NA nod sought for Rs345b spending

ISLAMABAD:

The government has sought ex-post facto approval from the National Assembly for nearly Rs345 billion in additional spending incurred during the current fiscal year without prior parliamentary approval. No war-related expenditures with India were booked in the accounts.

A Rs60 billion supplementary grant was allocated for defence purposes in the outgoing fiscal year, but it was not war related. Pakistan's armed forces met war-related expenses with India from their regular approved budgets, said Finance Minister Muhammad Aurangzeb.

The National Assembly's approval is being sought along with the new budget. While the Rs344.6 billion figure appears high, especially against the government's claim of strict expenditure control, it is still lower than in the previous fiscal year.

Under the Constitution, the federal government can approve supplementary grants for unforeseen expenditures without prior National Assembly approval. However, it must later follow the same approval process as for the new budget. Over time, this constitutional provision has been used routinely rather than exceptionally.

Details show that Rs345 billion in additional spending was incurred on unbudgeted items by diverting funds from other heads. This has not impacted the overall budget size, but the volume of these grants—most approved by the Economic Coordination Committee of the Cabinet—reflects poor budgeting and financial control.

Under the $7 billion International Monetary Fund (IMF) bailout package, the federal government has committed that – in order to ring fence the fiscal programme – no supplementary grants will be allowed beyond the approved budget, except in case of severe natural disasters. It has also pledged to seek ex-ante approval from the National Assembly for any spending exceeding budgetary appropriations.

Sources said discussions also took place at the IMF level about discouraging supplementary grants made through internal fund reallocation, to improve fiscal discipline.

The Pakistan Muslim League-Nawaz (PML-N)-led government approved these additional grants for all kinds of expenditures, including power subsidies, the Special Investment Facilitation Council (SIFC), armed forces, helicopter repairs, hosting the Shanghai Cooperation Organisation (SCO) summit, and discretionary spending on parliamentarians' schemes and civil armed forces' capacity building.

The single largest supplementary grant was for power sector subsidies, accounting for 37% of total additional spending. The government gave Rs115 billion in supplementary grants to pay independent power producers, while Rs308 million was allocated for structural reforms in the power sector.

An additional Rs14 billion was given to settle liabilities for solarising agricultural tube wells.

A Rs258 million grant was issued for financial compensation to families of Chinese nationals killed in a terrorist attack that Pakistani authorities attributed to foreign involvement.

The government allocated Rs59.5 billion to the armed forces in supplementary funding. This included Rs23.3 billion for Pakistan Army's counter-terrorism capacity enhancement, Rs8 billion for defence force projects, and Rs7 billion for the Jinnah Naval Base in Omara, according the finance ministry's budget book.

Additionally, Rs8 billion and Rs4 billion were allocated for the Special Security Division South and North, respectively—units that have existed for years and should be part of the regular budget.

The government also approved Rs5 billion for internal security duty allowances and Rs2 billion for technological upgrades at the Inter-Services Public Relations (ISPR).

A Rs1.3 billion supplementary grant was provided for fence maintenance along the Afghanistan and Iran borders, while Rs800 million was allocated for developing the naval air station in Turbat.

Another Rs1.8 billion supplementary grant has been allocated toward overhauling engines of VVIP aircraft, according to the finance ministry's budget documents.

The Reko Diq mining project received Rs3.7 billion in additional funds. A Rs1 billion grant was given for hosting the SCO summit, as per the budget book.

Despite some concerns, Rs2 billion was allocated to restructure Pakistan Revenue Automation Limited (PRAL) — a company and not a federal entity. An additional Rs2 billion was granted for Federal Board of Revenue (FBR) officers, and Rs1.6 billion for setting up anti-smuggling posts.

For transition accommodation of FBR officers, Rs430 million was approved, and Rs869 million was provided to enhance the organisation's operational efficiency. Despite this, the FBR has posted a record Rs1.03 trillion shortfall in tax collection for the current fiscal year, with one month remaining.

A compulsory Rs1.3 billion grant was given to the Election Commission of Pakistan for holding local government elections. Rs7.2 billion was allocated for Sindh-specific discretionary spending on small schemes and for operationalising the Green Line Bus Rapid Transit project.

The interior ministry received a Rs4.3 billion development grant for initiatives such as transforming the National Forensic Agency, building women's facilities in tribal areas, setting up check posts, and launching water supply schemes.

A Rs30 billion supplementary grant was provided for flood-affected areas of Sindh, and Rs19.2 billion was allocated for small development schemes executed by the now-defunct Pakistan Public Works Department. Sindh also received Rs9 billion in additional financial support for projects, but the finance ministry did not detail the projects.

An additional Rs7 billion was given for parliamentarians' schemes and Rs23.4 billion grant was approved for the federal Directorate of Immunisation.