$1.5b Saudi gift declared ‘statistical discrepancy’
Move fuels speculations about purpose of grant.
According to officials, who in the past have remained involved in fiscal operations, if the Saudi Arabia money had been an aid, the government would have treated it as part of foreign grants, which is considered non-tax revenues. ILLUSTRATION: JAMAL KHURSHID
ISLAMABAD:
Unlike any foreign grant, Pakistan has not treated $1.5 billion (Rs157 billion) gift from Saudi Arabia as non-tax revenues and instead declared the huge sum a statistical discrepancy in its budgetary books, fuelling speculations about the purpose of the aid.
According to the summary of the fiscal operations for July 2013-March 2014, there was a statistical discrepancy of Rs171.4 billion in the budgetary books. The head of statistical discrepancy deals with revenues and expenditures whose source and purpose are not known for the time being.
Ministry of Finance officials told The Express Tribune that the federal government decided to park the proceeds of the Saudi Arabia grant in the statistical discrepancy head, ballooning the size of the entry from Rs12 billion at the end of December 2013 to Rs171.4 billion by March 2014.
It is for the first time that the statistical discrepancy has swelled to that extent, which is 13.2% of net federal receipts during first nine months of the fiscal.
In February-March this year, Saudi Arabia had given $1.5 billion in aid to Pakistan in two equal tranches. The aid came following visits of top Saudi government officials to Pakistan.
The $1.5 billion came in Pakistan Development Fund (PDF) account, maintained in the State Bank of Pakistan (SBP). The SBP gave Pakistan rupees in exchange of dollars to the federal government.
The Pakistan Peoples Party had suspected that the aid flew in return of a change in foreign policy – a charge that the sitting government denies.
According to officials, who in the past have remained involved in fiscal operations, if the Saudi Arabia money had been an aid, the government would have treated it as part of foreign grants, which is considered non-tax revenues.
The same fiscal operation summary shows Rs12.3 billion foreign grants as part of its Rs666.5 billion non-tax revenues during the first nine months, raising a question mark over the two different kinds of treatments with the grant.
One possibility could be that the money has been given as advance payments for procurement of goods. In that case, the government will gradually move out the sum from the statistical discrepancy head, explained officials. If government sells goods to Saudi Arabia, the entry will be added to the balance of payments account. Currently, the entry is in the balance of payments table.
However, Finance Minister Ishaq Dar has made it clear that the $1.5 billion was a gift to Pakistan.
But according to a finance ministry official, the govt has not realised the amount as a grant. It will gradually start treating it that way as it starts spending the sum against development projects.
He added that the development projects will be decided in consultation with the donor country.
According to a former federal finance secretary, when the source and purpose of the transaction is clear, it is never placed under the statistical discrepancy head.
During the last couple of days, The Express Tribune made many attempts to get the official version of the Ministry of Finance. Till the filing of story, Rana Assad Amin, the ministry spokesman, was not available for comments.
Published in The Express Tribune, May 23rd, 2014.
Unlike any foreign grant, Pakistan has not treated $1.5 billion (Rs157 billion) gift from Saudi Arabia as non-tax revenues and instead declared the huge sum a statistical discrepancy in its budgetary books, fuelling speculations about the purpose of the aid.
According to the summary of the fiscal operations for July 2013-March 2014, there was a statistical discrepancy of Rs171.4 billion in the budgetary books. The head of statistical discrepancy deals with revenues and expenditures whose source and purpose are not known for the time being.
Ministry of Finance officials told The Express Tribune that the federal government decided to park the proceeds of the Saudi Arabia grant in the statistical discrepancy head, ballooning the size of the entry from Rs12 billion at the end of December 2013 to Rs171.4 billion by March 2014.
It is for the first time that the statistical discrepancy has swelled to that extent, which is 13.2% of net federal receipts during first nine months of the fiscal.
In February-March this year, Saudi Arabia had given $1.5 billion in aid to Pakistan in two equal tranches. The aid came following visits of top Saudi government officials to Pakistan.
The $1.5 billion came in Pakistan Development Fund (PDF) account, maintained in the State Bank of Pakistan (SBP). The SBP gave Pakistan rupees in exchange of dollars to the federal government.
The Pakistan Peoples Party had suspected that the aid flew in return of a change in foreign policy – a charge that the sitting government denies.
According to officials, who in the past have remained involved in fiscal operations, if the Saudi Arabia money had been an aid, the government would have treated it as part of foreign grants, which is considered non-tax revenues.
The same fiscal operation summary shows Rs12.3 billion foreign grants as part of its Rs666.5 billion non-tax revenues during the first nine months, raising a question mark over the two different kinds of treatments with the grant.
One possibility could be that the money has been given as advance payments for procurement of goods. In that case, the government will gradually move out the sum from the statistical discrepancy head, explained officials. If government sells goods to Saudi Arabia, the entry will be added to the balance of payments account. Currently, the entry is in the balance of payments table.
However, Finance Minister Ishaq Dar has made it clear that the $1.5 billion was a gift to Pakistan.
But according to a finance ministry official, the govt has not realised the amount as a grant. It will gradually start treating it that way as it starts spending the sum against development projects.
He added that the development projects will be decided in consultation with the donor country.
According to a former federal finance secretary, when the source and purpose of the transaction is clear, it is never placed under the statistical discrepancy head.
During the last couple of days, The Express Tribune made many attempts to get the official version of the Ministry of Finance. Till the filing of story, Rana Assad Amin, the ministry spokesman, was not available for comments.
Published in The Express Tribune, May 23rd, 2014.