 23.016
(SBP: 12.129) (SBP: 15.846)
Forex Reserves ($ billion)
(Banks: 6.469) (Banks: 7.170)
(on 20th May, 2020 (on 20th May, 2020
160.77 153.46
Exchange rate (PKR/US$)
(on 20th May 2020 (on 20th May 2020
Page 3
Chapter I – Macroeconomic Review and Outlook
Foreign Remittances Received
Country FY 2021 FY 2020
Saudi Arabia 6.4 5.32
UAE 5.08 4.68
UK 3.3 1.9
USA 2.2 1.4
Total 24.2 18.8
As these inevitable lockdowns were imposed across the country, many small and medium scale businesses shut down, workers especially
daily wage and informal laborers and those in the informal economy found themselves unemployed and supply chains faced significant
disruptions. Since a majority of Pakistan’s workforce operates in the informal sector and employs a large proportion of the population as casual
day laborers, the country overall faced adverse socio-economic impacts for this vulnerable population. Those already on the margins of poverty
were pushed further into it, as pre-existing inequalities further deepened and they faced issues such as food insecurity, lack of income/savings,
limited social safety protection, and lack of access to healthcare.
According to a survey on the Socio-economic Impacts of COVID-19 conducted by the Pakistan Bureau of Statistics in 2020, over 49% of
Pakistan's working population suffered a loss of employment and/or a decrease in income during the pandemic.1 The World Bank also affirmed
these findings. 2
1
https://www.pbs.gov.pk/sites/default/files//other/covid/Final_Report_for_Covid_Survey_0.pdf
2
https://openknowledge.worldbank.org/bitstream/handle/10986/35274/9781464817007.pdf
Page 4
Chapter I – Macroeconomic Review and Outlook
KPK
Pakistan
Affected 55%
Job Loss 29% Affected 49%
Income Loss 26% Job Loss 37%
Income Loss 12%
Punjab
Affected 48%
Job Loss 37%
Balochistan
Income Loss 10%
Affected 46% Sindh
Job Loss 39% Affected 51%
Income Loss 8% Job Loss 39% Figure 4: Percentage of population across Pakistan affected by COVID-19,
Income Loss 11% “Special Survey for Evaluating Socio-Economic Impact of COVID-19”,
Pakistan Bureau of Statistics
Almost half of the working population, mainly daily wage workers and casual workers in the informal sector, were affected due to the closure
of businesses and lockdowns. The survey also found that job losses due to the initial wave of the pandemic were primarily in the Manufacturing,
Construction, Transport and Retail industries. The loss of employment resulted in an increase in the incidence of poverty from 4.4% to 5.4%,
with upwards of two million people falling below the poverty line. An additional 40% of households suffered from moderate to severe food
insecurity.3
All these factors which were a consequence of the pandemic contributed to the aforementioned key macroeconomic indicators and Pakistan’s
negative economic growth rate in FY2020 (-0.47%). However, as said earlier, Pakistan’s economy began recovering quicker than anticipated
due to data-driven, timely and COVID-responsive policies by the government.
At the institutional and policy level, the Punjab government aligned all provincial policies, strategies and documents with the reality of the
COVID-19 pandemic. By ensuring that key provincial documents are responsive to COVID-19 and its socio-economic impacts, the government
ensured that every department effectively responds to the most critical needs. The Punjab government developed a comprehensive and holistic
response to COVID-19 through the Responsive Investment in Social Protection and Economic Stimulus (RISE) Punjab. This document
integrates seven critical pillars which provide Punjab with a realistic framework to overcome the current health, economic and social protection
challenges.
To help different industries and sectors recover from the adverse economic impacts of lockdowns and COVID restrictions, the State Bank of
Pakistan and the Government of Pakistan provided numerous economic stimulus packages, favorable loan policies, lower interest rates for
borrowing, increasing credit limits to SMEs, tax relief on food/health items, funds disbursement to Utility Store Corporations and substantial
support to all sectors through various policies. Further, relief of PKR 200 billion has been provided to Exporters, Agriculture and SME sectors,
while the SBP has also cut the policy rate to 7.5% and has given relaxation of one year in repayment of principle under various refinance
schemes. Stabilization and accommodative fiscal and monetary policies helped in mitigating the economic fallout of the COVID shock and laid
the foundation of a V-shaped recovery.
One of the key reasons for Pakistan’s economic recovery from COVID-19 has been its comprehensive and timely social protection response.
The Federal Government announced a PKR 1.2 trillion relief and stimulus package, the largest ever stimulus package, focusing on healthcare,
social protection and economic stability and stimulus. In order to provide comprehensive social protection to the most vulnerable segments of
the population, the Ehsaas Emergency Cash Program worth PKR 150 billion was launched, out of which PKR 81 billion has been disbursed to
over 6.6 million families and PKR 200 billion has been allocated to daily wage workers. According to a World Bank report on ‘global social
protection responses to Covid-19’, Pakistan ranks fourth globally in terms of the number of people covered and third globally in terms of the
percentage of population covered amongst those that covered over 100 million people. The Government has also been provided with external
financing worth USD 6.74 billion through loans and grants.
3 https://openknowledge.worldbank.org/bitstream/handle/10986/35274/9781464817007.pdf
Page 5
Chapter I – Macroeconomic Review and Outlook
Cash assistance
Ehsaas Emergency Cash Program
PKR150billionfor 6.6MillionFamilies
External financing
The Government been provided with
external financing worth USD6.74 billion
Punjab has a dominant role in the performance of the national economy. Although Punjab province, as a whole, contributes approximately
54% to the national income, 61% of the total employment in Pakistan (LFS, 2018), and houses 53% of the total population (Population Census,
2017). As per estimates, over a long run, Punjab’s economy has generally performed better than the national economy.
Due to the significance of the province, the impact of COVID-19 on Punjab’s economy is of critical importance to Pakistan. Consistent increase
in COVID-19 cases has led Government of Punjab to impose several smart lockdowns across the province to curtail the spread of COVID-19.
Frequent lockdowns have disrupted food supply chains of high- value agricultural products (vegetables, fruits, and milk) and farm inputs, but
have had relatively less impact on the wheat harvest. Punjab contributes about 57% to the value of national agricultural production and
produces more than 80% of the country’s wheat and cotton, almost two-thirds of its sugarcane, and about half of its maize; and its horticultural
output represents 67% of national production (Government of the Punjab 2018) making it inevitable for Government of the Punjab to take the
necessary steps to revive the economy.
The decline in growth was more pronounced in the industrial and services sectors as opposed to the agriculture sector. The decline in economic
activity and labor supply as well as the constraints on the movement of people impacted both manufacturing and the services sector resulting
in the significant increase in poverty. Informal sector workers were the most vulnerable and many of them have lost their jobs due to the
prevailing lockdown situation across the country.
The overall industrial production sector of Punjab reported a 6% increase in July-December 20-21 compared to the same period in the last
financial year.4
4 http://bos.gop.pk/system/files/C.I.S%20Jan%2021.pdf
Page 6
Chapter I – Macroeconomic Review and Outlook
0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% 160.00% 180.00%
The provisional numbers clearly show the upward trend in the second half of the CFY further strengthened taking the national growth in the
LSM and construction sectors to 9.29% and 8.34% respectively.
However, in addition to the introduction of PKR 1.24 trillion stimulus packages focusing on healthcare, social protection and economic stability,
the opening up of the economy has provided the much-needed relief. The unprecedented concession for the construction and SME sectors by
the government has also lessened the social and economic impact of the pandemic.
Page 7
Chapter I – Macroeconomic Review and Outlook
With the opening of the economy, private consumption has increased along with increase in inflow of remittance through formal banking
channels leading to economic revival. Machinery imports and cement sales recorded double-digit growth rates suggesting a recovery in
investment.
According to the World Bank, the industrial and services sector has shown recovery with "Large Scale Manufacturing" and business confidence
indexes exceeding pre-pandemic levels, resulting in most informal workers affected by the pandemic being able to return to work. The World
Bank estimates output growth to recover gradually over the medium-term, averaging 2.2% over FY2021-23, attributing mainly to contributions
from private consumption.
PKR 200 billion PKR 70 billion for PKR 150 billion for PKR 15 billion to PKR 100 billion for PKR 110 billion
relief to daily relief in Fuel cash transfers to support health accelerated tax relief to people in
wage workers prices low-income and food refunds to export electricity bill
families supplies industry payments
PKR 100 billion for PKR 100 billion for PKR 280 billion for PKR 25 billion for PKR 50 billion for A relief of PKR
financial support Emergency accelerated transfer to financial support 200 billion has
to support the Energy provision procurement of (NDMA) to to Utility Stores been provided
Agriculture sector Wheat purchase . to Exporters
and SMEs necessary
equipment to
deal with
pandemic.
On 25th March 2021, the World Bank approved $600 million to the Government of Pakistan to expand the Ehsaas program. 5 These funds will
support the government to gradually expand its flagship Ehsaas program, aiming to provide financial assistance to the underprivileged families
across the country
Another major initiative of Punjab Government launched by the PM is the universal health insurance through the Sehat Insaf Card, a milestone
program towards social welfare reforms; ensuring that the identified under-privileged citizens across the country get access to their entitled
medical health care in a swift and dignified manner without any financial obligations. Almost 30 million families will benefit from this program.
The Federal Government has also been given external financing to overcome the crisis of COVID-19 consisting of loans and grants from the
World Bank, IMF, Asian Development Bank, Islamic Development Bank, and countries such as China and France. The funding will be used
for emergency medical supplies, relief funds, National Disaster Risk Management Fund, Development Policy Credit, reduction in interest
payment and budgetary support. Additionally, on 24th March 2021, IMF announced an immediate purchase equivalent to about US$500 million
for Pakistan budget support under the Extended Fund Facility.
5 World Bank (2021b). World Bank Supports Expansion of the Ehsaas Social Protection Program in Pakistan to Increase Household Resilience to Economic
Shocks.
Page 8
Chapter I – Macroeconomic Review and Outlook
External Financing of USD 5,911 Million was made to Punjab through loans and grants. 6 As of 30th December 2020, the total outstanding debt
for Punjab is PKR 950.4 billion, the details of which are provided below.
China IDA
212,828 315,397
22%. 33%
IBRDA ADB
121,873 249,362
13%. 26%
Total Federal
950,462 Government
IDB 5,965
131 1%
0.01%.
France
4182 JICA
0.4% IFAD 29,451
11273 3%.
1%
Services 4.70 % Agriculture sector performance during FY2021 was impressive with
crops sector showing exceptional performance baring cotton crop.
There are bright prospects that the cotton crop will rebound in the coming year and remaining important crops will also build on the productivity
gains achieved during FY2022.
6
World Bank (2021b). World Bank Supports Expansion of the Ehsaas Social Protection Program in Pakistan to Increase Household Resilience to Economic
Shocks.
Page 9
Chapter I – Macroeconomic Review and Outlook
Industrial sector has come into positive growth zone in FY2021, after two successive years of contraction. This broad-base revival of large-
scale industries is expected to continue into FY2022. A combination of strong farm economics, construction sector boom and a likely
acceleration in exports on the back of ongoing textile sector expansion to cater to stronger global demand will help lift the growth in the industrial
sector to 6.5% in FY2020.
The services sector will likely benefit from further easing of pandemic induced restrictions as vaccination drive gains momentum. Moreover,
strong agriculture output and growth in domestic demand would enable wholesale and retail trade continue its growth momentum. The overall
services sector growth is projected at 4.7% in FY2022.
In view of the developing macroeconomic situation, Punjab government seeks to recalibrate tax policy providing tax relief to the most vulnerable
segments of the society while withdrawing some of the general exemptions given in FYs 19 and 20. The government also intends to reduce
tax expenditure as the economy has been impacted by COVID-19. Another important consideration for the government is to increase
development expenditure to provide the much-needed fiscal stimulus to the recovering economy and to improve service delivery. The
government is focusing on human capital development and social sectors. The government’s planning a sizeable investment in the education
and health sectors. One major initiative is the universal health coverage through the Sehat Insaf Card. It is also important for the government
to increase social protection schemes to ensure that the vulnerable are protected against COVID-19. The government can expand its
employment guarantee schemes to enable mass employment generation of semi to low skilled workers. It is important for the government to
provide a stimulus package to the micro small medium enterprise sector. Similarly, public works programmes can be used as effective tools
for employment generation. Efficient government expenditure on construction and public works increases investment in private sector.
Government’s efforts on PFM reforms should also be sustained so that a sound PFM system can be achieved that can help effective utilisation
of resources.
Page 10
Chapter
ChapterII –II Estimates
– EstimatesofofReceipts
Receipts
AA
nnual
nnual Budget
Budget is regarded
is regardedas as
thethe
keykey
manifestation
manifestationof of
thethe
priorities
priorities
of of
a Government.
a Government. ForFor
administrative
administrative
purposes,
purposes, however,
however, thethe
plan
plan
is isreflected
reflectedin interms
termsof ofestimates
estimatesof ofReceipts
ReceiptsandandExpenditure
Expenditureduring
duringa Fiscal
a FiscalYear.
Year.This
ThisChapter
Chapteris isaimed
aimedat atproviding
providinga a
comprehensive
comprehensive analysis
analysis
of of
thethe
Receipts
Receiptsof of
thethe
Provincial
Provincial
Government
Government in FY
in FY
2020-21
2020-21andand
projections
projections
forfor
FYFY2021-22.
2021-22.
Classification
Classification
of of
Receipts
Receipts
byby
thethe
Provincial
Provincial
Government
Government
1 1 General
GeneralRevenue
Revenue
Receipts
Receipts 22 Capital
CapitalReceipts
Receipts
The
The
following
following
diagram
diagram
provides
provides
different
different
sub-categories
sub-categories
of of
thethe
Receipts
Receipts
under
under
thethe
twotwo
main
main
categories
categories
of of
Provincial
Provincial
Receipts:
Receipts:
Provincial
Provincial
Consolidated
Consolidated
Fund
Fund
General
General
Revenue
Revenue
Receipts
Receipts Capital
Capital
Receipts
Receipts
Punjab’s
Punjab’s
Share
Sharein in
Provincial
Provincial
TaxTax Provincial
Provincial
Non-Tax
Non-Tax Current
Current
Capital
Capital Development
Development
Federal Divisible
Federal Divisible
Receipts
Receipts Receipts
Receipts Receipts
Receipts Capital Receipts
Capital Receipts
Pool
Pool
Provincial
ProvincialReceipts
Receiptsmainly
mainly
consist
consist
Federal
Federal Divisible
Divisible
Pool
Pool
transfers,
transfers,OwnOwn Source
Source
Revenue
Revenue (Provincial
(ProvincialTaxTax Receipts
ReceiptsandandNon-Tax
Non-Tax Receipts)
Receipts)
andand
loan
loan
amounts
amounts raised
raised
by by
andand
returned
returned to the
to the
Province.
Province.It isIt pertinent
is pertinent
to mention
to mention
thatthat
thethe
Divisible
DivisiblePool
Pool
transfers
transfers
perper
capita
capita
(Inflation
(Inflation
adjusted)
adjusted)
have
havedecreased
decreased overover
thethe
years,
years,
resulting
resulting in in
shrinking
shrinkingof of
resources
resources forfor
provincial
provincial
governments.
governments. ToToaddress
address this,
this,
Government
Government of of
Punjab
Punjabhashas
been
beenstrategizing
strategizing
to to
enhance
enhancethethe
Provincial
Provincial OwnOwnSource
SourceRevenue
Revenue andanddecrease
decrease
dependence
dependence ononthetheDivisible
Divisible
Pool
Pool
transfers.
transfers.
This
This
is essential
is essential
to to
ensure
ensurefinancial
financial
sustainability
sustainability
andandconsistent
consistent allocation
allocation
of of sufficient
sufficient
resources
resourcesforfor
development
development in the
in the
Province.
Province.Focus
Focus
hashasbeen
beenmainly
mainlyonon
increasing
increasingtaxtax
base
baseby by
improving
improvingtaxtax
compliance
compliance andanddocumentation
documentation of of
thethe
economy,
economy, andand
increasing
increasing overall
overallTaxTaxandand
Non
NonTaxTax
receipts
receiptsof of
thethe
Province.
Province. Further,
Further,thethe
Government
Government is is
alsoalso
engaging
engaging with
with multilateral
multilateraldevelopment
development agencies
agencies to to
raise
raise
financial
financial
loans
loans
forfor
undertaking
undertaking major
major
development
development projects.
projects.
Punjab
Punjab hashas
been
been
leading,
leading,
among
among
federating
federating
units
units
of the
of the
country,
country,in its
in its
efforts
efforts
to best
to best
deal
deal
with
with
thethe
COVID-19
COVID-19 pandemic.
pandemic. Government
Government of Punjab
of Punjab
hashasadopted
adopteda proactive
a proactive approach
approachto to
mitigate
mitigate
thethe
negative
negative
impact
impact ononbusinesses
businesses by by
extending
extendinga Tax
a TaxRelief
Relief
Package
Package worth
worth more
morethan
thanPKR50
PKR50
billion
billion
(discussed
(discussedin detail
in detail
below).
below).
Furthermore,
Furthermore,subject
subject
to the
to the
outcome
outcome of the
of the
latest
latest
COVID-19
COVID-19 wave,
wave,
it isit expected
is expected
thatthat
thethe
provincial
provincialeconomy
economy
willwill
recover
recoverfrom
fromthethe
impact
impact of of
COVID-19
COVID-19
Relief
Relief in in FYFY 2021-22.2021-22.
Relief/
Relief/economic
economic stimulus
stimulusforfor
businesses
businesses Keeping
Keeping in in
view
viewthethe
foregoing,
foregoing, thethe
Ministerial
Ministerial
Committee
Committeeof ofthethe
Social
SocialProtection
Protection
Social
SocialProtection
Protection by by
providing
providing
relief
relief
to to
thethe COVID-19
COVID-19
Cabinet
Cabinet onon
affected
affectedsegments
segments of the
of the
society
society Resource
Resource
Mobilization
Mobilization(RMC) (RMC)
adopted
adopted a a multi- multi-
Revenue
RevenueGeneration Generation dimensional
dimensional Fiscal
Fiscal
Revenue
Revenuegeneration
generationthrough
througheconomic
economicgrowth growthandand StrategyStrategy with
with
a focus
a focus
broadening
broadening
of the
of the
taxtax
base
base
rather
rather
than
than
increasing
increasing
rates
rates
Page
Page
11 11
Chapter II – Estimates of Receipts
on striking a balance between provision of relief, revenue generation and social protection.
Based on multiple rounds of Finance Department’s meetings with major Tax collecting Departments, and rigorous efforts of the RMC, a
comprehensive tax-by-tax analysis of Punjab’s Tax Relief Package and Departmental proposals for the FY2021-22 has been conducted. This
has resulted in generation of additional provincial revenue estimated at Rs. 17.4 billion, for FY-2021-22. Following are the key recommendations
finalized by the RMC:
▪ Reduced PSTS to sectors closely associated with Construction sector including Architects, Town Planners, Supply of
Machinery and Rental of Bulldozers
▪ Expansion of Reduced Rate on credit / debit card to mobile wallets & QR scanning to promote documentation of economy
▪ PSTS reduced to 5% for 10 sectors, including Fashion Designers, Dress Designing & Stitching Services, Laundries and Dry
Cleaners, Commission (to the extent of Home Chefs) and Beauty Parlors
▪ Continuation of reduced rate of Stamp Duty from 5% to 1%
▪ Removing differential of property tax rate between commercial self & rented units
▪ Rationalization of the Board of Revenue valuation table
▪ Enhancement in Existing Land Based Rates of Agriculture Income Tax
▪ Enhancement in Water Rates to ensure efficient use of canal water
The table below summarizes the estimates of total Provincial Receipts of the Government:
(PKR Billion)
Page 12
Chapter II – Estimates of Receipts
(PKR Billion)
General Revenue Receipts BE 2020-21 RE 2020-21 BE 2021-22
Federal Divisible Pool Taxes 1432.968 1354.168 1683.696
Tax on Income 587.887 513.756 626.878
Land Customs 184.043 201.503 225.971
Sales Tax 558.763 561.249 729.950
Capital Value Tax 0.887 0.146 0.164
Federal Excise 100.882 77.148 100.313
Excise Duty on Natural Gas 0.507 0.365 0.419
Provincial Tax Revenue 220.886 228.650 272.566
Board of Revenue 56.000 56.200 65.950
Excise, Taxation & Narcotics Control Department 32.364 30.500 42.766
Transport 0.675 0.600 0.700
Finance (Punjab Revenue Authority) 125.000 141.150 155.900
Energy 6.847 0.200 7.250
Provincial Non-Tax Revenue (Including Straight Transfers and Grants) 96.181 129.914 132.042
Income from Property and Enterprise 10.208 18.855 26.848
Receipts from Civil Administration and Other Functions 16.479 14.411 17.978
Miscellaneous Receipts 69.494 96.648 87.216
Total General Revenue Receipts 1,750.035 1,712.732 2,088.304
Taxes on income
Wealth Tax
CVT
Customs-duties
Page 13
Chapter II – Estimates of Receipts
Since the Divisible Pool transfers constitute a large proportion of General Revenue Receipts, even a small percentage variation between
Federal Board of Revenue’s Budgeted Estimates and Actual Collection leads to a major re-adjustment in Provincial Receipts. The following
table shows the variance between Budget Estimates and Actual Tax Collection by FBR during the last four years:
(PKR Billion)
The last tranche of the FDP is received around the 28 th of June each Financial Year. The common practice is to conduct the settlement and
reconciliation exercise for the entire FY as well as the last two to three days of June and transfer the balance amounts to the Provinces in the
form of arrears in the first quarter of the next FY.
Page 14
Chapter II – Estimates of Receipts
Punjab Revenue Authority
Provincial Tax Revenue Sources Board of Revenue
(PKR Billion)
Tax Receipts BE 2020-21 RE 2020-21 BE 2021-22
Punjab Revenue Authority 125.000 141.150 155.900
Sales Tax on Services 121.000 136.650 150.900
Punjab Infrastructure Development Cess 4.000 4.500 5.000
Board of Revenue 56.000 56.200 65.950
Agricultural Income Tax 2.500 2.500 5.250
Registration of documents 0.074 0.587 0.700
Land Revenue 20.000 15.986 20.000
Capital Value Tax 0.000 0.100 0.000
Stamp Duty 33.426 37.026 40.000
Excise, Taxation & Narcotics Control Dept. 32.364 30.500 42.766
Urban Immovable Property Tax 14.500 14.408 22.230
Tax on Professions, Trades and Callings 1.200 1.050 1.366
Receipts under Motor Vehicles 13.031 12.500 15.560
Provincial Excise 3.114 2.200 3.194
Tax on Luxury Houses 0.092 0.092 0.060
Other Indirect Taxes 0.427 0.250 0.356
Energy 6.847 0.200 7.250
Electricity Duty 6.847 0.200 7.250
Transport 0.675 0.600 0.700
Motor Vehicles fitness certificate and permit fee 0.675 0.600 0.700
Total Provincial Tax Revenue 220.886 228.650 272.566
Page 15
Chapter II – Estimates of Receipts
The above table shows that tax collection by the Punjab Government during FY 2021-22 is estimated at PKR 272.57 billion as compared to BE
2020-21 of PKR 220.89 billion. Major increase in Provincial revenue is expected from Sales Tax on Services and Urban Immoveable Property
Tax. Both taxes have high potential through expansion of tax base and effective enforcement.
Services such as Telecommunications, Banking/ Insurance, Contractual Execution etc. were expected to be the
primary revenue spinners for PRA during the financial year and have also generated the highest revenue
25%
increase over
Budget
amongst different sectors as shown below. The following table shows the Revised Estimates of collection from
Estimates of FY
major Services during the year: 2020-21
Construction services
Rs. 2.5 Billion Restaurants, etc
Rs. 3.0 Billion.
PRA has done remarkably well to maintain very high growth in revenue collection over the past years. Based on the revenue trends, PRA has
been assigned a target of PKR 155.9 billion for FY 2021-22 with an increase of 25% over Budget Estimates of FY 2020-21. Further, the
Government has reduced the PSTS for ten sectors from 16 to 5% to incentivize compliance.
Page 16
Chapter II – Estimates of Receipts
Board of Revenue (BOR)
BOR’s collection is estimated at PKR 65.95
billion for FY 2021-22. The major tax heads
under BOR’s purview are elaborated for the Board of Revenue
purpose of clarity: Responsibilities
Land Revenue:
Land revenue is a broad category and includes a number of receipts related to land revenue functions, the largest being mutation fee. This
category of Provincial Tax Receipts has a lot of potential and is expected to contribute upto PKR 16 billion to the provincial exchequer during FY
2020-21. Further, the BE for Land Revenue for FY 2021-22 is set at PKR 20 billion which is 25% higher than the RE of FY 2020-21.
PKR 16 bn
Revised Estimate 2020-21
PKR 20 bn
Budget Estimate 2021-22
Stamp Duty:
Government has reformed the system by introducing e-Stamps to facilitate taxpayers, plug leakages in this tax collection and to ensure greater
transparency in the process of transfer of property. This reform has shown a decent growth since implementation of reform initiative.
A priority area for the Federal and Provincial Governments has been the Construction Sector. In order to further boost the Sector, the
Government of Punjab has continued the reduced Stamp Duty rates, for transactions of land in Urban areas to 1% from 5%, for FY 2021-22.
Keeping in view the annual growth trajectory the Budget Estimates of Stamp Duty for FY 2021-22 have been pitched at PKR 40 billion which is
20% higher than the BE of FY 2020-21.
Page 17
Chapter
ChapterII –II Estimates
– EstimatesofofReceipts
Receipts
Motor
MotorVehicle
VehicleTaxes:
Taxes:
Excise,
Excise,
Taxation
Taxation
& Narcotics
& NarcoticsControl
Control Department
Department collects
collects
‘Tax‘Tax
onon
Registration’
Registration’
andand
‘Token
‘Token
Tax’
Tax’
onon motor
motorvehicles.
vehicles.
TheTheBEBE2020-21
2020-21
of of
MVMV
Taxes
Taxes
waswas
PKR
PKR13.031
13.031
billion.
billion.
The The
Revised
Revised Estimate
Estimate
forfor
thisthis
taxtax
hashas
been
been
pitched
pitched
at PKR
at PKR
12.500
12.500billion,
billion,
while
while
thethe
target
target
forfor
thethe
next
next
Financial
Financial
Year
Year
hashas
been
been
estimated
estimated
as as
PKRPKR15.56
15.56
billion.
billion.
Urban
UrbanImmoveable
ImmoveableProperty
PropertyTax
Tax(UIPT):
(UIPT):
TheTheUIPT
UIPTforfor
FYFY 2021-22
2021-22stands
stands
at at
PKRPKR
22.230
22.230
billion which
billion which
is 54%
is 54% higher
higher
than
than
BEBE2020-21.
2020-21. ThisThis
is ais tax
a tax
devolved
devolved to to
Municipal
Municipal
Committees,
Committees,
Municipal
Municipal
Corporations
Corporations andand
Metropolitan
Metropolitan
Corporation
Corporation under
under
Local
Local
Government
Government legislation
legislation
in Punjab.
in Punjab.However,
However,forfor
administrative
administrative
purpose,
purpose,
it isit is
being
being
collected
collectedby by
thethe
Provincial
ProvincialGovernment.
Government.The The proceeds
proceedsof of
thisthis
taxtax
areare
passed
passedononto to
thethe
respective
respective Local
Local
Governments/local
Governments/local agencies
agencies
from
from
where
wherethethe
taxtax
is collected.
is collected.
Administrative
AdministrativeRelief
ReliefProposed
Proposedfor
forFY2021-22
FY2021-22
Reg.
Reg.Fee
Feeand
andToken
TokenTax
Tax UIPT
UIPT
1. 1. Waiver
Waiver of of
penalty
penalty
onon
late
late 1. 1. Waiver
Waiverof of
surcharge
surcharge ononlate
late
payment
payment of of
motor
motor
vehicle
vehicletaxtax payment
payment of of
UIPT
UIPT
inin
1st1st
andand2nd
2nd
inin1st1st
andand2nd
2ndQuarter of of
Quarter FYFY Quarter
Quarterof of
FYFY2021-22
2021-22
2021-22
2021-22 2. 2. Collection
Collectionof of
UIPT
UIPT
inin22
2. 2. 5%5% Rebate
Rebateforfor
payment
payment installments
installments
through
through ePay
ePayPunjab
Punjab 3. 3. 5%5% rebate
rebate forfor payment
payment through
through
ePay
ePayPunjab
Punjab
Professional
ProfessionalTax
Tax
TheTheB.EB.E
forfor
FYFY
2021-22
2021-22 with
with
respect
respect
to to
Professional
Professional
TaxTax
hashas
been
been
pitched
pitched
at at
PKRPKR
1.371.37
billion against
billion against
thethe
Revised
Revised
Estimates
Estimates
forfor
FY2020-21
FY2020-21
to to
thethe
tune
tune
of of
PKRPKR
1.05
1.05
billion.
billion.
Non-Tax
Non-TaxRevenue
Revenue
Categories
Categoriesofof > > Income
Incomefrom
frompublicly
publicly
owned
ownedproperty
property and
andenterprises
enterprises
Provincial
Provincial > > Receipts
Receiptsfrom
from
Civil
Civil
Administration
Administrationandand
other
other
functions
functions
Non-Tax
Non-TaxRevenue
Revenue > > Extraordinary
Extraordinary Receipts
Receipts
> > Miscellaneous
Miscellaneous Receipts
Receipts
from
from
toll,
toll,
fees,
fees,
cess
cess
etc.
etc.
collected
collected
byby
Provincial
Provincial
Departments
Departments
(excluding
(excluding
Federal
Federal
Grants
Grants
and
and
Development
Development
Surcharges
Surcharges
and
and
Royalties)
Royalties)
Revised
Revised
Budget
Budget
Estimates
Estimates
FYFY
2020-21
2020-21
& Projected
& Projected
Budget
Budget
Estimates
Estimates
FYFY
2021-22
2021-22
are:
are:
(PKR
(PKR
Billion)
Billion)
Non-Tax
Non-Tax Revenue
Revenue BEBE 2020-21
2020-21 RERE 2020-21
2020-21 BEBE 2021-22
2021-22
Income
Income
from
from
Property
Property
and
and
Enterprises
Enterprises 10.208
10.208 18.855
18.855 26.848
26.848
Electricity
Electricity
(Net
(Net
Hydel
Hydel
Profit)
Profit) 5.000
5.000 7.500
7.500 12.500
12.500
Page
Page
18 18
Chapter II – Estimates of Receipts
Net Hydel Profit Arrears 5.000 7.500 12.500
Interest on Loans to District Govts. / TMAs 0.040 0.040 0.035
Interest on Loans to Financial Institutions - - -
Interest on Loans to Non-Financial Institutions. 0.163 2.292 0.309
Interest on Loans & Advances to Govt. Servants. - - -
Interest on Loans – Others 0.005 0.004 0.004
Dividends - 1.519 1.500
Civil Administration and other Functions 16.479 14.411 17.978
Fiscal Administration 0.815 1.200 1.205
Law and Order 6.878 5.884 7.555
Justice 0.622 0.573 0.750
Police Department 6.100 5.125 6.600
Jails including Civil Defense 0.156 0.186 0.205
Community Services 4.215 3.554 4.335
Communications & Works 3.900 3.270 4.025
Public Health 0.315 0.284 0.310
Social Services 4.036 3.307 4.292
Education 1.950 1.757 2.106
Health 2.086 1.550 2.186
Housing and Physical Planning 0.535 0.466 0.591
Miscellaneous Receipts 69.494 96.648 87.216
Agriculture 1.072 1.092 1.147
Board of Revenue 20.356 10.250 30.356
Fisheries 0.320 0.421 0.380
Forest & Wildlife 0.918 0.865 1.020
L&DD 1.026 1.115 1.270
Cooperative 0.003 0.003 0.004
Irrigation 4.201 4.300 11.317
Industries 0.347 0.380 0.412
Mines & Minerals 11.000 10.000 11.660
Home 0.952 0.899 1.087
Misc. 18.974 20.939 18.724
Federal / Foreign Grants 4.177 39.526 2.437
Straight Transfers 6.148 6.858 7.402
Total 96.181 129.914 132.042
Page 19
Chapter II – Estimates of Receipts
Income from Property & Enterprises mainly consist of profits of hydroelectricity generating units referred to as ‘Net Hydel Profits’ (NHP)
located in Punjab – in line with Article 161(2) of the Constitution of Pakistan 1973. An amount of PKR 3.7 billion was received as arrears of NHP
during FY2020-21. The running payment for FY2021-22 is forecasted at PKR 12.5 billion. Further, an amount of PKR 25 billion has been budgeted
for FY2021-22 in lieu of NHP with the following break-up:
PKR 12.5 bn
NHP Arrears Payment
PKR 12.5 bn
NHP Running Payment
PKR 25.0 bn
(Expected) (FY 2021-22 Forecasted) NHP Budget FY 2021-22
The other main source of Revenue under this category is ‘Interest on Loans’ advanced by the Government to financial and non-financial
institutions. The revenue from ‘Civil Administration & Other Functions’ can be divided into:
Receipts collected by Law The Receipts from ‘Toll on These Receipts pertain
Department from sale proceeds of Provincial Roads and Bridges’ to different social
unclaimed and escheated property, are the major sources of services like Health
court fees realised in cash, general income in this category. Levy and Education etc. The
fee, fines & forfeitures, receipt of of toll on 13 new roads has Budget Estimate for FY
official record room & recoveries of already been approved by the 2021-22 has been set
over-payments, etc. Government since FY2019- at PKR 4.292 billion
20.
Receipts collected by Home
Department include sale proceeds
of articles manufactured in jail,
fines, payments on services
rendered including supplies made
by workshop of department
Receipts collected by Police
Department on account of police
personnel deputed at the strength of
Railways, Federal Government,
public departments, fees, fines,
forfeiture, motor driving license fee,
traffic fines, e-challans, police land
receipts and recoveries of
overpayments.
For Miscellaneous Receipts, the Budgetary Estimates for FY 2021-22 have been pitched at PKR 87.22 billion. Under Article 161 of the
Constitution and the NFC Award, Straight Transfers to the Provinces include Net Proceeds of the Federal Excise Duty on Natural Gas, Net
Proceeds of Royalty on Crude Oil and Natural Gas assigned to the Provinces under the Constitution. The table below compares Straight
Transfers receipts:
Page 20
Chapter II – Estimates of Receipts
(PKR Billion)
(PKR Billion)
Programme Grants (Foreign i.e. PESP-II, NISP etc.) 4.177 3.710 2.437
(PKR Billion)
BE 2020- RE 2020- BE 2021-
Particulars
21 21 22
DFID-Punjab Education Sector Project-II - 2.137 -
DFID-Punjab Skills Development Project 2.434 0.385 -
National Immunization Support Project - 0.697 1.347
Enhancing PPPs in Pakistan (Punjab) 0.643 0.352 0.644
IFAD-Southern Punjab Poverty Alleviation Project Program - 0.081 0.244
Hydraulic Model Study USA HRS Nandipur Irrigation Research Institute - 0.003 -
JICA-Construction of Distribution Center, Rehabilitation of Old Jhal Khanuana Water Treatment
- - 0.202
Plant
Women’s Income Growth and Self Reliance Program in Punjab (WINGS) 1.100 0.055 -
Total 4.177 3.710 2.437
Page 21
Chapter II – Estimates of Receipts
For the Financial Year 2021-22, estimate of total Current Capital Receipts is pitched at PKR 499.487 billion compared to a Budget Estimate of
PKR 443.499 during FY 2020-21. The table below provides a detailed comparison of Current Capital Receipts for FY 2020-21 and FY 2021-
22 (in PKR Billion):
(PKR Billion)
BE RE BE
Receipts
2020-21 2020-21 2021-22
Loans & Advances/ Recoveries of Loans and Advances 1.280 18.525 3.049
From District Governments/TMAs/Local Bodies 0.024 0.024 0.017
From Financial Institutions 0.000 0.000 0.000
From Non-Financial Institutions 1.236 18.477 3.009
From Government Servants 0.020 0.024 0.024
From Private Sector (Taccavi Loans) 0.000 0.000 0.000
Debt 85.350 38.972 51.099
Permanent Debt-Domestic 0.000 0.000 0.000
Permanent Debt-Foreign 85.350 38.972 51.099
Account No. I Total 86.630 57.497 54.148
Recoveries of Investment-State Trading Schemes 173.913 198.571 217.434
Cash Credit Accommodation 157.956 283.450 202.905
Account No. II Total 331.869 482.021 420.339
Innovative Financing 25.000 15.989 25.000
Total Current Capital Receipts (Account No. I & II) 443.499 555.507 499.487
Account No. I - Permanent Debt: The Budget Estimates for FY 2021-22 for
Domestic and Foreign Loans borrowed the permanent debt (foreign) have been estimated at PKR 51.099 billion. The
directly or through the Federal Government Government would receive budgetary support loans from World Bank under Punjab
comprise the Permanent Debt of the Education Sector Reform Program, Punjab Skills Development Project, Punjab Jobs
Provincial Government. & Competitiveness Project, Strengthening Markets for Agriculture and Rural
Transformation (SMART), Punjab Green Development Program, Punjab Cities
Program and Punjab Resource Improvement and Digital Effectiveness (PRIDE) Program. The Revised Estimates of FY2020-21 were lesser
Page 22
Chapter II – Estimates of Receipts
than the Budget Estimates 2020-21 due to restructuring of Disbursement Linked Indicators (DLIs) of PESP-III and SMART Projects, which is
under process with the consultation of World Bank, and owing to COVID-19 pandemic and subsequent lockdown.
51.1
Strengthening
Markets for Punjab
Agriculture and Cities
Rs. Billion Program
Rural
Transformation
Punjab-Pak
National Immunization
Support Program
Page 23
Chapter II – Estimates of Receipts
Account No. II - Public Debt (Food Account): Food Account of the Province, commonly known as Account No. II, is also maintained
with the State Bank of Pakistan like Account No. I. However, the former account is meant exclusively for transactions relating to state trading
in food commodities by the Food Department.
Rs
Finances for Food Commodity purchases Wheat Grain procured directly from Receipts from sale of wheat are then
raised through ‘Cash Credit farmers by the Food Department with deposited in Account No. II, from where
Accommodation’, carried out by a Financing from Banking Consortia these are utilised to retire the Consortia
Consortium of Banks Loans
During FY2021-22, an amount of PKR 420.339 billion is estimated to be received for commodity operations compared to the amount of PKR
482.021 billion realized during FY 2020-21.
Further, at the start of FY2020-21, claims of various Provincial Departments, pending with the Federal Government came to the tune of PKR
99.58 billion (excluding NHP dues of approximately PKR 56.9 Billion). During the CFY, an amount of PKR 16.6 billion of PRA was settled and
credited to Punjab. Whereas, the current claim of PKR 84.946 billion (excluding NHP dues) is still pending (detail in table below) with the
Federal Government. These claims, which if received, will create additional fiscal space in the Development budget of the Province.
(PKR Billion)
Issues Department Amount
Payment of Mark-Up on 2.5 MMT of Federal Strategic Reserves of Wheat Claimed Food 33.796
Arrears of Devolved Vertical Programs of Health & Population Welfare Primary Health 32.28
Federal Share of Subsidy on Wheat Export Food 9.96
CDA share for Operation of RWP-ISB Metro Bus Transport 5.36
Reconciliation of Cross-Adjustments of taxes PRA 3.55
Total Total 84.946
Page 24
Chapter II – Estimates of Receipts
Primary
Arrears of Devolved Vertical Health
4
Programs of Health & Population Department
Welfare
2
CDA share for Operation of RWP- Department
ISB Metro Bus
PRA
1
Reconciliation of Cross-Adjustments of
taxes
The Provincial Government has taken up the issue with the Federal Government during various meetings. The Chief Minister of Punjab has
also requested the Prime Minister for his intervention. However, the settlement might take longer than anticipated. It is, therefore, thought
appropriate that these claims may not be budgeted as Receipts for the CFY as their reconciliation and settlement may not actualize during FY
2021-22.
Page 25
Chapter II – Estimates of Receipts
Page 26
Chapter III – Estimates of Expenditures
B
udgetary outlays for Financial Year
2021-22 have been formulated against Major Components of Government Expenditure
the backdrop of a Covid 19 pandemic
recovering economy. The FY 2020- Current Expenditure
Enables Government to maintain
2021 brought a host of fiscal challenges.
the current level of service delivery
Notwithstanding these, Government of the Punjab
adopted a strict monitoring regime on expenditure,
regular monthly reviews, with prudent spending
being the order of the day, and without
compromising on essential services delivery. Development Expenditure
Expenditure on Health sector and allied services Enhances capacity of Government
continues to grow. Public Works program for to provide services to citizens Government
employment generation is being promoted as an Expenditure
effective tool and will receive additional funds. It
also coincides with Federal priority program of
provision of low cost housing to public as well as Capital Expenditure
a boost to construction sector in general. While Consists of Loans made, Loans
essential expenditures cannot be truncated, repaid, and Contributions made to
stringent austerity measures to curtail separate funds for meeting Long-
nonessential spending is a need of the hour to Term Liabilities, such as Pensions
achieve financial balance.
Public spending is critically significant in Pakistan’s economy. Generally, Government expenditure is carried out for the purpose of public
welfare by provision of Public Goods, investment in social sectors like Health and Education, for improvement in labour productivity, provision
of subsidies where necessary, along with equitable redistribution of income. With massive resource constraints, consequent to the pandemic
COVID-19, Government of the Punjab has made efforts to ensure that spending in key areas is not compromised and the benefits of
expenditure reach all segments of society.
(PKR Billion)
CLASSIFICATION BE 2020-21 RE 2020-21 BE 2021-22
Current Revenue Expenditure 1,318.338 1,314.906 1,427.900
Social Sectors 681.798 663.150 744.403
Infrastructure Development 49.268 60.057 47.636
Production Sectors 61.180 63.806 66.703
Services Sectors 513.894 515.642 557.045
Others 12.196 12.249 12.110
Current Capital Expenditure 460.292 569.193 540.114
Repayment of Principal 55.084 48.297 54.158
Investments 43.800 11.290 39.995
Loans and Advances (Principal) 29.411 27.464 25.621
State Trading in Medical Stores 0.127 0.121 -----
State Trading (Wheat) (A/C-II) 217.211 349.264 273.122
Repayment of Commercial Bank Loans (A/C-II) 114.659 132.756 147.217
Development Expenditure 337.000 375.222 560.0
Annual Development Programme 337.000 375.222 560.0
Total Expenditure 2,115.628 2259.320 2528.013
Page 27
Chapter III – Estimates of Expenditures
Articles 120-126 of the Constitution of Islamic Republic of Pakistan, 1973 provide framework for Annual Budget Statement, Demand for Grants,
Charged and Voted Expenditure out of Provincial Consolidated Fund, procedure for Annual Budget Statement, Authentication of Schedule of
Authorized Expenditure and procedure for Supplementary Grants for excess expenditure.
After accommodating the demands of Current Revenue Expenditure and Current Capital Expenditure, the net surplus is available for financing
the Development Expenditure, which may be additionally financed through foreign aided projects. The budgetary allocations tend to strike a
balance between competing demands of Current and Development Expenditures. Without compromising on essential areas of Current and
Capital Expenditure, the Provincial Budget bids to ensure maximum surplus for Development Expenditure.
Budgetary Framework
Macro-Economic
Projections
Recurrent impact of
Current Expenditure
Development Expenditure
Development Priorities
Sectoral Allocations
Page 28
Chapter III – Estimates of Expenditures
Against the various components of expenditure, a comparison of allocations in year 2020-21 and 2021-22 is explained as follows:
1,427.9
1,318.3 1,314.9
The Current Expenditure, which is classified into five sectors, has been estimated at PKR 1,427.900 for FY 2021-22, which is (8.3%) higher
than the outgoing Financial Year’s Budget Estimates.
SOCIAL SECTOR
Page 29
Chapter III – Estimates of Expenditures
Education 0.183 0.269
Youth Affairs & Sports 0.879 0.954 1.173
Specialized Health & Medical Education 127.761 119.492 137.919
Primary & Secondary HealthCare 123.003 124.358 135.474
Health 0.0316 0.0408
Population Welfare 5.120 5.307 7.443
Social Welfare & Bait ul Maal 2.613 2.637 2.960
Women Development 0.289 0.236 0.342
Local Government & Community Development 65.087 60.365 71.092
Total 681.798 663.150 744.403
COVID-19 and its serious threat to public health was a major driver for budgetary allocations for Non-Development and Development
Expenditure in the Social sector for FY 2020-2021. Its overarching impact on all matters pertaining to public health initiatives, as well as
emergency initiatives taken to respond to the seriousness of the pandemic will be discussed in more detail in a separate chapter. However, it
is important to note that formulation of budget estimates for healthcare and allied services is centered on operational costs of special COVID
related curative centers alongside improvement of diagnostic facilities, ongoing purchase of vaccines along with running of vaccination centers.
Simultaneously, financial support for eradication of other communicable and non-communicable diseases must continue unabated. After
promulgation of Local Government Act Punjab, 2019, funds are transferred to District Health Authorities in order to empower Local
Governments to incur expenditure in accordance with the needs of local public.
Page 30
Chapter III – Estimates of Expenditures
After promulgation of Local Government Act Punjab, 2019, funds are transferred as PFC share to Metropolitan Corporation, Municipal
Corporations, Union Councils and Town Councils, in order to empower Local Governments to incur expenditure in accordance with the needs
of local public. Devolution of financial powers inculcate positive changes including ensuring equitable distribution of national resources, uplifting
marginalised communities, increasing employment opportunities and faster decision making in facilitating economic development.
Government of the Punjab is focused on creating a conducive environment for promotion of sports. Sports activities not only boost a healthy
lifestyle but help in molding well rounded personalities with sportsman spirit who go on to represent the country in various international sports
events and competitions.
INFRASTRUCTURE DEVELOPMENT
Government’s spending on construction and infrastructure vouches net increase Infrastructure Development
in physical capital assets and brings about economic gains alongside increase in
Communication &
employment opportunities. Efficient Government Expenditure in construction and
Works
public works also attracts private sector investment. Provision of affordable Rs. 15.3 billion
housing units is another target which Government of the Punjab has set for itself.
Various options were considered, after which Government of Punjab has agreed
that peri urban state land qualifies for affordable housing schemes. Government
Irrigation
covered area of 500 sft. Construction of 1000 housing units will be undertaken in
Energy
the first phase on state land identified for the purpose. An amount of Rs. 01 billion
47.6
Billion
has been released for the project in FY 2020-2021 while an amount of Rs. 02
billion has been budgeted in CFY 2021-22.
Page 31
Chapter III – Estimates of Expenditures
Province of Punjab, is
predominantly agrarian and
remains the food basket for
Production Sectors
the entire country. The
Tourism & Archaeology
Production sector is Mines & Minerals
Rs.0.628
focused on Food Security, Rs. 0.95 billion
provision of raw inputs to
Agriculture
Agri-based industry. It
Rs. 28.0 billion
provides employment to a Industries, Commerce
large segment of the & Investment
population and also Rs. 11.3 billion 66.7
generates sizable revenue Billion
through exports. In addition
to the Current Non- Forestry, Wildlife
Livestock & Dairy & Fisheries
Development Expenditure
Development Rs. 6.25 billion
in FY 2021-22; Government
Rs. 14.12 billion
of Punjab has committed Food
resources for several Rs. 5.4 billion
initiatives to strengthen the
production sector and provide support to small scale farmers particularly. An amount of PKR 1.200 billion is allocated for Crop Insurance
Program, farmers shall be provided subsidy on agricultural inputs and an amount of PKR 2.400 billion is earmarked for Interest Free Loan
Schemes for farmers. Budgetary allocations for agriculture during FY 2021-22 will contribute towards improved research and better extension
and field services for farmers. Afforestation is another area of concern in light of growing population and starkly reduced ratio of no of trees
per person; to address this issue, regular tree plantation campaigns are organized across the Punjab.
SERVICES SECTORS
Services Sectors include current expenditure on provision of services which relate to executive and Legislative organs. Punjab Government is
fully committed to improve performance of its administrative and regulatory institutions through provision of sufficient budgetary support for
operational Expenditures.
Page 32
Chapter III – Estimates of Expenditures
Excise & Taxation 1.530 3.008 2.207
Relief 1.481 0.388 1.499
Finance 299.907 283.857 319.682
Total 513.894 515.642 557.045
Budgetary estimates for Financial Year 2021-22 for Services Sector record 8.3% increase over last year’s Budget Estimates. Security, a very
prominent part of Services Sector, though highly priced is closely linked to economic activity. Effective policing not only helps reduce crime
rate but also has positive social and economic implications. A secure environment boosts economic activity while increase in crime rate has a
negative impact on trade and industry, leading to stalled economic growth. Despite financial stress, Government of Punjab is committed to
providing financial support to Home Department and Punjab Police. Government of the Punjab firmly believes that spending on judicial and
policing services will safeguard economic affairs and social sector public investments.
OTHERS
This Sector incorporates areas of governance and administration which are drivers of change and improvement. Planning & Development
Department leads the development portfolio of the Punjab. Its sector wise work distribution ensures that all departments receive due
representation in allocation of development budget. Not only this, Planning & Development through effective monitoring and evaluation ensures
proper closure of timeline driven projects and programs with completion of all deliverables on the part of the project/program.
Government of the Punjab is focused on creating a conducive environment for promotion of cultural activities. Tourism especially cultural and
religious tourism will serve to highlight the indigenous potential of the Province which has rich and diverse cultural history, for generations to
come. Needless to say, these activities will also attract investment and help in economic growth while also providing employment for the local
population.
01 02 03
Page 33
Chapter III – Estimates of Expenditures
Government of Punjab maintains Provincial Account No. II (Food) with the State Bank of Pakistan. Capital Expenditure out of this account is
incurred on state commodity trading operations in food grains especially procurement of wheat for maintaining critical stocks of the staple food.
Out of sale proceeds of the grains released to the Flour Mills, loans obtained from the commercial banks for trading operations of Food
Department are repaid.
Public Financial Management Reforms has changed focus from Incremental Budgeting to Medium-Term Budgeting Framework (MTBF) against
the traditional yearly approach. On the basis of macroeconomic indicators, a Medium-Term Fiscal Framework (MTFF) was developed to finalize
an indicative resource envelope for next three Financial Years.
Finance Department has introduced a Framework for Rolling Expenditure to control and monitor expenditure on the basis of demand as against
traditional supply model. The Framework makes budgetary allocations resilient enough to combat unexpected macroeconomic challenges.
With the introduction of the Framework, Administrative Department demands release of allocated monies spread over the entire fiscal years
based on actual needs at a given time.
Page 34
Chapter IV – Annual Development Programme
Contribution Services
National 62.4%
Economy
54.2%
In the FY 2020-21, Pakistan’s economy recorded negative growth as a result of the COVID-19 economic downturn. Despite the onset of the
pandemic and the consequent adverse socio-economic impacts of it, Government of the Punjab has made substantial progress and is on the
road to economic recovery. In the current fiscal year, strategic support was provided to economic sectors to recoup economic losses and
substantial public investment was made in key social sectors like Health, Education and reforms to support the private sector and improve
investment climate were also implemented. Development priorities and Government spending for Annual Development Program (ADP) 2020-
21 was guided by Punjab Growth Strategy 2023 and Punjab Spatial Strategy 2047. As a result of effective planning and purposeful
perseverance by Government of the Punjab to trigger drivers of growth, the provincial economy improved significantly reporting a growth rate
of 4.2% in FY 2020-21. Figure 1 presents a GDP growth trajectory for Punjab over the next two years, projecting that the economy will reach
a growth rate of around 4.8 percent in FY 2021-22.
8 7
7 PGS Projected 5.9
Scenario 6.3
5.5
6
6 4.2 4.5
5
4 4.8 5
4.4 PGS Base Scenario
3
2 2.6
1
-0.2
0 COVID Recovery Scenario
-1 2017-18 2018-19 2019-20 -0.2 2020-21 2021-22 2022-23
Page 35
Chapter IV – Annual Development Programme
Figure 2:Chapter
Chapter
Size Chapter
ofIVADP,
IV– Annual
– Annual
IVPunjab
– Annual
Development
Development
Development
Growth Programme
Programme
Programme
Strategy 2023, P&D Board
Figure
Figure
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ofPunjab
ADP,
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1003
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703603 703
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Projected
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Scenario 690690 690 700
700 700
Rs. Billion
563 560
603503 603
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Rs. Billion
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433 563
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503403 503
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403303 403 411411
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PGS Base Scenario
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3 3 3 2017-18 2018-19 2019-20 2020-21* 2021-22 2022-23
2017-18
2017-182017-18 2018-19
2018-192018-19 2019-20
2019-20
2019-20 2020-21*
2020-21*
2020-21* 2021-22
2021-22
2021-22 2022-23
2022-23
2022-23
7% Growth Scenario PGS Base Case COVID Recovery Scenario
7%7%
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Enhanced Government spending through the Annual Development Program in different sectors of the economy is the basic pre-condition for
Enhanced
Enhanced
staying Enhanced
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the path spending
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lead to a provincial GDP growth of 2 percent which leads to 1 percent improvement in employment level and 4 percent improvement in poverty, 1increase
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increasein
increase
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will
will will
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translating into GDPGDP
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translating
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outout
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of poverty
out ofinpoverty
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in FY
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2021-22.
in FY 2021-22.
To achieve a growth rate of 4.8 percent in 2021-22, the size of the Annual Development Program is being increased to Rs. 560 billion. The
ToToachieve
achieve
Toaachieve
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a growth arate
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rate
of of
4.8rate
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Government of Punjab is targeting a growth rate of 5.5 percent by 2022-23, for which size of the ADP will have to be increased substantially
Government
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of Punjab
of Punjab ofisPunjab
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is targeting
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substantially
substantially
(Figure 2). Table 1 highlights the proposed ADP shares by sector for Punjab to achieve its economic growth targets.
(Figure
(Figure
2).(Figure
2).
Table
Table2).
1 highlights
1Table
highlights
1 highlights
thethe
proposed
proposed
the proposed
ADP ADPshares
shares
ADPbyshares
by
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sectorby
forsector
for
Punjab
Punjab
fortoPunjab
achieve
to achieve
toitsachieve
its
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economic
its economic
growth
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growth
targets.targets.
8.6%
8.6% 4.0%
4.0%
4.0%4.0% 4.8%
4.8%4.8%
4.8% 2.1% Urban
2.1% UrbanUrban
2.1% Urban
8.6% 8.6% Agriculture
Agriculture
Agriculture 2.1%
2.1% 2.1%
2.1%
Energy
Energy
Energy
2.1%
Water
Water
Supply
Water
SupplySupply Industry
Industry
Industry Agriculture Energy Development
Development
Development
Development
Water Supply Industry
KEY
KEYPRIORITY
KEY
PRIORITY
KEY PRIORITY
AREAS
AREAS
PRIORITY AREAS
AREAS
Regional
Regional
Regional
Equalization
Equalization
Equalization
Regional Equalization
Government
Government
Government
of of
thethe
Punjab
of
Punjab
thehas
Punjab
has
mademade
has
conscientious
conscientious
made conscientious
efforts
efforts
to efforts
to
address
address
to the
address
the
Development
Development
the Development
disparities
disparities
disparities
across
acrosstheacross
the
different
different
the regions
different
regions
ofregions
of
Punjab
Punjab
of Punjab
Government
through
through
increased
through
increasedof the
increased
funding,Punjab
funding, hasimprovements
improvements
funding, made
improvements conscientious
in the
in the
governance
governance efforts
in the governance to structure,
structure, address
structure,
andand the
capacity
capacityDevelopment
andbuilding
capacity
building disparities
measures.
building
measures.
measures.
South
South across
Punjab,
Punjab, the
Southbeing different
Punjab,
being
thethe
being regions
geographical
geographical of Punjab
the geographical
through
centre
centre increased
of centre
Pakistan,
of Pakistan, funding,
of Pakistan,
hashas
linkages improvements
linkages
has to
linkages
most
to most
deprived in
todeprivedthe governance
most regions
deprived
regionssuch
regions
such structure,
as as
interior
such
interior and
asSindh, capacity
interior
Sindh, building
Baluchistan,
Sindh,
Baluchistan, measures.
Baluchistan,
andand
South
South
and
of KP,
of South
South
KP,therefore
of Punjab,
therefore being
KP, therefore
Punjab’s
Punjab’s the
focus geographical
Punjab’s
focus
on on
focus on
centre of Pakistan, has linkages to most deprived regions such as interior Sindh, Baluchistan, and South of KP, therefore Punjab’s focus on
Page
Page
36 36Page 36
Page 36
Chapter IV – Annual Development Programme
Regional Equalization for the development of South Punjab will also support the Development of the most vulnerable areas of Pakistan
connected with this region. Some of the most critical priorities for South Punjab are as follows:
Poverty Headcount Ratio in South Punjab is twice as much as rest of the province and has a 32 percent share in provincial population. In FY
2021-22, a 35 percent share in ADP has been earmarked for the development of South Punjab.
After inevitable delays due to COVID-19 pandemic, the flagship project Orange Line Metro Train commenced operations in October 2020. The
ridership of the project is at 70,000 passengers per day which is expected to rise gradually. Government of the Punjab is working on developing
an integrated system to increase train ridership and at the same time make the project as much self-sustainable as possible. In ADP 2021-22,
funds amounting to Rs. 10 billion have also been reserved for Special Initiatives for CPEC Economic Growth.
In FY 2020-21, work on the ongoing CPEC project Allama Iqbal Industrial City, Faisalabad was expedited on priority. Land acquisition process
was completed and work on infrastructure and provision of utilities is being undertaken in full swing. Adequate resources have been prioritized
in the coming fiscal year for the completion of Phase – I of the project, expected to be completed in June 2022. In addition to this, Government
of the Punjab also plans to fast-track implementation of CPEC socio-economic projects in FY 2021-22 since this mandate also suffered
setbacks due to the pandemic.
In order to strengthen CPEC development in the province, Government of the Punjab is developing CPEC Strategy for Punjab, which is
expected to be launched in the upcoming fiscal year. The Strategy will outline the roadmap to capture the full potential of this partnership with
China and will focus on the following:
Page 37
Chapter IV – Annual Development Programme
1 2 3 4
Development of Evaluation of Regulatory Reforms Alignment of Ongoing
Targeted Strategies shortcomings/issues to strengthen the key Development
and Plans in key hampering growth of sectors and improve Programs of the
cooperation areas of key sectors and policy overall investment Punjab with the CPEC
CPEC Long Term Plan measures for climate investments.
2030 improvement in the
context of CPEC
At the front of development of PPP initiatives in the province, during FY 2020-21, construction of Food Grain Silos project has been completed
with total project cost of Rs. 300 million. On Lahore Ring Road Southern Loop (SL-III) with total project cost of Rs. 10,448 million, the process
of financial close is in advanced stage and major hindrances in construction work have been resolved. Moreover, effort on a number of new
PPP projects have been commenced which include (i) Parking cum commercial plaza in Rawalpindi (3 Projects); (ii) Multan Vehari Road; (iii)
Faisalabad Chiniot Sargodha Road; (iv) Lai Expressway Rawalpindi; and (v) Parking cum commercial plaza at Old Mayor House Faisalabad.
Estimated cost of these projects on cumulative basis is Rs. 96 billion. Furthermore, a project of Procurement, installation and O&M of Water
meters in Lahore was launched for investor solicitation in the previous year with an estimated cost of Rs. 10.40 billion. The project will be
awarded shortly following conclusion of the bidding process.
For FY 2021-22, a pipeline of imminent PPP projects exists where project proposals are under revision process. These projects pertain to
Combined effluent Treatment Plants (CETPs), Special Economic Zones, roads and transportation and real estate development. Additionally,
a number of projects have been envisaged by Government of Punjab which include (i) Parking Plazas – 4 projects (1 in Rawalpindi, 2 in
Faisalabad and 1 in Sargodha; (ii) Commercial use of BOR land on Jail road Lahore; (iii) PPP projects on lands under control of Auqaf
Department; and (iv) Naya Pakistan Housing Development Plan, Faisalabad. Estimated cost of these projects on cumulative basis is Rs. 25
billion. Hiring of Transaction Advisors for these projects is under process and feasibility study of these initiatives will commence shortly.
Page 38
Chapter IV – Annual Development Programme
Regional
01 Data Availability 02 Localization Plans 03 Development
Forum
Strengthening of data Formulation of sector- Vulnerability assessment of
availability at the Provincial/ specific SDGs localization South Punjab region and
District level for monitoring plans/ action plans, District development of South
and reporting on SDGs level localizations of SDGs Punjab Regional
indicators for data-driven and Scenario planning and Development Forum
policy making Strategic Forecasting for
SDGs in Punjab
The size of the Annual Development Programme 2019-20 was set at Rs. 337 billion. Considering the government’s focus on developing human
capital, it allocated Rs. 36.3 billion for the Education Sector. For the Health sector, Rs. 42.38 billion and Rs 11.3 billion was allocated for
Specialized Healthcare & Medical Education and Primary and Secondary Healthcare respectively. Furthermore, Rs. 20.1 billion was allocated
for the Irrigation Sector and Rs 11.99 billion for the Agriculture sector. To address environmental changes and promote conservation and
environmental governance, Rs. 5.2 billion was allocated in FY 2020-21. Figure 3 depicts the ADP budget over the last four years along with
its revision and utilization.
600
80% 90%
635 80%
69%
500 70%
59%
400 60%
439
50%
300 350 337 40%
200 270 30%
238
210 207 20%
100
10%
0 0%
2017-18 2018-19 2019-20 2020-21*
Page 39
Chapter IV – Annual Development Programme
Figure 4 illustrates the number of schemes that are expected to complete by
5,889 Figure 4: Completion of Schemes in
end of June 2021. A total of 5,889 schemes are expected to be completed on
FY 2020-21
priority, out of which 1,770 are ADP schemes, 1,500 belonging to Community
2,619 Development Programme and 2,619 schemes of Sustainable Development
1,770 1,500 Achievement Programme. This number of completed schemes is being shared
with a great sense of satisfaction.
Backlog of 5
years or more
comprehensive detailed analysis was done to rationalise the throw forward in
ADP 2020-21. An Online Tool has also been developed to manage the Throw
Forward. The following four Pruning Filters / Criteria were used to rationalize 02
the size of Throw Forward: 01
of Schemes
Proliferation
04
1,400 4.3 1,296 1,245
5
Throw Forward (PKR
3.7 03
1,200 4
1,024
TF in Years
liability from 3.7 to 2.4 times of the Budget Allocations, which was reduced from Rs. 1,296 billion to Rs. 821 billion in absolute numbers.
During the current Financial Year (2021-22), the size of the Throw Forward in absolute numbers has increased to Rs. 1,250 billion, however
in comparison with the size of current Budgetary Allocations, the Throw Forward liability has reduced further to 2.2 times of the Budgetary
Allocations (2021-22). This has been achieved using the above listed objective criteria to manage the Throw Forward in Punjab.
▪ TB Control Programme (Rs 3,498 million), Infection Control Programme (Rs 2,873 million), and provision of
Ultrasonography Machines in 24/7 BHUs of South Punjab (Rs 364 million)
▪ Up-gradation of Radiology / Specialties Department in Services Hospital, Lahore (Rs. 2320.166 million)
▪ Provided Basic Education to 463,276 out of school children through 13,519 Non-Formal Basic Education Schools, and
Non-Formal Education Feeder Schools in 36 Districts / basic literacy skills to 34000 illiterate adults across Punjab
▪ Establishment of University of Veterinary and Animal Sciences at Bahawalpur (cost Rs 3,100 million), Registration of
37,250 calves in all districts of Punjab (cost Rs. 1,800 million), Establishment of training centre for biologics at UVAS,
Ravi Campus Pattoki (cost Rs. 398 million)
Page 40
Chapter IV – Annual Development Programme
▪ Completion of 8 roads of DG Khan Package (cost Rs. 2,430 million), Completion of Dualization of: Sargodha – Mianwali
Road (Phase-I) (cost Rs. 4,800 million), Muzaffargarh – D.G. Khan Road (cost Rs. 11,000 million) and Dina – Mangla Road
(cost Rs. 1,300 million)
▪ Training of 550,000 individuals through Skills Development Programme / projects of PSDF, TEVETA and PVTC.
Operationalization of Punjab Rozgar Scheme to facilitate SMEs. Training Facility of TEVTA institutions increased from
90,000 to 150,000 under Hunarmand Nojawan Program
▪ Higher Education Department initiated 08 New Universities (Rs. 8097.310 million) and established 32 New Colleges
(Rs.4264.446 million), established IT Labs in 38 colleges (Rs.149.978 million), provided Missing Facilities to 223 Colleges
(Rs.1534.783 million) and awarded 53,551 scholarships of worth Rs.6910.00 million to talented & needy students through
PEEF
▪ Punjab Barrages Improvement Phase-II (PBIP-II) Jinnah Barrage (cost Rs. 14,427 million), New Khanki Barrage
Construction Project (cost Rs. 23,442 million) and Up gradation of Trimmu Barrage, Punjnad Head Works (cost Rs. 16,800
million)
▪ Established 05 Special Education Centres, strengthened 7 Special Education Institutes and Upgraded 4 Special
Education Institutes to secondary level
▪ Solarization of 11,000 Public Schools in South Punjab through Punjab Ujaala Programme (cost Rs. 8,251 million)/ Saving
of 5GWh of energy units through retrofitting of Public institutions (cost Rs. 357 million)
▪ Automation of Stamp Papers (e-stamping) in 36 Districts of Punjab (cost Rs. 606 million), Online Payment of Government
receipts (cost Rs. 236.1 million), Establishment of Citizen Facilitation Centres in all Divisional Headquarters of Punjab
(cost Rs. 1,810 million)
▪ Under Southern Punjab Poverty Alleviation Project (SPPAP) 662 women given low cost houses, 743 women given small
land plots, small ruminant (2 Goats packages) to 19,777 poor women, vocational and enterprise trainings to 4,118 and
1,662 were given to women, respectively (cost Rs. 15,524.5 million)
▪ Under Tribal Area Development Project (TADP), 120 kms of metaled roads, 14 kms of roads rehabilitation, 36 Nos. of
Community Development Sub Projects, 16 Nos. of Community Solar Tube well Sub Projects and 16 Nos. of community
Drinking Water Supply Sub Project were completed
Page 41
Chapter IV – Annual Development Programme
Improvement of basic
Human Development Enabling environment amenities through
Inclusive & balanced through Skills for private sector District Development
regional development Development resource mobilization Package
01 03 05 07 09
.
02 04 06 08
Economic Growth led Transformation of Strengthening Support for Public Targeted investments
investment Agriculture Sector compliance with Private Partnership - in priority projects
Sustainable Development PPP through Economic
Goals (SDGs) Revival Programme
In FY 2021-22, Economic Growth Initiative is being launched by Government of the Punjab, that will be an essential part of Annual Development
Programme (ADP). It will aim at stabilizing the economy and initiating a rapid recovery. The Programme will be used as a springboard to
accelerate structural shifts towards a frame worked and well thought out way forward to mitigate the effects of COVID-19 pandemic and
Page 42
Chapter IV – Annual Development Programme
catapulting the provincial economy on route to long-term growth. Through the programme, government spending in initiatives of highly
productive sectors of the economy will be increased and key initiatives focusing on Human Capital Development, Infrastructure Development
to boost the Construction sector, MSME support for spurring economic activity, Skills Development through improved Education system and
Vocational Trainings, improving agriculture productivity and building a robust Healthcare system will be implemented. This Programme will be
implemented with an allocation of Rs. 10 billion in FY 2021-22 in the most targeted manner. CPEC initiatives will also be funded through this
arrangement.
The Package will be implemented with a budget of Rs 360 billion over the next three years by the line Departments under the supervision of
the District Administration. Around 3,600 Schemes have been prioritized in all Districts of the Punjab. Following is the scheme and cost wise
break-up of the Package:
The major projects/ initiatives planned for Annual Development Programme 2021-22 are the following:
Page 43
Chapter IV – Annual Development Programme
Flagship Projects Completing in 2021-22
Promotion of High value Agriculture through Solarization of Drip & sprinkler Irrigation System
10 (cost: Rs 1,929 million)
▪ Implementation of Universal Health Coverage under Health Insurance Program in Punjab (Cost: Rs 80,000 million;
Allocation: Rs 60,000 million)
▪ Integrated Reproductive Maternal Newborn & Child Health (IRMNCH) & Nutrition Program (Phase-III) (Cost: Rs 6,706.999
million; Allocation: Rs 400 million)
▪ Enhanced HIV / AIDS Control Programme Punjab (Phase II) (Cost: Rs 2,080.9 million, Allocation: Rs. 400 million)
▪ Integrated Program for Communicable Disease Control, Punjab (Cost: Rs 2,356 million, Allocation: Rs. 250 million).
▪ Establishment of 1000-Bedded General Hospital, Lahore (Cost: Rs. 14,000 million; Allocation: Rs 200 million)
Page 44
Chapter IV – Annual Development Programme
▪ Establishment of 4 Mother & Child Hospitals in District, Layyah, Rajanpur, Attock and Bahawalnagar (Cost Rs.2,400
million, Allocation: Rs. 40 million)
▪ Strengthening of Basic Health Units of Punjab (Phase – II) (Cost: Rs. 5,500 million, Allocation: Rs. 1,100 million)
▪ Establishment of 19 Universities in various Districts of Punjab (Cost: 38,414, Allocation: Rs.1,542 million)
▪ Insaaf Afternoon Schools Programme (Cost: Rs 6,500 million; Allocation: Rs.6,500 million)
▪ Establishment of Special Children Village at Sharaqpur, District Sheikupura (Cost: Rs.800 million, allocation of Rs.150
million)
▪ World Bank funded programme “Punjab Rural Sustainable Water Supply & Sanitation Programme” will be launched
phase wise in 2009 villages of 16 tehsils across the Punjab (Cost: USD 553 million).
▪ Punjab Poverty Graduation Initiative (PPGI) (Cost: Rs. 9,000 million, Allocation: Rs. 500 million)
▪ Chief Minister Punjab’s Road Rehabilitation Program (Cost: Rs. 8,000, Allocation: Rs. 8,000 million)
▪ Dualization of Sargodha – Mianwali Road (Phase-I) (Cost: Rs. 4,786 million)
▪ Dualization of Dina – Mangla Road, Length 12.83 Km (Cost: Rs. 1,300 Million)
▪ Construction of Flyover at Nadirabad Phatak to Industrial Estate, Multan (Cost: Rs. 2,842 million).
▪ Construction of Sorra Dam (Cost: Rs. 4,500 million, Allocation: Rs.1,150 million)
▪ Chaubara Branch Canal Construction Project - Greater Thal Canal (Phase-II) (Cost: Rs.20,076 million, Allocation: Rs.
830 million).
▪ Rural Enterprises in Agriculture Development (READ) (Cost: Rs. 1,262.9 million, Allocation: Rs. 240 million).
▪ Rural Employment and Agriculture Promotion (REAP) Projects (Cost: Rs. 7,600 million, Allocation: Rs. 450 million).
▪ Program for Establishment of Model Markets in Punjab (Cost: Rs.15,000 million, Allocation: Rs. 4860 million).
▪ Monitoring and Evaluation of Ten Billion Tree Tsunami Programme (Cost: Rs. 13,187 million, Allocation: Rs. 2,567 million)
▪ Establishment of Punjab Health and Wellness Radio Station (Cost: Rs. 70 million, Allocation: 70 million)
▪ Establishment of Surgical City at Sialkot (Cost : Rs.1,721 million, allocation Rs.300 million)
▪ Establishment of High Performance Cricket Centres at Lahore, Faisalabad and Sialkot (in consonance with the Prime
Minister’s Vision of regionalizing domestic Cricket structure) (Cost: 1750 million, Allocation: 660 million).
▪ Pilot/Demonstration Resource Efficiency & Cleaner Production Investments in key Industrial Sectors (Cost: 2,000
million, Allocation: Rs. 250 million)
▪ Skilling Youth for Income Generation (SYIG) project (Cost: Rs. 9,500 million, Allocation: Rs. 1,500 million)
▪ Installation of Air Quality Monitoring System in Punjab (Cost: Rs.2,000 Million, Allocation: Rs.1,000 million).
▪ Establishment of Environmental Monitoring Center (Cost: Rs.1,000 million, Allocation: Rs.100 million).
▪ Installation of Water Quality Monitoring System in Punjab(Cost: Rs.1,400 million, Allocation Rs.400 million).
Page 45
Chapter IV – Annual Development Programme
Chapter IV – Annual Development Programme
million have been undertaken through the Annual Development Program (ADP), focusing on health, education, skill development, water and
sanitation,
million haveagriculture, livestock,
been undertaken irrigation,
through energy,Development
the Annual physical infrastructure, urbanfocusing
Program (ADP), development, andeducation,
on health, governance.
skill development, water and
sanitation, agriculture, livestock, irrigation, energy, physical infrastructure, urban development, and governance.
Expected cash inflows for FY 2021-22 amounting to US$ 733.05 million in the shape of Projects (US$ 506.53 Million) and Programs (US$
Expected
226.55 cashcomprises
Million) inflows forofFYloans
2021-22 amounting
and grants to US$
provided by733.05 million
our major in the shape
International of Projects Partners
Development (US$ 506.53 Million)
including theand Programs
World (US$ 353.6
Bank (US$
226.55 Million) comprises of loans and grants provided by our major International Development Partners including the World
million), Asian Development Bank (US$ 182.891 million), Danish International Development Agency (US$ 26.117 Million), French Development Bank (US$ 353.6
million),(US$
Agency Asian23.5
Development Bank (US$ 182.891
Million), International million),
Fund for Danish Development
Agricultural International Development
(US$ 19.014Agency (US$
Million), 26.117
Asian Million), French
Infrastructure Development
Investment Bank (US$
Agency (US$ 23.5 Million), International Fund for Agricultural Development (US$ 19.014 Million), Asian Infrastructure
29 Million) and Exim Bank of China (US$ 93.96 million), Foreign Commonwealth & Development Office UK (US$ 3.98 million) Investment Bank and
(US$Japan
29 Million) and
International Exim BankCooperation
Development of China (US$ 93.96 (US$
Agency million),
1.25Foreign
million)Commonwealth & Development Office UK (US$ 3.98 million) and Japan
International Development Cooperation Agency (US$ 1.25 million)
▪PunjabUrban
▪Punjab UrbanLand
Land ▪Punjab Agriculture
▪Punjab Agriculture Scheme
▪SewerageScheme
▪Sewerage ▪ Construction
▪ Construction of of ▪ Heritage
▪ Heritage & Urban
& Urban ▪ Rural
▪ Rural Employment ▪ Construction
Employment ▪ Construction
of of
systemEnhancement
system Enhancement Markets
Markets for
forLarech
LarechColony
Colonytoto Eastern Waste
Eastern WasteWater
Water Regeneration:
Regeneration: and Agriculture
and Agriculture Distribution Centre,Centre,
Distribution
(PULSE)Project
(PULSE) Project Development
Development Gulshan-e-Ravi
Gulshan-e-Ravi Treatment Plant
Treatment at at
Plant Tourism
Tourism Promotion (REAP)
Promotion (REAP) Rehabilitation of Old of Old
Rehabilitation
Projects
Projects Faisalabad CityCity
Faisalabad Development in in
Development Jhal Khanuana
Jhal Khanuana
▪Punjab Rural
▪PunjabRural ▪Constructionofof
▪Construction Lahore FortFort
and and
its its
SustainableWater
Water Thal Canal
Canal Surface Lahore
Sustainable ▪Greater Thal
▪Greater SurfaceWater
Water Buffer ZoneZone
Buffer
and
and Sanitation
Sanitation (GTC) Project
(GTC) Project Treatment
TreatmentPlant
Plantatat
Project
Project BRBD Lahore
BRBD Lahore
Work
▪Improving Work
▪Improving
▪Support to Naya Force Readiness in ▪Construction of
▪Support to Naya Force Readiness in ▪Construction of
Pakistan Housing Punjab Waste Water
Pakistan Housing
Program in Punjab
Punjab Waste Water
Treatment Plant at
Program in Punjab ▪Punjab Sustainable TreatmentBooti
Mehmood Plant&at
▪Punjab
HighwaySustainable Mehmood Booti &
Highway Shahdra
Development Shahdra
Development
Page 46
Page 46
Chapter IV – Annual Development Programme
1 Education 54,220
6 LG&CD 26,631
7 Roads 58,299
8 Irrigation 30,778
9 Energy 7,000
12 Agriculture 31,497
13 Forestry 4,000
14 Wildlife 1,000
15 Fisheries 1,000
16 Food 500
Page 47
Chapter IV – Annual Development Programme
20 Tourism 1,253
Services 23,375
23 Transport 16,800
Others 36,410
27 Archaeology 700
Total 560,000
The mammoth size of this ADP will be most appropriately complemented by the substantial allocation made under the Public Sector
Development Programme (PSDP) by the Federal Government. The Punjab Government intends to put in place a robust mechanism for
effective and efficient utilization of this huge development portfolio.
Page 48
Chapter V – Public Account
T
he Provincial Consolidated Fund (PCF) has been established under Article 118 (1) of the Constitution of Islamic Republic of Pakistan,
1973. The Constitution requires that all revenues received by the Provincial Government, all loans raised by that Government and all
moneys received by it in repayment of loan, shall form part of a Consolidated Fund, to be known as Provincial Consolidated Fund.
Article 118 (2) further provides that all other moneys received by or on behalf of the Provincial Government; or received by or deposited
with the High Court or any other court established under the authority of the Province; shall be credited to the Public Account of the Province.
01 Provincial
Consolidated Fund
Trust Moneys
Received
Deposits under
Court Orders
02
Government Tax/ Loans Received &
Non-Tax Receipts Recovered Public Account
The moneys received and forming part of the Provincial Consolidated Fund (PCF) and Public Account (PA), are deposited to the Government
Treasury, cash of which is placed in a bank account titled “Punjab Account Number – I (Non-Food)”, under an agreement between the Governor
Punjab and State Bank of Pakistan, which is maintained by the State Bank of Pakistan. This account reflects a common cash balance of both
Provincial Consolidated Fund and the Public Account. However, separate sets of books of accounts for receipts and expenditure of Provincial
Consolidated Fund and Public Account of the province are maintained by the AG / District Accounts Offices. It may also be worthwhile to add
that the Government is authorized to open more than one bank account, to keep the cash pertaining to the Provincial Consolidated Fund and
Public Account separately. Moreover, to run the system of the Government in a smooth manner, more accounts can be established with the
State Bank of Pakistan. All such accounts would, however, shall form part of the Provincial Consolidated Fund or the Public Account of the
Province as composite cash balance of the PCF or PA, respectively. For example, Government of the Punjab has opened Provincial Account
Number - II (Food) with the State Bank of Pakistan for its commodity operations. Similarly, Provincial Account Number – V (District Education
Authorities) and Provincial Account Number – VI (District Health Authorities) have also been opened with the State Bank of Pakistan. The cash
balances of these accounts are treated part of the composite cash balance of the Punjab Account No-I(NF) for the purpose of overdraft facility
of the Punjab Government.
The Government, as a custodian of all moneys placed in the Public Account, has a fiduciary responsibility to receive and disburse these
moneys but is not at liberty to appropriate the money pertaining to Public Account for the general service of the Government. In terms of Article
119 of the Constitution of Pakistan, the Treasury & Subsidiary Treasury Rules and Punjab Financial Rules have been framed to: a) regulate
the disbursement of moneys from the Public Account and b) form & manner to keep the accounts thereof.
As the disbursement of moneys credited to the Public Account is not subject to the vote of the Provincial Assembly, therefore balance do not
lapse on close of the financial year. However, the deposits not exceeding five rupees unclaimed for one whole account year, balances not
exceeding five rupees of deposits partly repaid during the year then closing, and all balances, unclaimed for more than three complete account
years will, at the close of June in each year shall lapse and is credited to Government through transfer entries. Thus, the balance of the money
credited to the Public Account are carried forward on year-on-year basis, maximum for three complete financial years for the money exceeding
five rupees. Therefore, such money can be refunded within a span of three financial years after the year of deposit. On completion of life of
three financial years the unpaid credits are shifted to the Provincial Consolidated Fund as Miscellaneous receipts under Object code “C03801-
Unclaimed Deposits”. Any claim arising thereafter is refunded, as prescribed, from provincial receipt of “unclaimed deposits”.
The moneys credited to the Public Account and its disbursement are generally governed by the agreement(s) / law & rules / court orders etc.
So far as to distinguish the different kinds of credits / debits and the maintenance of Public Account is concerned, various codes with
nomenclature have been allotted at Major, Minor and Detailed levels in the Chart of Accounts (CoA).
The credits and debits of Public Account are categorized in following three categories:
Page 49
Chapter V – Public Account
Rs
01 02 03
Cash and Bank balances, Liabilities, Loans, Deferred
Receivable loans & advances, Liabilities, Trust Accounts, Equities and Investment by
Physical Assets, and Special Deposit Accounts, Government
Investments Revolving Fund etc.
Page 50
Chapter V – Public Account
Positive net reflects the position of more credits and less debits and vice versa. The net of Public account (+) or (-) may be treated as source/
financing available during a financial year for PCF. However, prudent financial management principles require that the money of Public Account
may not utilized for the purpose relating to Provincial Consolidated Fund.
The provisions of Financial Rules demand prudent Cash Management inter alia the cash pertaining to the Public Account need to be deposited
into Government Treasury and not to be kept apart from the Punjab Account No.- I (Non-Food) maintained by the State Bank of Pakistan. The
Federal Government has framed Cash Management and Treasury Single Account Rules 2020 under the Public Finance Management Act,
2019. Foregoing in view, Government of the Punjab is also taking measures for promulgation of a similar PFM Act. In the mean while Provincial
Government has initiated amendments in the existing financial rules to adopt the principles of Treasury Single Account. These amendments
together with the proposed PFM Act, shall restrict government offices from undertaking any cash operation outside the Treasury Single Account
or the principal Government account i.e., Punjab Account No.1 (Non-Food).
To ensure transparency in the disbursement from Public Account by maintaining prudent financial management the Federal Government has
devised a procedure to deposit and disburse money from Public Account, known as “Special Assignment Account, procedure for withdrawal
of funds from the Public Account of the Federation 2021”. The prime objective of devising this procedure is to facilitate the government offices
in closure of the commercial bank accounts, transfer of all the available balances to the Public Account / Account No.1 (Non-Food) and
undertake further public account transactions through the Account No.1 (Non-Food). It has therefore been found expedient to prescribe a
dedicated and hassle-free procedure for withdrawal of funds from the Public Account through non-lapsable special assignment account, as
the existing Assan Assignment Account procedure is for withdrawal of funds from the Consolidated Fund only. Considering the features of the
Special Assignment Accounts, the same has been adopted by the Punjab Government and the process of its dissemination / training of the
DDOs is already underway.
Page 51
Chapter V – Public Account
Page 52
Chapter
ChapterVIVI– Debt
– Debtand
andContingent
ContingentLiabilities
Liabilities
DD
ebt,ebt,pension
pensionandandGPGPFund Fundinvolve
involvemajor
majorfinancial
financialliabilities
liabilitiesof ofthetheGovernment.
Government.AsAsperperthetheinternational
internationalbest
bestpractice,
practice,thethe
Government
Government specifically
specificallyincludes
includesdetails
details
of of
these
theseliabilities
liabilities
in the
in thewhite
whitepaper
paper
onon
budget
budget
forfor
policy
policymakers
makersandandlegislators
legislators
to to
keepkeep
a a
close
close eyeeye
onon
them.
them.If not
If not
managed,
managed, these
these
liabilities
liabilities
cancanerode
erodefiscal
fiscalspace
space
andand
adversely
adversely
affect
affect
thethe
credibility
credibility
of of
budget.
budget.
Debt
DebtStock
Stock
Punjab’s
Punjab’s debt
debt
levels
levels
areare
relatively
relatively
lowlow
when
whenmeasured
measured as as
percentage
percentage of its
of its
GSDP
GSDP (Gross
(Gross Sub-national
Sub-national
Domestic
Domestic Product)
Product)andand
as as
a percentage
a percentage
of of
its its
annual
annual
revenue.
revenue.Punjab’s
Punjab’s debtdebt
consists
consists
mainly
mainlyof of
long-term
long-term loans
loansobtained
obtained
ononconcessional
concessional
terms
termsfrom
from
multilateral
multilateral
institutions
institutions
by by
thethe
Federal
Federal Government
Government andand
on-lent
on-lent
to to
Government
Governmentof of
thethe
Punjab.
Punjab.
TheThefocus
focus
of of
external
external
financing
financing
remains
remains
in the
in the
areas
areas
of of
Education,
Education, Agriculture,
Agriculture,
Transport,
Transport,Urban
UrbanDevelopment
Development etc.etc.
Breakdown
Breakdownof of
Punjab’s
Punjab’stotal
total
debt
debtis as
is as
under:
under:
7Punjab`s
7Punjab`s
Debt
Debt
Stock
Stock
asas
of of
30.06.2021
30.06.2021
(Rs.
(Rs.
Billion)
Billion)
Rupee
Rupee
Value
Value Exchange
Exchange
asas
at at %% Growth
Growth NetNet
NewNew
Type
Type
of of
Loan
Loan asas
at at
JunJun
’20’20 growth
growth
from
from Rate
RateLoss
Loss
Jun`21
Jun`21 from
from Jun`20
Jun`20 Debt
Debt
Jun`20
Jun`20 /(Gain)
/(Gain)
8Domestic
8Domestic
Debt
Debt 6.76.7 5.25.2 -22.9%
-22.9% -1.5
-1.5 -1.5
-1.5 0 0
External
External
Debt
Debt 991.0
991.0 951.2
951.2 -4.0%
-4.0% -39.8
-39.8 34.3
34.3 -74.1
-74.1
Total
Total
Debt
Debt 997.7
997.7 956.4
956.4 -4.1%
-4.1% -41.3
-41.3 32.8
32.8 -74.1
-74.1
Exchange
Exchange
Rate
Rate
(PKR/USD)
(PKR/USD) 168.35
168.35 154.41
154.41
External
External
Debt
Debt
(USD
(USD
mln)
mln) 5,927
5,927 6,194
6,194 4.5%
4.5%
TheThedecline
declinein debt
in debt
stock
stock
is mostly
is mostly
attributed
attributed
to to
PakPak
Rupee
Rupee
appreciation
appreciation
against
against
foreign
foreigncurrencies
currencies
i.e.i.e.
Rs.74.1
Rs.74.1
billion
billion
andand
remaining
remaining
Rs.32.8
Rs.32.8
billion
billion
is the
is the
amount
amountof of
newnew
loans
loans
(net
(net
of of
repayments)
repayments)added
added
in debt
in debt
stock
stock
during
during
thisthis
financial
financial
year,
year,
against
againstnewnew
as aswell
well
as as
already
already
contracted
contracted
loans
loansof of
Government
Government of of
thethe
Punjab.
Punjab.
Debt
Debt
stock
stock
in Rupee
in Rupee
terms
terms
asas
of of
Jun`21
Jun`21
shows
shows
a decline
a decline
of of
4%4%
(i.e.,
(i.e.,
RsRs
41.3
41.3
billion)
billion)
with
with
respect
respect
to to
debt
debt
stock
stock
of of
Jun`20.
Jun`20.
33.7%.7% RsRs
22.0%.0%
Punjab`s
Punjab`s
GSDP
GSDP (Gross
(GrossSub-National
Sub-National Domestic
DomesticProduct)
Product)
is is
estimated
estimated at 55%
at 55% of the
of the
National
National
GDP
GDPandand
thethe
size
size
of of
Punjab’s
Punjab’s debtdebtis quite
is quite
lowlow
when
whenmeasured
measured asas
a a
Punjab’s
Punjab’s
total
total
Debt
Debt
asas
%age
%age
of of
percentage
percentage of its Gross
of its GrossSub-national
Sub-nationalDomestic Product Punjab’s
Product
Domestic Punjab’s
total
total
Debt
Debt
asas
%age
%age
of of
GSDP
GSDP National
National GDPGDP
(GSDP)
(GSDP)
i.e.,i.e.,
3.7%3.7%andand
thethe
ratio
ratio
goes
goes
down
downwhen
whendebt
debt
stock
stock is compared
is compared with national
with GDP.
national GDP.
7 Debt
7 Debt
stock
stock
includes
includes
actual
actual
disbursements
disbursements till 15.05.2021
till 15.05.2021
andand
thethe
estimates
estimates
of loans
of loans
receipts
receipts
for for
thethe
remaining
remainingperiod
period
till 30.06.2021.
till 30.06.2021.
8 Domestic
8 Domestic
debtdebt
amount
amount
is exclusive
is exclusive
of outstanding
of outstanding commodity/wheat
commodity/wheat debtdebt
obtained
obtainedby Food
by Food
Department
Department for for
procurement
procurement of wheat,
of wheat,
estimated
estimated
at Rs
at Rs
560560
billion
billion
as on
as 31.06.2021.
on 31.06.2021.
Revised Gross
Revised Domestic
Gross DomesticProduct (GDP)
Product (GDP)estimate
estimateof FY2021 issued
of FY2021 by State
issued Bank
by State of Pakistan
Bank (SBP)
of Pakistan i.e.i.e.
(SBP) PKR 46,675
PKR blnbln
46,675 is used for for
is used calculation of percentages.
calculation of percentages.
Page
Page
5353
Chapter VI – Debt and Contingent Liabilities
Sector Wise Composition of Total Outstanding Debt as of 30-06-2021 %age Debt as of Jun 30, 2021
Agriculture & Livestock 28%
Transport & Communication 24%
Education 22%
Urban & Community Development 12%
Governance 6%
Healthcare 5%
Industries & Infrastructure 2%
Energy 2%
Environment 0.2%
Tourism 0.2%
Domestic Debt
Domestic Debt of the Government consists of Cash Development Loans (CDLs) obtained from the Federal Government. CDLs are agriculture
program loans at fixed interest rates with original maturity of 25 years. Many of these loans have already been repaid and the outstanding
amount of CDLs as of Jun`21 is estimated at Rs.5.2 billion which will be get repaid in full by FY2030
External Debt
Punjab’s External Debt is concessional in nature with an average borrowing rate of 1.41% p.a. and PKR 5.2 bn
average maturity of 8.8 years as of June ‘21. The World Bank Group (including IBRD and IDA) is the
outstanding amount of CDLs
leading creditor with 46% share followed by ADB with 25% share in External Debt stock. A relatively
smaller proportion of External Debt stock consists of bilateral loans including those from China, Japan as of Jun`21
and France. Creditor wise composition is provided below.
Page 54
Chapter VI – Debt and Contingent Liabilities
International Development
Association (IDA)
Punjab`s External Debt is denominated mainly in US Dollar (75%) followed by Special Drawing Rights (14%) and Japanese Yen (7%). Table
below explains the composition of External Debt stock by currency;
(Rs Billion)
Foreign Debt Stock by Currency as of 30.06.2021
Redemption Profile
The redemption profile refers to the projections of annual principal repayments according to repayment schedules of underlying loans. It helps
in identifying periods in which large principal repayments will be due and taking appropriate measures to deal with such challenges. Redemption
profile of Punjab’s debt is quite smooth and is spread over a period of 36 years. Projections of principal repayments for next 14 years are
shown below:
Page 55
Chapter VI – Debt and Contingent Liabilities
1.59 1.12
63.50 61.13 61.27 61.16 63.17 61.91 63.29 64.40 59.82 56.70 54.56 51.85
47.47 47.63
FY 2021-22 FY 2022-23FY 2023-24FY 2024-25FY 2025-26FY 2026-27 FY 2027-28FY 2028-29FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33FY 2033-34FY 2034-35
External Loans Rep. Domestic Loans Rep.
Debt Service
Debt Service refers to the amount of annual payments on
account of principal and interest. Ratio of Debt Service to
Revenue is a good measure to assess the risk of debt
distress. Lower ratio demonstrates debtor’s ability to
4.1%
3.2%
service debt without distress.
Of Average Annual
Punjab`s Ratio of Debt Service to Avg. Revenue is 4.1% Revenues of last 3 years
for FY 2021-22 which is quite low and indicates low risk.
Debt Service9 estimates of FY2021-22 are illustrated here.
PKR 49.05 bn
Punjab`s estimated Debt Servicing for FY 2021-22 is
PKR 13.8 bn 1.0% FY2021-22 Principal
FY2021-22 Interest Payment: Debt Servicing
marginal when compared to the size of average annual
payment as %age of as %age of Average
Revenues10 of the last three years i.e., 3.9%. This indicates Average Revenues for the Revenues for the last
that the province is self-sufficient to honor its obligations on last three years three years
account of debt servicing. Debt servicing estimates of
FY2021-22 are summarized below:
70.00 5.0%
60.00 4.5% 4.2%
4.0% 4.1% 4.0%
% of Avg. Revenue
50.00
3.3% 3.3%
PKR Billion
40.00 3.0%
9 Exchange rates communicated by Federal Government are used for calculating debt servicing in Rupee. In floating-rate foreign loans, LIBOR rate of 15.05.2021 has been used
Page 56
Chapter VI – Debt and Contingent Liabilities
Risk Analysis of Punjab’s Debt Profile
A number of indicators are used to monitor and control risks associated with government’s debt. Risk indicators act as a guideline to devise
future borrowing strategies. A few risk indicators are explained in the following paragraphs:
Proportion of Debt maturing in a year and ATM of Debt stock as of 30.06.2021 are given below:
73 %
Page 57
Chapter VI – Debt and Contingent Liabilities
99%
Exchange Rate risk refers to the exposure of the debt portfolio to changes in exchange rate.
Government of Punjab`s debt is highly exposed to FX Risk as 99% of the total outstanding debt
stock is denominated in foreign currency. However, this seemingly high risk is partially mitigated by
two factors;
Share of Foreign Debt
(as % of total)
01 02
low interest rates on foreign loans offset the overall size of Punjab’s External Debt is low
adverse consequences of exchange rate as a percentage of the provincial GSDP
depreciation i.e.3.7%
Guarantees
The Government issues guarantees mainly to Public Corporations and Public Private Partnerships (PPPs) as government support to enhance
financial viability of the projects undertaken by these entities. Currently, the outstanding guarantees pertain mainly to Public Corporations
operating in the energy sector and PPP projects in roads & transportation sector. The size of guarantees issued by General Government is
quite small compared to the provincial Revenue (2.85%) and provincial GDP (0.2%). As of 30.06.2021 the total amount of outstanding
Guarantees is estimated at PKR 48.7 billion out of which PKR 4.7 billion is attributable to Public Private Partnerships (PPP) while the remaining
Guarantees worth PKR 44 billion are issued to power projects of Punjab
Domestic borrowing limit assigned by the National Economic Council (NEC) has so far been used by the
Government to offer Guarantees to various Public Sector Entities (PSEs) to ensure/ increase the bankability of
their projects.
PENSION
Government has a Defined-Benefit (DB) Pension Scheme for its permanent employees. The pension scheme is being managed on a ‘pay-as-
you-go’ basis, i.e. pension payment during a year is made out of that year’s revenues regardless of the time of accrual of the liability.
Considering the sharply increasing burden of pension expenditure, Government is considering various options for reforming the Pension
Scheme.
Pension Expenditure
Pension is the second-largest expense of the Government of Punjab. It has been growing at a very high rate in recent years. The steep rise in
Pension Expense as a proportion of Revenue over time is a matter of concern. A glance at Punjab’s pension expenditure since FY10-11 is as
under:
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Chapter VI – Debt and Contingent Liabilities
FY13-14 76.40 815.00 9.37
FY14-15 88.80 902.00 9.84
FY15-16 113.80 1,108.00 10.27
FY16-17 141.00 1,405.00 10.04
FY17-18 172.90 1,387.00 12.47
FY18-19 205.20 1,426.00 14.39
FY19-20 228.80 1,408.00 16.25
CAGR 22.66% 11.26%
Pension expense has grown at a compound annual growth rate (CAGR) of 23% since FY10-11 while Revenue has grown at a CAGR of 11%
respectively during the same period. As a result, Pension Expense to Revenue has increased from 6.75% in FY10-11 to 16.25% in FY19-20.
Evidently, pension liability has become one of the major sources of fiscal risk for the Government and there is an urgent need to reform the
Pension Scheme.
The government of Punjab follows the Federal Government in allowing an annual increase in salary and pension. Comparison of inflation and
salary and pension increases have given by the Government of Punjab since FY10-11 is as under:
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Chapter VI – Debt and Contingent Liabilities
An annual increase in salary and pension without regard to inflation may lead to unmanageable pension expenditure and liabilities. Potential
reforms to Pension Scheme should include a policy to ensure that annual increase in pension should not be higher than the annual inflation
rate.
PKR 38.1 bn
9
5 5 5.3 5
4.8
Page 60
Chapter VI – Debt and Contingent Liabilities
A few years ago, the need to establish a separate Fund, for investing GPF contributions and to gradually increase its Funding Ratio to 100%
in order to make it a fully-funded off-budget GPF scheme, was realized. The Government passed Punjab General Provident Investment Fund
Act 2009 to establish an investment fund for the management of GP Fund liabilities of the government. The Government has been transferring
a significant portion of GPF contributions into the Fund in recent years.
Page 61
Chapter VI – Debt and Contingent Liabilities
Based on the actuarial valuation, accrued GP Fund liability is estimated at Rs. 279.6 billion on 30th June 2021. Considering the GP Investment
Fund size of Rs 11.6 bn, the Funding Ratio of the Scheme stands at 4.1%.
Page 62
Chapter VI – Debt and Contingent Liabilities
02
05 07
Gross Return 11.33% 03 Gross Return 7.61%
01 Net Return 11.33% Net Return 7.61% Gross Return 17.30%
Gross Return 9.51%
04 06 Net Return 17.27%
Gross Return 8.64% Net Return 9.51% 08
Gross Return 11.73%
Net Return 8.64% Gross Return 9.30% Gross Return 7.72%
Net Return 11.70%
Net Return 9.30% Net Return 7.60%
Rs Rs
Rs
Page 63
Chapter VI – Debt and Contingent Liabilities
Page 64
Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
T
his fiscal year began in the uncertain and highly volatile reality of the COVID-19 pandemic, which threatened to derail the hard-earned
stabilization and nascent recovery of the pre-COVID period. The global pandemic impacted countries across the world, where the
WHO has reported 1170.81 million confirmed cases of Covid-19 worldwide, with 3.55 million deaths as of June 2, 2021.1 Adverse
socio-economic impacts and unprecedented stress to health systems caused by the COVID-19 pandemic, have directly threatened
the world's economy and wellbeing whilst jeopardizing progress towards the United Nation's 2030 Agenda for Sustainable Development2. As
of June 3, 2021, a total number of 926,695 confirmed cases were reported in Pakistan, with a death toll of 21,022. More specifically Punjab
has the highest number of reported cases among all provinces, where the number of COVID-19 confirmed cases is 340,989, with 10,132
reported deaths.3
Inflation rose considerably over the past fiscal year as supply chain disruptions impacted food commodity prices in both urban and rural areas
of Punjab. Inflation climbed to 9 percent in September 2020 across Pakistan, while double-digit food inflation continues to erode citizens’
purchasing power5. This worsened the situation for millions of households who have seen a decline in their purchasing power since 2016,
according to data from the Pakistan Bureau of Statistics. Despite being an agrarian economy, Pakistan’s population continues to face food
insecurity and price volatility for basic commodities.
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Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
In fact, over 49% of Pakistan's working population suffered a loss of employment and/or a decrease in income during the pandemic, according
to a survey conducted by the Pakistan Bureau of Statistics in 2020 11. As a result, the incidence of poverty increased in fiscal year 2020, with
more than two million additional people falling below the poverty line. Moreover, 40% of households suffered from moderate to severe food
insecurity8.
Nonetheless, using the $1.3 billion debt relief from the
IMF, the federal government rolled out a Rs. 1.2 trillion
Cumulatively, Pakistan has faced an estimated financial loss of relief and stimulus package, the largest ever stimulus
package, focusing on healthcare, social protection and
up to Rs 2.5 trillion because of the COVID-19 pandemic in the
economic stability and stimulus. This package aims to
FY 2020-21.7 While the monetary policy is accommodative and not only help the businesses but also to help the most
fiscal policy is prudent, public debt guarantees have increased vulnerable segments of the population to alleviate their
to 92.8% of the GDP 6. The Federal Government sought miseries and suffering7. Deviating from its known
debt relief and secured an additional $1.3 billion from stand, the IMF supported Pakistan’s stimulus package
the IMF. This increase in debt relief does not resolve for opening the labor-intensive construction industry,
Pakistan’s long-standing problems with overburdening foreign including tax amnesty to those investing primarily in
and local debt but in fact exacerbates them and hinders housing building, where the unemployed daily wage
sustainable solutions in the long-term. workers could be absorbed9. Cash transfer programs
have also been expanded to protect the most
vulnerable segments of society. Additionally, the State
Bank of Pakistan cut interest rates (from 13 percent to 7 percent) and provided monetary stimulus to businesses4.
However, it must be noted that merely providing liberal fiscal and monetary stimulus to a few sectors of the economy is not sufficient for a
developing country like Pakistan that needs to generate more than 1.3 million jobs a year but its growth rate is less than 2 per cent 6. Such
stimulus may produce only sporadic growth that will not be sustainable. In this regard, synchronized and sustained growth in all sectors of the
economy is required, which would require overcoming these tough fiscal challenges.
A perennial fiscal challenge that continues to plague Pakistan’s economy severely due to COVID-19 is its gaping fiscal deficit. The State Bank
of Pakistan has noted there may be some risks that may hinder achieving revenue targets. A financial loss of Rs 2.5 trillion because of COVID-
19 during the FY 2020-21 is an extraordinary shock7. This means that the Government must keep a consistent check on its expenditures and
raise revenue by expanding tax base to develop capabilities (i.e. health and education) of its people. In this context, the United Nations has
also urged the national governments to cope with the impacts of COVID-19 by: (a) introducing essential measures to check the vulnerability of
healthcare systems, (b) accelerating the use of information and communication technologies in the societies' core activities, (c) increasing the
use of technologies and distance learning in education sector.
11 https://www.pbs.gov.pk/sites/default/files//other/covid/Final_Report_for_Covid_Survey_0.pdf
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Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
During the COVID-19 pandemic, Pakistan’s Small and Medium-sized enterprises (SMEs) were impacted severely as many shut down and
others faced unprecedented economic disruptions. SMEs are crucial for the economy
as these businesses are spread all over Pakistan in rural and urban areas and provide
employment to a large proportion of Pakistan’s working population. They constitute
over 90 percent of the estimated 3.2 million business enterprises and contribute 40
percent to the GDP with over 40 percent of export earnings 6. Therefor e, the revival
Foreign Remittances and growth of the SME sector is one of the significant tasks ahead for the Government
and is already a part of key government strategy documents such as the Punjab
$ 24.2 billion Growth Strategy 2023.
in Jul-Apr FY 2O21
While the GDP growth fell, inflation rose and there was a trade imbalance, Pakistan’s
foreign remittances rose to $ 24.2 billion in Jul-Apr FY2021 compared to $ 18.8 billion
last year, which indicates a growth of 29 percent. Foreign remittances received by Pakistan are estimated by the World Bank to be
approximately 8 to 9 percent of the total GDP10. Even though the flow of foreign remittances has increased despite the COVID-19 pandemic,
a few economists argue that this increase will be short-lived due to diaspora job losses, particularly in countries like Saudi Arabia and the
United Arab Emirates. The State Bank of Pakistan, however, is optimistic in its outlook, arguing that Pakistan’s external sector will remain
stable during the current fiscal year7.
Despite a negative economic growth rate in FY 2020-21, the National Accounts Committee has estimated an economic growth rate of 3.94%
for FY 2021-22 and the IMF has projected a 1.5% increase for the same time. Both of these estimates are significantly better than the economic
growth rate of FY 2020-21 and suggest that Pakistan is on the road to economic recovery. Despite the high volume of COVID-19 related
expenditures, and concessions on different taxes, fees, and loan repayments etc., the fiscal sector has also performed beyond the expectations
as a result of the government’s efforts to maintain fiscal discipline. During first three quarters of FY 2020-21, total revenue receipts increased
by 6.5% percent with total volume of Rs.4993 billion, and expenditures grew by 4.3 percent (Rs. 6645 billion). Fiscal deficit remained 3.5
Page 67
Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
percent of GDP as compared to 4.1 percent during same period of last year. Following in the footsteps of the Federal Government, the Punjab
Government has also improved its tax collection by 16 percent to Rs. 191.5 billion during the same period. In fact, the Punjab Revenue
Authority has outperformed all other revenue collecting provincial agencies by increasing its collection of sales taxes on services by 37 percent
to Rs. 117 billion from Rs. 85.5 billion during same period of the last fiscal year. Additionally, the Excise and Taxation Department has slightly
increased its revenue collection to Rs. 26.6 billion from Rs. 22.1 billion a year ago.
Other sectors of the economy also showed a healthy trend of significant improvement during the three quarters of the current fiscal year as
compared to last year. Growth rate of Large Scale Manufacturing (LSM) increased from negative 9.9 percent a year ago to positive 5 percent.
Except cotton, all major Kharif Crops exceeded their
respective production targets. The Government’s incentives to Measures for Economic Recovery
the construction sector also proved to be a catalyst for growth
of its allied manufacturing segments. Amidst the lockdown,
more Pakistanis, who had been previously hesitant, began
online shopping and using other online services which Economic growth
contributed significantly to the positive growth of the services rate of 3.94%
sector especially in segments including wholesale and retail, Revenue receipts
transportation, free lancing, e- commerce, communications, increased by 6.5%
and online certifications. Inflation remained subdued during
first two quarters and resurfaced since February 2021. Punjab Government
However, it remained significantly low at 8.6 % as compared improved its tax
to 11.2 % last year.
collection by 16%
As the economy of Pakistan as well as that of Punjab has PRA tax collection
begun recovering from the devastating effects of COVID-19
owing to the vision and commitment of the Government and its increased 37 %
institutions, the Punjab Government is committed to PRA
completely bring the economy of the province out of clutches
of the pandemic and make it self- sufficient and advanced. In
that regard, the Punjab Government has introduced schemes,
packages, projects, and developed policies to aid the
province’s economic recovery in a sustainable and inclusive
manner. Some of these are:
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Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
Page 69
Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
Healthcare Reforms
The greatest impact of the COVID-19 pandemic has been on the healthcare infrastructure and systems of Pakistan and all its provinces,
highlighting critical areas that need improvement. As a result, the Punjab government increased the total Health sector allocation by 22%
(FY2017-18: Rs. 233 Bn to FY202-21: Rs. 284.4 Bn) and will further increase this substantially in the forthcoming budget. One of the key
initiatives that the Punjab Government
undertook is the provision of Health cards to
under-privileged households so their Allocation FY202-21
healthcare needs may be effectively met. Rs. 284.4 Bn
Over 5.4 million households have received
health cards until now and by December
2021 the health card will provide universal Government increased
health coverage to the 110 million the total Health sector
inhabitants of Punjab. Other health related allocation by 22%
interventions by the Punjab government
include immunization of 81% of its children
in 2019-20 that increased from 70% in 2014-15; induction of over 32,000 healthcare professionals to improve the provision of healthcare to
people; upgradation of 49 nursing schools and introduction of a new service structure of nurses. Further 173 hospitals were dedicated for
Corona patients; additional 15721 beds including 787 oxygen beds were added in these hospitals and 2284 HDUs were reserved for Corona
patients. 43 testing labs for Covid-19 tests with accumulative capacity of more than 40,000 test per day and 857 vaccine centers are working
in the whole province. To meet the inflated demand of HR due to high pressure of corona cases in hospitals, 490 doctors (MOs/WMOs), 2
consultants, 795 nurses, 250 allied, and 419 support staff were recruited in addition to existing HR.
Education Reforms
One of the most significant and pressing challenges being faced by school-going children across the globe is on learning losses as a direct
consequence of COVID-19. Many schools, colleges and universities shut down for long periods of time to curtail the spread of COVID-19 and
led to major learning losses. In a country where enrollment is already very low and the literacy rate needs further improvement, this proved to
Page 70
Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
be a colossal loss. Therefore, the Government of
Punjab increased allocation to the Education sector Government of Punjab increased allocation to the Education
by 13.4% in FY 2020-21. Further to ensure sector by 13.4% in FY 2020-21
uninterrupted education of students from vulnerable
communities, the Punjab Government gave a waiver
of admission and tuition fee to overcome declining
admission and enrollment rates. Other interventions
that the Government of Punjab has introduced over
the last year includes the Insaaf Afternoon School Insaaf Afternoon School Program in 577
Program in 577 schools across 22 districts and schools across 22 districts
increase in the number of high schools across Punjab
by 20% since 2018, to name a few.
Some other programs introduced by the Punjab Government include the establishment
and operation of 93 Pannah Gahs and 121 Langar Khanas; Ba-Himmat Bazurg Program for person older than 65 year; Nai Zindagi Program;
Unconditional Case Transfer for Persons with disabilities; Income Generation Scheme for disabled people; Women Income Growth and Self
Reliance Programme at a cost of PKR 7.14 Billion with 292000 beneficiaries; increase in Social Security coverage for Workers where 251,445
cards have been issued between 2018-2021 compared to only 89,241 cards issued from 2013-2018.
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Chapter VII – Post COVID-19 Fiscal Challenges and Measures for Economic Recovery
Page 72
Chapter VIII –Chapter
Public Financial
VII – PostManagement
COVID-19 Fiscal
(PFM)Challenges
Reform and Measures for Economic Recov
P
ublic Financial Management (PFM) reforms refer to the set of laws, rules, systems, and processes used by national and sub-national
governments to mobilise revenues, allocate funds, undertake public spending, account for funds and audit results. A strong PFM
system is an essential aspect of the institutional framework for an effective state. Improving effectiveness in PFM systems allows
governments to make the best use of resources.
Over the years, Government of the Punjab (GoPb) has achieved some key milestones in this journey of PFM reforms, which clearly
demonstrates the priority assigned to the instant policy space. Some of the momentous initiatives undertaken in the previous years include the
creation of Punjab Revenue Authority, the establishment of Punjab Pension Fund, Debt Management Unit, Corporate Finance Unit, and the
introduction of Medium-Term Budget Framework, citizens budget and e-payments of taxes. Some of these reforms have contributed to a
marked increase in the own-source revenue, fiscal responsibility, improved quality of technical input for strategic and operational levels decision
making and improvement in Pakistan’s ranking on the Ease of Doing Business Index.
02 04 06
01 03 05 07
304
reform agenda. The World Bank and FCDO became the leading
USD million Programme titled ‘Punjab Resource partners to the reform efforts of the Finance Department. FCDO’s
Improvement and Digital Effectiveness (PRIDE)’. technical assistance through the Subnational Governance (SNG)
Programme helped the department in developing a holistic Public
Financial Management Reform Strategy 2025 to address the deficiencies highlighted in the assessment.
The PFM-RS comprises nine pillars, each of which addresses a major area within the PFM system. The pillars are presented in a Results
Framework that specifies the vision, result areas, issues, and recommended actions to counter these challenges. PFMRS 2025 aims to develop
a robust PFM system setting out long-term goals and a vision for PFM reforms defining priorities and sequencing of the reform process.
Effective implementation of the strategy is expected to build the capacity of Finance Department officials and increase tax and non-tax revenue
Page 73 Page 72
Chapter VIII – Public Financial Management (PFM) Reform
eventually leading to improved service delivery. The
01 strategy includes a pillar on disaster risk financing
Revenue mobilization is (DRF) systems, which is extremely relevant given the
strengthened to finance services COVID-19 pandemic. The inclusion of DRF not only
improves budget credibility through improved fiscal
Rs
02 risk assessment but will also help provisioning for pre-
PFM and Disaster Risk Financing arranged disaster financing instruments. This is the
first time DRF has been included in any provincial PFM
03 strategy in Pakistan. In the coming Fiscal Year, GoPb
Quality of budgeting is improved will be conducting an analysis of climate and disaster
related expenditure along with an assessment of
04 climate and disaster budget tagging and tracking
Budget is executed as planned and systems. Moreover, a donor coordination forum has
fiscal risks are managed better
been notified to coordinate the efforts of all donors
05 involved in PFM and oversee the implementation of the
Reformed development budget strategy.
systems
06 Punjab Resource Improvement and
R Improved management of funds in
local governments
Digital Effectiveness Programme
07 During FY 2020-21, the government started the
Improved legal and regulatory implementation of a USD 304 million PRIDE
framework programme based on the PFM Reform Strategy. The
08 objectives of the programme are to increase own-
Capacity enhancement for better source revenue and improve the reliability of resource
PFM allocation and access to digital services for people and
09 firms in Punjab.
IT for effective PFM and revenue
mobilization Without an effective oversight and implementation
mechanism, even the best of the strategies may fail.
Realizing this, relevant fora of Programme Steering Committee for PRIDE, Donor Coordination Forum, and Advisory Committee on Provincial
Finance have been created to provide guidance and oversee implementation of the strategic vision.
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Chapter VIII – Public Financial Management (PFM) Reform
Regulatory and Legal Reforms
Currently, the GoPb is in a process of finalizing two laws to improve
the regulatory function envisaged under Article 119 of the Constitution
of Pakistan: first, Public Financial Management Act, and second,
Fiscal Responsibility Debt Management Act (FRDMA). The former, in
addition to strengthening management of public finances to improve
01 02
implementation of fiscal policy for better macroeconomic
Fiscal
management and to strengthen budgetary management, will fulfill the Public
constitutional requirement to regulate the provincial financial Responsibility
Financial
management through an Act of Provincial Assembly, which is being Debt
Management
regulated through rules duly approved by the Governor. It may also Management
address the issues of outdated provisions of existing rules, regulation
Act
Act (FRDMA)
of separate legal entities created by the successive governments
under different laws, weak controls of regulatory entities, and cash
management practices. And the latter will pave way for prudent fiscal
and debt management by laying down key principles of financial management to ensure financial discipline by embedding a few quantitative
targets pertaining to fiscal and debt management. This is also in line with the direction of reforms envisaged under the PRIDE Programme.
This year, Finance Department is presenting a Fiscal Risk Statement to the legislature, disclosing all major risks to the provincial finances.
Budget Transparency
Budget transparency and accountability are important elements in budget efficiency. Improvements in budget transparency will also strengthen
scores in PEFA indicators. To increase
budget transparency, Finance Department
prepared the first ever mid-year budget While last year’s white paper included information on contingent liabilities,
execution report in FY 2020-21. The mid- an important element of PEFA’s Performance Indicator-5 i.e., budget
year budget execution report allows for documentation, this year’s budget will include disclosure of financial
the analysis of budget spending and assets, fiscal risk statement, explanation of budget implications of new
enables a comprehensive assessment of
policy initiatives and quantification of tax expenditures.
actual spending and revenue collection
against original estimates at the midpoint of
the budget year. It also helps identify the need for
changes in budget allocation, including whether there is a need for supplementary budgets. Budget execution reports will help identify variances
between actuals and allocations and present recommendations to ensure that variance is within an acceptable limit. This practice will not only
continue next year but the government will also prepare a year-end report looking at the government’s performance for the entire year. This
will have a comprehensive assessment of actual spending and revenue collection against budget estimates at the end of the financial year.
Year-end report will help take stock of the government’s performance in realising its targets and performance indicators and informs future
policy direction.
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Chapter VIII – Public Financial Management (PFM) Reform
Fiscal Space Reforms
Reforms undertaken by FD have not only focused on improving budgeting
and fiscal strategy but also to increase fiscal space. To increase its own
3
source revenue, the government is undertaking different reforms relating to
different taxes. Provincial excise is the third largest tax collected by the PKR .1 billion
Excise Taxation & Narcotics Control (ET&NC) Department, however, the
efficiency of excise duty collection is undermined by the outdated legal third largest tax collected by the Excise Taxation &
framework, the Excise Duty Act (1914), and an outdated system of tax Narcotics Control (ET&NC) Department
collection, monitoring, record keeping, regulation of licenses/ permits and
transport of spirit and liquor. The ET&NC Department is revising the Excise
Duty Act and its rules to improve the efficiency of revenue collection while minimising associated risks. The revisions will aim at addressing
issues related to:
01 02 03
Increased efficiency in excise Use of technology to improve Address weaknesses in the
administration excise administration and system for monitoring
reduce the interface between production at distilleries and
taxpayers and tax collectors breweries
In FY2021-22, GoPb also plans to reform Urban Immovable
Property Tax (UIPT) and Motor Vehicle Tax (MVT). UIPT, a local 01 02
government tax, is an extremely important tax for ET&NC new valuation
integration of
Department. By realizing its potential, the dependence of local tables for UIP Tax
MIS and GIS
governments on provincial transfers can be reduced. This could also datasets
help in establishing a link between local taxation and local provision
of services and potentially create a system of local accountability.
UIPT
The reforms in this space include formulation and implementation of
new valuation tables for UIP Tax, integration of MIS and GIS
datasets and effectively use the integrated system for tax collection,
and deliberations to move from Gross Annual Rental Value to Tax
Reforms
Capital Value for assessment of UIPT.
integrated shifting to
system for tax Capital Value
collection for collection
03 04
Page 76
Chapter
ChapterVIIIVIII– Public
– PublicFinancial
FinancialManagement
Management(PFM)
(PFM)Reform
Reform
Motor
MotorVehicle
VehicleTaxTax(MVT)
(MVT)isisalso
alsoa asignificant
significanttaxtaxforforET&NC
ET&NCDepartment.
Department.The The
government
government has
has tried
tried toto automate
automate motor
motor vehicle
vehicle base
base forfor
thethe regulation
regulation ofof motor
motor vehicles
vehicles
andcollection
and collectionofofMVT.
MVT.Currently,
Currently,a apilot
pilotisisunderway
underwaythatthatisis testingthe
testing theuse
useofofhandheld
handheld
readersininparking
readers parkinglots
lotsand
andgantry
gantryreaders
readersplaced
placedatatmain
mainentry/exit
entry/exitpoints
pointsand
andmain
main
roadstotoidentify
roads identifyvehicle
vehicletoken
tokentax
taxdefaulters,
defaulters,increasing
increasingefficiency
efficiencyasastraffic
trafficstops
stopswill
will
bebelinked
linkedtotoananE-Pay
E-Paysystem
systemforforspot
spotcollection
collectionofofdues
duesfrom
fromdefaulters.
defaulters.The Thepilot
pilotisis
expected
expected toto help
help reduce
reduce tax
tax evasion
evasion andand thereby
thereby supportanan
support increase
increase inin revenue.
revenue.
In In
thethe
context
contextof of
Covid
Covid
situation,
situation, GoPbGoPb hashasnotnot
onlyonly
developed
developed Covid-sensitive
Covid-sensitive taxation
taxationandandrevenue
revenueproposals
proposals butbut
also
also
focused
focused onon
areas
areasof of
taxation
taxation
andandrevenue
revenue reforms
reforms thatthat
would
would improve
improve thethecollection
collection
byby
improving
improving thetheefficiency
efficiencyof of
taxtax
collection.
collection.
Concessions
Concessions were
wereallowed
allowed onon
property
propertytaxtax
andandmotor
motor
vehicle
vehicle taxtax
by by
extending
extending thethe
rebate
rebate
period.
period.
Moreover,
Moreover, to to
encourage
encourage payments
payments through
through e-pay
e-paya special
a special discount
discount
of of
5%5%
waswasoffered
offered
ononMVT MVT
andandUIPT.
UIPT. TheThedepartment
department is supporting
is supporting revenue-raising
revenue-raising pilots
pilots
including
includingautomation
automation andand
integration
integrationof of
GIS/MIS
GIS/MIS data
data
forfor
property
propertytaxes,
taxes,
thethe
useuse
of of
‘track
‘track
andandtrace’
trace’forfor
distilleries/breweries,
distilleries/breweries,andandintegration
integration of of
taxtax
databases
databases to to
identify
identify
sales
sales
taxtax
evasion.
evasion.TheThe
pilot
pilot
of of
integration
integrationof of
property
property
taxtaxsystem
system willwill
automate
automate property
propertysurveys,
surveys,integrate
integratethethe
useuse of of
MIS MISandand
GIS,
GIS,identify
identify
excluded
excluded areas,
areas,develop
develop anan
application
applicationforfor
updating
updatingproperty
property details,
details,enable
enableproperty
propertyowners
ownersto to
review
reviewproperty
property details
details
forfor
taxtax
computation,
computation, andand
testtest
thethe
useuse
of of
barcodes
barcodes
forfor
auto-property
auto-property surveys.
surveys.
It is
It estimated
is estimatedthat
that
thethe
innovation
innovationwill
will
increase
increase
thethe
current
current
taxtax
yield
yield
of of
PKR 1313billion
PKR billion
through
through
increased
increased
efficiency
efficiency
of of
property
property taxtax
management
management structure,
structure,
increased
increasedcoverage,
coverage,andand
reduced
reduced human
humanerror.
error.
TheThe
intervention
intervention
linking
linking
MIS
MISand and
GISGIS
data
data
will
will
make
make it easier
it easier
forfor
thethe
ET&NC
ET&NCDepartment
Department to to
identify
identify
taxable
taxable
properties
propertiesand
and
improve
improve thethe
overall
overall
administration
administrationof of
UIPUIP
Tax.
Tax.
ToTo
achieve
achieve
thethe
DLIs
DLIsunder
underthethe
PRIDE
PRIDEprogramme
programme andand
to to
bring
bring
efficiency
efficiency
in tax
in tax
administration,
administration,GoPb
GoPbwillwill
alsoalso
bebefocusing
focusingonon
thethe
integration
integration
of of
databases
databasesof of
provincial
provincialtaxes
taxes
in in
thethe
coming
coming FY.FY.
Currently,
Currently,
all all
databases
databases areare
operating
operating
in in
silos.
silos.
Integration
Integration of of
taxes
taxes
is expected
is expected to to
increase
increase
compliance
compliancewith
with
thethe
taxpayers
taxpayers andand
prevent
prevent
revenue
revenue
leakages.
leakages.
Finance
FinanceDepartment
Department Punjab
Punjab hashas
gonegonebeyond
beyond meeting
meetingthethe
requirements
requirements of the
of the
PRIDE
PRIDE programme
programme andandhashas
linked
linkedintegration
integration with
with
simplification
simplification
andandharmonization
harmonization of of
taxes
taxeswithin
withinthethe
province
province andand
across
acrossfederating
federatingunits.
units.
Punjab
Punjab is proactively
is proactively engaging
engaging with
withother
otherjurisdictions
jurisdictions to to
setset
thethe
agenda
agenda to to
achieve
achieve thetheoptimum
optimum level
level
of of
harmonization.
harmonization. These
These efforts
efforts
arearehelping
helping a great
a greatdeal
dealin innarrowing
narrowing downdown thetheformformandanddegree
degree of of
harmonization
harmonization ononthethe
various
various dimension
dimension of taxation
of taxationacross
across
jurisdictions.
jurisdictions.
Punjab
Punjabhashasfinalized
finalized
thethe
proposals
proposals of simplification
of simplification of tax
of tax
regime
regime within
within
thethe
province
provinceto to
facilitate
facilitatethethe
process
process andand bring
bring
uniformity
uniformityacross
acrossprovinces.
provinces. TheThenextnextstep
step
is is
thethe endend
thethefragmentation
fragmentation of of
taxtax
bases
basesandand
differentiated
differentiatedtaxtax
rates.
rates.Currently,
Currently, thetheprovinces,
provinces, including
includingPunjab,
Punjab,areare
levying
levyingandandcollecting
collectingthisthis
taxtax
both
bothononthetheorigin
originandandthethe
destination
destination
basis.
basis.
Moreover,
Moreover, Punjab
Punjab seeks
seeksto to
settle
settle
thethe
definitional
definitionalandand
jurisdictional
jurisdictional
issues
issuesandanddecrease
decrease thethe compliance
compliance costs
coststo to
taxpayers
taxpayers by by
moving
moving
from
frommultiple
multiple
taxtax
returns
returns to to
a single
a single taxtax
return.
return.
Another
Another initiative
initiative worth
worthmentioning
mentioning here
hereis is
e-Pay,
e-Pay,thethe
firstfirst
ever
ever
Government
Government payment
payment aggregator
aggregator which
which waswaslaunched
launched by by
Government
Government of of
Punjab,
Punjab, in in
2019,
2019, forfor
citizen
citizen
facilitation
facilitation
andandease
easeof of
business
business byby
enabling
enablingcitizens
citizens
across
across
Punjab
Punjab to to
paypay
their
their
taxes
taxesusing
usingelectronic
electronic
payment
payment
channels.
channels. It has
It has increased
increased thethe
digital
digital
transactions
transactions of of
OwnOwn Source
SourceRevenue
Revenue drastically
drastically
andand
collected
collected PKRPKR 2525
Billion
Billion
plus
plus
from
from5.95.9
million
million
plus
plus
transactions
transactions till till
May May2021
2021in CFY
in CFYwhile
whilefacilitating
facilitating
4.74.7
million
million beneficiaries
beneficiaries
using
using
thethe
system.
system.A total
A total
of of
9 departments
9 departments andand
2020taxes
taxes
have
havebeen
been
digitized
digitizedwithwith
seamless
seamless andand
convenient
convenient online
online
payment
payment methods.
methods. Moreover,
Moreover, newly
newlyadded
addedlevies,
levies,
interalia, in FY
interalia, in FY2020-21
2020-21 were
were
Vehicle
Vehicle
Fitness
Fitness
Certificate,
Certificate, e-Challan,
e-Challan, e-Auction,
e-Auction, PEPRIS
PEPRIS andand
Workers
Workers Participation
ParticipationFund.
Fund.In In
FYFY2021-22,
2021-22, several
severallevies
leviesareare
being
beingplanned
plannedto to
bebeadded
addedin e-
in e-
PayPayincluding
including Agriculture
Agriculture income
income Tax,
Tax,Domicile
DomicileFees,
Fees,Character
Character Certificate
CertificateFees,
Fees,
Cattle
Cattle
Market
MarketFeesFeesetc.etc.
OnOn thethe
other
other
hand,
hand,Government
Government of of
Page
Page
77 77
Chapter VIII – Public Financial Management (PFM) Reform
the Punjab is also planning to implement disbursement module, on the lines of collection of receipts, in upcoming version of e-Pay which is
expected to help in efficient utilization of Government funds.
Further, in FY2021-22, the Government, through Irrigation Department, is launching e-Abyana pilot in 04 canal divisions, giving an option to
farmers to pay Abyana through electronic payments, paving the way for improved quality of assessments and increased transparency in the
overall process of issuance of bills and payments made by farmers. This system is expected to allow higher visibility of performance of irrigation
revenue staff down to the grass root level combined with the use of satellite based information sources. Moreover, electronic payments will
allow real time re-conciliation of accounts at each Canal Division and lower levels which will lead to improved focus on recovery and enhance
revenue generated through Abyana in the long run.
Considering the income shock and decline in the aggregate domestic demand, the Government decided not to raise tax rates or impose new
taxes. It, however, decided to explore options to raise revenues without any incidence on the taxpayers. The Government intends to use the
“Land Utilization Policy” for efficient and productive use of its assets. This policy envisages disposal of State Land through various modes
including sale and lease using a competitive and transparent process. The purposes may include cultivation, commercial, industrial, and
charitable. The new dispensation is aimed at generating revenue, attracting investment in backward areas, and supporting economic growth.
Pension Reforms
Moreover, the government is also maximizing its existing resources through the identification and implementation of efficiency gains by
reforming the pension system. GoPb is undertaking a review of policy options for the pension system, including the development of a direct
contributory scheme for new hires along with proposing changes to the existing direct benefit scheme. GoPb has recently raised the minimum
voluntary retirement age to 55 years of age or completing a minimum of 25 years of service, whichever is later. Other changes under the direct
benefit scheme that are being considered are indexation of pension to inflation, the merger of ad hoc allowances into the basic pay scale and
reduction in the rate of commutation. GoPb has also launched a proof of life pilot where GoPb in partnership with NADRA that will have an
online and mobile-based application using biometric verification of pensioners for proof of life. The current practice of physical certificates is
susceptible to fraud and manipulation, with the risk that pensions can continue to be claimed for pensioners who may have died. These reforms
are expected to bring in efficiency savings of at least PKR 68 billion over three years.
Conclusion
PFM is an essential part of the development process. A sound PFM system supports aggregate control, prioritization, accountability, and
efficiency in the management of public resources and delivery of services, which are critical to the achievement of public policy objectives.
GoPb is committed to improving governance in Punjab and achieving greater transparency and accountability, the foundation for which is in a
robust PFM system.
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