A huge sum of Rs88.7 billion is untraceable in the official books, as the federal government does not have any clue about roughly one-tenth of the total expenditures that it incurred during the first three months of the current financial year.
This also puts a question mark over authenticity of the entire fiscal operations since the numbers reported in the ‘Summary of Consolidated Federal and Provincial Budgetary Operations’ are understated. The finance ministry, on Monday, released the summary of fiscal operations for the period July-September of the fiscal year 2012-13.
In the summary, a sum of Rs88.7 billion has been described as “statistical discrepancy” – a euphemism that the finance ministry uses for untraceable chunks. The untraceable amount makes 9.1% of the total expenditures of Rs975.9 billion that were incurred during the first quarter, according to the official documents.
This is not for the first time that big amounts are untraceable in the official books; however, the figure is alarming this time. In the fiscal year 2010-11, Rs32.4 billion was reported as untraceable, whereas by end of the last fiscal year it swelled to Rs69.9 billion. The government’s budget is based on cash accounts and previous transactions are not reported in the new fiscal year.
The reported figures also undermine the authenticity of the entire budget. The summary shows that government’s development spending during the first quarter remained at Rs30.3 billion. Contrary to this figure, Prime Minister Raja Pervez Ashraf spent his entire annual discretionary budget of Rs22 billion in just three and half months.
The finance ministry’s own reports suggested that the federal development spending was over Rs60 billion.
The discrepancies, giving rise to doubts of irregularities, are despite the fact that the Rs5.6 billion Project to Improve Financial Reporting and Auditing (PIFRA) has in place for the last many years. PIFRA’s objective is to ensure accuracy, completeness, reliability, and timeliness of intra-year and year-end government financial reports at the national, provincial, and district levels.
Both, spokesperson of the Ministry of Finance Rana Assad Amin and PIFRA Project Director Asif Usman, were not available to defend the discrepancies. In the past, officials used to say that discrepancies are addressed at close of every fiscal year but so far neither the finance ministry nor PIFRA had given any update about discrepancies over the last couple of years.
Though the numbers appear understated, the summary shows, that in three months the federal government spent Rs299.4 billion on domestic debt servicing and Rs13.4 billion on foreign debt servicing, which is Rs131.8 billion or 73% higher than the preceding period. On defence, Rs117.5 billion was spent – higher by Rs10 billion or one-tenth.
Total revenues, both federal and provincial, remained at Rs692 billion. The budget deficit – gap between income and expenditures – during the period under review remained at Rs283.8 billion or 1.2% of the gross domestic product.
The deficit is in line with annual target of 4.7%, but the trend is unlikely to be sustained in the coming months. Total revenues ballooned due to the Rs113.8 billion one-off payment by the United States on account of Coalition Support Fund.
Moreover, the Federal Board of Revenue (FBR) has already informed the finance ministry that it cannot achieve this year’s tax collection target of Rs2.381 trillion. It has estimated an Rs187 billion shortfall that will widen the annual budget deficit by the same amount.
Asrar Raouf, member of Inland Revenue of FBR recently said that the Finance Minister Dr Abdul Hafeez Shaikh was in the loop regarding declining revenues.
Published in The Express Tribune, November 27th, 2012.