Fiscal mismanagement: Govt spends record Rs4.3 trillion in fiscal 2012

Economic managers unsure where Rs70 billion spent.

ISLAMABAD:

The country’s total expenses in the public sector for the first time ever increased to Rs4.3 trillion in fiscal 2012, out of which the government has no clue where it spent Rs70 billion. 

The finance ministry on Friday finally released the summary of consolidated federal and provincial budgetary operations for the fiscal year 2011-12, revealing mismanagement and lack of planning on the part of economic managers and showing the reasons behind historical budget deficit.

The country’s total expenditures stood at Rs4.33 trillion against total national income of Rs 2.57 trillion, showing a gap of Rs1.76 trillion or 8.53% of the Gross Domestic Product, according to the summary. The expenditures also include Rs391 billion “one-off” payments to clear the commodity and circular debt.

The budget deficit is Rs910 billion or 4.4% of GDP higher than what the economic managers had gotten approved from the Parliament.

However, this is not the only worrisome element as there is another issue of unidentified expenditures of Rs69.8 billion. The government has no clue where the money is being spent. The official summary puts this money under the head of “statistical discrepancy”. The amount is equivalent to shortfall in tax collection target assigned to the Federal Board of Revenue and also even more than the amount the government collects in electricity bills from the entire country in a month.

When contacted the Finance Ministry spokesperson contested that this money was not being misused. Rana Assad Amin said the Accountant General of Pakistan Revenue did not voucher the expenses and the discrepancy will be addressed in October when the government will give final accounts.

There team failed to clarify the status of the funds despite the government spending Rs5.6 billion project to Improve Financial Reporting and Auditing.

Expenditures breakup

Of the total expenditures, the federal government expenses remained slightly over Rs3 trillion, which were also Rs500 billion more than the budget approved by the Parliament. Of the federal expenses a sum of Rs889 billion was spent on servicing of domestic and foreign debt. Another sum of Rs507.2 billion was spent on defence while Rs3.4 billion was spent on social protection.

On the development side the federal government spent Rs313.3 billion.

The four provincial governments spent Rs967.7 billion and out of that their development spending remained at Rs375.5 billion.

Financing the deficit

In a massive crowd out of private sector credit, the federal government obtained Rs1.76 trillion loans for bridging the gap between expenses and income. The government took 93 per cent of Rs1.63 trillion loans from the domestic market, leaving little credit for the private sector for business expansion.

The government got gross Rs264 billion foreign loans out of that it paid back Rs135.2 billion and the rest of the amount was utilised to finance the budget.

Published in The Express Tribune, September 1^st, 2012.