Ex-FATA’s Woes

Federal government’s recent financial cuts hit uplift and security of ex-FATA districts

Peshawar: Stoppage of funds by the federal government that took power some six months ago is worsening administrative as well as law and order problems in the militancy-infected Khyber Pakhtunkhwa (KP) province, officials say.

They say the newly merged districts of the former Federally Administered Tribal Areas (FATA) are the worst affected, where the flow of all the development and non-development funds has come to a halt.

The KP government, which is led by former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party, lays the blame for this on the federal government, headed by Prime Minister Shahbaz Sharif of Pakistan Muslim League Nawaz (PML-N) who replaced Mr Khan in a confidence vote in April.

It says that that the federal government is deliberately creating problems for the PTI government in KP. The federal government’s response to these allegations was not immediately available.

The KP Finance Minister, Taimur Saleem Jhagra, told Bol News that due to federal cuts, the budget for the ex-FATA districts has been slashed from Rs 137 billion during the pre-April 2022 period to Rs 115 billion now.

Development funds worth Rs 20.5 billion for the region have also been held back so far. In addition, since July, the federal government has removed the residents of these districts from the health card scheme, adding to KP’s financial burden by another Rs 4.5 billion, he said.

These cuts have reduced the ability of the KP government to adequately fund the law enforcement mechanism in areas where militants are increasingly building inroads into the communal structures, and are targeting government officials, including the police.

“The amount of Rs 60 billion allocated by the federal government in the 2022-23 budget for the newly merged districts will not even pay staff salaries,” he said. “We will need at least Rs 86 billion to meet administrative and other needs of the six million people that inhabit these districts.”

These financial constraints are not limited to the merged districts alone, but also extend to the wider provincial economy of KP. According to Mr Jhagra, KP’s share in the National Finance Commission (NFC) Award has fallen short of a total Rs 28 billion over the financial years 2021-22 and 2022-23. This, he said, is a “blatant violation of the Constitution and is crippling the provincial economy”

The five-yearly NFC Award, which was constituted in 1951 to stabilize provincial economies by alleviating horizontal fiscal imbalances and was formally institutionalized in 1973, has not been renewed since the 7th NFC Award, issued in 2010.

During this time, the country has witnessed a substantial growth in population – the benchmark for resource allocation under the provincial divisible pool. This means that the KP’s share, as well as that of the other three provinces, continues to be based on the population census conducted as far back as 1998.

“As such, the current NFC arrangement for KP does not reflect the area and demographics of the merged districts, which were included in KP under the 25th amendment to the Constitution, made in May 2018,” he said.

Besides the NFC Award, monthly provincial revenue receipts under the Net Hydel Power Profits (NHPP) have also been shrinking. The KP government’s documents available with Bol News show that until June 2022, the federal government owed the KP Rs 61 billion in NHPP arrears.

Given these issues, KP faces a deficit of over Rs 300 billion, Mr Jhagra said.

Businessman and president of the KP Chambers of Commerce and Industry, Mohammad Ishaq, when contacted for his views, said there was no doubt that fund cuts will affect the KP, and especially the ex-FATA districts.

“The KP government had been raising the issue with the federal government, but the federal finance ministry was linking the cuts to conditionalities of the International Monetary Fund (IMF),” he said, adding that a shortfall of over Rs 100 billion was surely going to paralyze the administrative machinery of the province, and thereby hurt development, education, health as well as the current rescue and rehabilitation efforts in the flood affected areas.

Mr Ishaq was critical of the Shahbaz Sharif government, saying that it had taken disastrous steps ever since it came into power. He referred to the suspension of imports of a number of products, causing importer’ consignments to get stuck in the middle. Traders’ community also suffered due to fluctuating exchange rate of the US dollar, he said.

Bol News also sought views of a security expert, Brigadier (retd) Mehmood Shah, who said that maintaining law and order and fighting terrorism required a lot of financial support, and the same was the case with socio-economic development.

“Financial cuts will surely affect the capacity of the province to ensure development and peace, but there are steps the KP government itself can take to minimize the damage,” he said. “It can put cuts on non-development expenditure, and desist from spending public money for political gains.”