Pakistan's Khyber Pakhtunkhwa government struggles to pay salaries to employees

Amid the growing economic crisis in Pakistan, the Khyber Pakhtunkhwa government is facing a severe financial crisis and has reached the edge of default. According to the Pakistani news outlet, The News International, the caretaker government in the Pakistani-administered region is facing a deficit of PKR 110 billion in the current month. The deficit is in terms of salaries, pensions, development budget and non-salary budget. Amid the rising fiscal deficit in the region, the caretaker government has announced a cabinet meeting to discuss the advance Eid salaries and the pension issue. The matter has become worse since the government is only left with PKR 13 billion in its provincial kitty. 

According to The News International, the Finance Department has refused to disburse pay and pension for the month of April in advance on accounts of Eid. Other than this, payments of the flour subsidy that amounts to PKR 20 billion and provision of a non-salary budget for essential services amounting to a total of PKR 9.6 billion per month are also due. Part of the reason why the caretaker government of the Pakistani-administered region is struggling is the fact that the Pakistani federal government owes a whopping PKR238 billion to the KP government. “We are finding it difficult to pay salaries, today we have requested a provincial cabinet meeting just for this one agenda point to decide whether we should pay the salaries before Eid or on the 1st of next month,” Finance Secretary Muhammad Ayaz told the Pakistani news outlet. 

The finance secretary sent a note to the chief secretary

According to The News International, desperate about the current financial crunch, Ayaz wrote a note to the chief secretary. In the note, he made it clear that the finance department should be allowed to disburse the salary/pension for the month of April 2023, on the first day of the subsequent month. “The account-I balance stood at Rs13 billion and the total wage bill for salary/pension is around Rs45 billion per month. The next tranche of federal transfers expected in the middle of April is projected to be about Rs 20-25 billion,” the note reads. Ayaz stated in the note that considering the payment of salaries and pensions in advance would lead the government to nose dive towards default. The finance department of the struggling region made it clear that they would be unable to pay the salaries and pensions before Eid.