The Ministry of Planning-run Systems Applications and Products (SAP) - the financial accounting and reporting software - showed that Rs680 billion was spent under the Public Sector Development Programme (PSDP) during fiscal year 2020-21, which was higher than the Rs650 billion approved by the National Assembly.
On the other hand, the finance ministry’s provisional figures suggested PSDP expenditures of close to Rs670 billion. Sources told The Express Tribune that after seeing huge savings against the approved development budget, the government just before the close of the fiscal year decided to divert funds towards agencies that had either pending liabilities or needed funds for ongoing projects.
These included the Pakistan Atomic Energy Commission (PAEC) liabilities and financing requirements of the National Disaster Management Authority (NDMA) and the National Transmission and Despatch Company (NTDC).
As against the allocation of Rs23 billion, the government gave Rs72.4 billion for development expenditures to the PAEC - the entity running civilian nuclear power projects, according to data by the planning and development ministry.
The revised budget was Rs49.5 billion or 215% higher than the original allocation.
“We had savings against Rs650 billion PSDP that we decided to divert towards the PAEC to clear its present and some of the past liabilities,” said Federal Minister for Planning and Development Asad Umar on Monday while speaking to The Express Tribune.
Umar said that at the time of last year’s budget, the PAEC had sought far higher than the Rs23 billion budget, which the government at that time could not commit due to the limited fiscal space.
PAEC was given the additional amount after other ministries could not spend the allocated funds, said the sources.
For the last fiscal year, the government had allocated Rs70 billion in the PSDP for Covid-19 mitigation measures. However, the actual spending under this head was shown as zero in the SAP software, said the sources.
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Umar stated that the Covid-19 budget was transferred to the provinces for onward spending. He said that the budget was given through the Ministry of Finance, which was also the reason behind the increase in development allocation of the finance ministry.
Against an allocation of Rs65 billion, the Ministry of Finance was actually given over Rs105 billion during the last fiscal year, an increase of 61.5%. In the new PSDP book, the revised spending of the finance ministry had been shown at Rs66.7 billion at the time of presentation of this year’s budget.
Sources said that out of an additional Rs40 billion given to the finance ministry, Rs37 billion had been taken out of the Covid-19 budget of the last fiscal year.
Umar said that the Covid-19 programme allocation had been reduced after the government decided to drop the WASH component from the programme.
Similarly, the NTDC that had originally been given Rs40 billion was actually released around Rs70 billion.
NDMA had not been given any money for development spending in last year’s original budget. But the figures showed that the NDMA also received Rs27.5 billion after other ministries could not spend their funds.
PSDP funding can only be made to projects that are part of the PSDP. Any funds that remain unutilised have to be surrendered at the close of fiscal year. However, the sources said that some of the funds were transferred to non-lapsable accounts to show higher spending.
The Express Tribune had sent questions to the Ministry of Finance a week ago, requesting it to comment.
The Ministry of Finance did not reply to the questions on how much of the Rs72 billion was actually spent in 2020-21 and whether some of the past liabilities of a few years ago also settled against last fiscal year’s PAEC budget.
The ministry also did not respond whether the entire allocation of Rs105 billion for the finance ministry had been actually spent or some of the funds were placed with banks and would be utilised in the current fiscal year.
The Ministry of Finance had estimated Rs72 billion foreign loans for development purposes but the SAP system put it at Rs126 billion. Till the first week of June, the government had informed the National Economic Council that Rs421 billion was spent and the SAP system data now puts the figure at Rs680 billion.
The Rs259 billion spending in less than 30 days means the ministries spent Rs9 billion a day compared with an average of Rs1 billion a day in the first 11 months of FY21. This indicates that the PSDP money has either been used for other than development purposes or some money remains parked in banks, said the sources.
In June this year, the International Monetary Fund (IMF) issued a press release to report a breach of its Article VIII by Pakistan.
“New information that came to the authorities’ (Pakistan) attention, and which was shared with Fund staff, has revealed that the data on government guarantees dating back to fiscal year 2016 was reported inaccurately,” said the IMF.
“The non-complying purchase arose as a result of a lack of interagency coordination in the compilation of government guarantees provided by the federal government to state-owned enterprises that contributed to incorrect estimates of the government guarantees, starting as far back as FY 2016,” said the IMF deputy managing director.
Published in The Express Tribune, August 10th, 2021.
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