By Staff Reporter
PESHAWAR: The northwestern province of Khyber Pakhtunkhwa has appealed to the federal government for urgent intervention after a prolonged closure of trade routes along the Afghan border triggered a 53.02 percent drop in provincial revenues, with collections from a key infrastructure cess plunging amid stalled cross-border commerce.
Border crossings and trade between the two countries have remained closed since October 11, following ground fighting and Pakistani airstrikes across their contested 2,600-km (1,600-mile) frontier that killed dozens on both sides in the worst fighting since the Taliban’s 2021 takeover of Kabul. All trade and transit have been blocked since the fighting erupted.
The suspension of trade has hammered the province’s finances, as revenue from the infrastructure development cess (IDC) fell to Rs3.48 billion in the first seven months of the current fiscal year, down from Rs7.42 billion in the same period a year earlier, according to provincial officials.
Muzammil Aslam, finance adviser to the Khyber Pakhtunkhwa chief minister, detailed the crisis in a four-page letter to federal Commerce Minister Jam Kamal, calling for an immediate meeting of stakeholders from both provincial and federal levels to address the fallout. The proposed talks would focus on the revenue shortfall’s impact on the province and the mounting difficulties for exporters and traders, including payments stuck across the border and a sharp contraction in business activity, Aslam said in the letter.
The provincial government has already set up a revenue review committee to assess the damage, which has uncovered an alarming decline in IDC collections since the border trade halt began. Pakistan’s exports to Afghanistan are largely funnelled through the Torkham and Ghulam Khan crossings, while trade volumes at other Khyber Pakhtunkhwa points like Kharlachi and Angoor Adda have continued to dwindle, reflecting shifts in cross-border patterns since the Taliban returned to power in Kabul.
Torkham, serving as the main gateway to Afghanistan’s major consumption hubs, has seen some growth, but overall, border stations in Khyber Pakhtunkhwa handled nearly 80 percent of Pakistan’s total exports to its western neighbour in the previous fiscal year. Aslam warned that the extended disruption was inflicting severe revenue, economic and employment setbacks on the province, describing the shortfall as a significant blow to its financial stability.
He traced the initial dip in cess collections to a court-imposed stay order, which was lifted in November, allowing recovery efforts to resume. However, those measures yielded little as trade remained frozen, grinding commercial operations to a near halt. Exporters and traders are now grappling with consignments and payments stranded on the Afghan side, exacerbating liquidity strains throughout the sector, the adviser noted. The financial pinch has made it tough for many businesses to fulfil their cess payment requirements, given the abrupt and ongoing trade stoppage.
Aslam highlighted the month-by-month slide in IDC inflows, with October receipts tumbling from Rs1.3 billion to below Rs487 million. November saw an even steeper fall, to just Rs198 million from Rs1.29 billion a year prior. Cess revenues are tied directly to the flow of goods and commercial traffic across the border, making it all but impossible to hit collection goals under the current suspension, he explained.
Traders, in particular, are voicing grievances over their inability to settle dues, as they cannot collect funds from Afghan buyers amid the broader stagnation in bilateral trade. “This situation is beyond the control of both traders and tax collectors and may result in a broader slowdown in economic activity across the province if trade disruptions continue,” Aslam said.
Khyber Pakhtunkhwa, bordering Afghanistan along a rugged stretch, relies heavily on cross-border commerce for revenue and jobs, with the IDC levied on imports and exports to fund infrastructure projects.
Copyright © 2021 Independent Pakistan | All rights reserved
