Govt makes irregular spending on MPs' projects

ISLAMABAD:

In an irregular move, the federal government spent Rs110 billion on development schemes after the end of June as part of last fiscal year's public sector development spending. The funds were allocated to projects favored by parliamentarians and the ruling parties.

Despite implementing a cash-based accounting system that also required surrendering the surplus funds before the close of the fiscal year, the government went overboard and opened a public purse after the close of the fiscal year, some official documents show.

This on one hand compromised the quality of the spending due to chances of wastages and leakages, while on the other hand resulted in violation of an act of parliament and the fiscal prudence rules.

According to the official record, the Ministry of Planning had booked Rs641.7 billion spending under the Public Sector Development Programme (PSDP) till the last day of the fiscal year 2023-24.

However, the PSDP spending in fact stood at Rs751.7 billion –an excess of Rs110 billion compared to figures booked on the last day of the fiscal year.

The spending is in violation of the Public Finance Management of 2019 and the fiscal rules of 2023.

According to the Assan Assignment Account rules, "the unspent budget at the close of the financial year shall be surrendered by respective offices as per the government instructions; otherwise these will be treated as lapsed".

Neither the ministries surrendered the unspent funds nor did the finance ministry declare those lapsed.

Similarly, according to Section 12 of the Public Finance Management Act, "all ministries and divisions, their attached departments and subordinate offices and autonomous organizations shall surrender to the Finance Division at least 25 days before the presentation of the budget in the National Assembly, all anticipated savings in the grants or assignment accounts or grant-in-aid controlled by them".

The budget was presented in the National Assembly on June 12 and the ministries were required to surrender their surplus budgets much before the end of May.

Out of Rs110 billion irregular spending after the end of the fiscal year, the Rs24.4 billion was on account of foreign loans received against various projects.

The foreign loans disbursements were against the projects of the Federal Board of Revenue (FBR), water resources and the National Transmission and Despatch Company (NTDC).

The Rs752 billion spending was also nearly Rs20 billion higher than the figures that the Ministry of Finance officially announced last month. The ministry had said last month that the PSDP spending remained at Rs732.2 billion.

Due to compulsions of maintaining some semblance of fiscal discipline under the International Monetary Fund (IMF) programme, the finance ministry was not allowing major spending on the development despite allocations by parliament.

This was evident from the fact that as of end of March, the development spending hardly amounted to Rs322 billion. This in no time more than doubled.

Surprisingly, the total Rs752 billion spending was even Rs8 billion higher than the authorization by the Ministry of Planning.

When contacted, Planning Ministry spokesman Asim Khan said the Planning Division authorized an amount of Rs744 billion during FY 2023-24 in accordance with the final ceiling as well as release strategy indicated by the Finance Division.

"The Planning Division does not have the authority or mechanism to ensure spending by various ministries, divisions and the entities remain within authorized amounts."

The Ministry of Finance did not respond to a request for comments till the filing of the story.

The details showed that the excessive post-June spending was incurred on the projects of the parliamentarians, the National Highway Authority, merged districts of Khyber Pakhtunkhwa, provincial nature schemes, Ministry of Housing, Information Technology, Health Ministry, Ministry of Railways, Water Resources and the NTDC.

The spending on the parliamentarians' schemes amounted to Rs48 billion till end of June, which suddenly jumped to Rs56.8 billion. There was Rs8.7 billion spending on the parliamentarians' schemes past the close of the fiscal year.

The development spending becomes the first casualty and the finance ministry always slashes these funds to compensate over spending in other areas.

For the last fiscal year, parliament had approved the Rs950 billion PSDP, which the Finance Ministry significantly slashed to make room for more interest payments.

An amount of Rs14.3 billion was spent on the merged districts of Khyber-Pakhtunkhwa after the end of the fiscal year and the total expenses under this head jumped to Rs46 billion.

The Finance Ministry allowed Rs36 billion additional spending to the National Highway Authority after the expiry of the fiscal year and its total spending amounted to Rs122.5 billion.

The ministries are often forced by the Finance Ministry to curtail their spending despite having fiscal allocations and the authorization by the Planning Ministry. However, all such efforts complicate the fiscal problems, as the delay in completion of the projects is increasing their costs.

The government also spent additional Rs7.2 billion on provincial projects after the end of the fiscal year, taking total spending under this head to Rs16.6 billion.

The details showed that the government also spent Rs1.5 billion on the climate change projects after the end of the fiscal year. The housing ministry's projects, mostly road infrastructure schemes, also received Rs7.8 billion after the expiry of the fiscal year, taking total spending to Rs24.4 billion.

The Ministry of Finance also allowed the NTDC to spend Rs10.8 billion after the end of the fiscal year.

The Revenue Division was allowed to spend Rs9.2 billion after the end of the fiscal year, which was mainly because of receiving foreign loans by the FBR from the World Bank.