Provincial governments' overdraft limit enhanced to Rs 97 billion

The federal government has reportedly enhanced ways and means limits, commonly known as overdraft limit of provincial governments, by about 40 per cent to Rs 97 billion from 69 billion, well informed sources told Business Recorder. Transfers from divisible pool are the main sources of revenue for the provincial governments. These transfers are released provisionally twice a month. Subsequently, after reconciliation, amount due, if any, is also released to the provincial governments.
The sources said in case the provincial expenditure in a given month is more than the revenue receipts, the provincial governments can utilize" ways and means limits" to bridge mismatch. Historically, the ways and means limits were provided by the federal government through the State Bank of Pakistan to the provincial governments as overdraft facility almost equal to six weeks of wage bill of a province.
According to sources, ways and means limits were last revised in 2010. Recently, the provincial governments proposed appropriate enhancement in the limits. Accordingly, after due deliberation, provincial ways and means limits have been revised. The sources said, the ways and means limit of Punjab has been enhanced by 34.5 per cent to Rs 50 billion from Rs 37.200 billion, followed by Sindh to Rs 22 billion from 15 billion, Khyber Pakhtunkhwa (KP) to Rs 15 billion from Rs 10.100 billion and Balochistan to Rs 10 billion from Rs 7.100 billion.
Grants and transfers to provinces and others for the year 2018-19 have been estimated at Rs 477.924 billion as compared with Rs 430.230 billion in budget estimates 2017-18 and Rs 461.638 billion in revised estimates. Provincial governments during a meeting of the Council of Common Interests a few months ago complained against Federal Board of Revenue (FBR) for unconstitutional deductions at source.
Sindh Chief Minister Murad Ali Shah informed the meeting that he had requested the Ministry of Inter-Provincial Coordination (IPC) to place a summary moved by Sindh regarding "unconstitutional and unauthorized deduction by FBR from the Provincial Consolidated Fund (PCF) before the CCI" but regretted that the matter was not included in the agenda.
He requested that the Finance Ministry should refund the amounts deducted at source as the State Bank of Pakistan had declared such deductions from PCF "unlawful" and recommended that the FBR should reconcile the balances with the provinces. Punjab Finance Minister Dr Ayesha Ghaus Pasha also supported the view point of the Sindh chief minister and termed at source deduction by FBR from PCF an "arbitrary and unlawful practice violative of the constitution".
After hearing the viewpoints of both provinces, the Prime Minister directed the Ministry of Finance to resolve provincial complaints against the Federal Board of Revenue over at source deduction of funds from PCF.