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Reading: Govt ‘overspent’ Rs261bn in FY 2015-16
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PhotoNews Pakistan > Pakistan > Govt ‘overspent’ Rs261bn in FY 2015-16
Pakistan

Govt ‘overspent’ Rs261bn in FY 2015-16

Web Desk
By Web Desk Published June 6, 2016 7 Min Read
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Islamabad: Despite the government’s protestations of “fiscal discipline”, Finance Minister Ishaq Dar has sought parliament’s post-facto approval for a Rs261 billion ‘supplementary budget’ to cover massive governmental expenditure overruns in the outgoing fiscal year, almost 28pc higher than the figure approved last year.

Many of these overruns could be described as extravagant and avoidable expenses in view of the austerity policy currently in place, a senior government official said. For example, about Rs15 million was spent on the purchase of vehicles by the Prime Minister’s Office and an additional Rs15m paid to ministers and ministers of state as TA/DA.

Similarly, Rs822m was spent by the Foreign Office on the purchase of 35 ‘high security vehicles’, and Rs107m was given to the Capital Development Autho­rity for the construction of Kazakhstan’s embassy in Islamabad.

Another Rs109m was spent by the Ministry of Foreign Affairs on the purchase of an unspecified number of vehicles, despite a ban on the purchase of new vehicles.

According to budgetary documents placed before parliament, approval has been sought for Rs260.88bn in supplementary grants. Of these, grants worth Rs158.88bn are of a ‘technical nature’, while Rs102bn are expenditure overruns or additional expenses that are likely to place an additional burden on the budget.


Avoidable expenses burdening govt’s ‘supplementary budget’


A cursory look at the budget documents suggests that some of these additional burdens pertained to the purchase of luxury vehicles for cabinet members and the prime minister’s staff, as well as advertisements, ministers’ allowances, the refurbishment of accommodations for judges and unexplained expenses by intelligence agencies, under the additional expenditure head.

On the other hand, some of these additional expenses include projects of national importance, such as the creation of a special security division for Chinese workers, the strengthening of the civil armed forces and the payment of overrun subsidies to some private entities and sugar barons.

A finance ministry official explained that a major chunk of supplementary grants pertained to technical re-appropriations — the shifting of funds from one head to another or debt rollovers — that had no additional impact on the budget.

However, he confirmed that regular supplementary grants had been significant over the last three years. These included Rs65bn in 2013-14, Rs139bn in 2014-15 and Rs102bn this year, despite the government’s austerity policy.

In its written statement, the finance ministry says that regular supplementary grants were meant “to provide for expenditure purposes that were not foreseen at the time of finalisation of demands for grants. Such supplementary grants put an additional burden on the budget”.

But surprisingly, the ministry was not able to foresee the massive expenditure of Rs102bn when it was formulating the last budget.

Most of these supplementary grants are described as ‘charged expenditure’ out of the federal consolidated fund, which is just presented to parliament for its information and is taken as approved without voting. Simply put, parliament cannot reject these grants because the amount has already been consumed.

For example, despite repeated claims that subsidies will be slashed, the government has actually exceeded subsidy allocations by around Rs45bn, which has now been charged in the budget. Another Rs44bn has been spent on the generic and unspecified head ‘others’.

An even greater amount — Rs33bn — was paid to K-Electric as tariff differential subsidy. Around Rs12bn subsidy was given for rice and cotton, Rs1.6bn support was extended for sugar export and Rs17.8 billion was paid to power companies against receivables from Fata. A Rs5bn contribution was also made to the Asian Infrastructure Investment Bank.

A Rs1.23bn grant was used on the establishment of a dedicated network for sharing classified data and the purchase of jammers by the Intelligence Bureau. Interestingly, the Cabinet Division paid Rs375m for maintenance of the Pakistan Metro Bus System, while Rs50m was paid to the labourers working on the project as a reward for its timely completion.

An additional expense of Rs30bn was made by the armed forces, including Rs20bn for the creation of a special security division to protect Chinese workers, Rs5bn for “IS duty allowance”, Rs3bn for unspecified capacity-building exercises and Rs60m for the Youm-i-Azadi Show on August 14.

An amount of Rs45m was spent on international arbitration against Agility – a firm engaged by the Federal Board of Revenue. An amount of Rs2bn was spent on 6th Population and Housing Census, which could not take place as planned. Around Rs1.528bn was spent on government advertisements, beyond the funds authorised by parliament.

At least Rs13bn was paid separately to the Frontier Corps in Khyber Pakhtunkhwa and Balochistan and Rs5.1bn was given to Pakistan Rangers in Sindh and Punjab. The National Accountability Bureau paid Rs525m for international arbitration in a case against M/s Broadsheet.

Although Rs100bn was separately allocated in the development budget for temporarily displaced persons and security enhancement, an additional Rs15bn was paid for TDPs and related support services of Operation Zarb-i-Azb. The ministries of water and power and petroleum also spent an unauthorised Rs1.5bn on unspecified ‘services rendered’.

A major part of the expenditure overrun was unavoidable to some extent, given the overall economic condition, the deterioration of public-sector companies and poor fiscal management. However, several expenditures, including extravagant spending on publicity, travelling and medical allowances for ministers, advisers and top bureaucrats, could have been avoided.

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