“Government Allocates Rs110 Billion to Development Schemes Post-June”
Government’s Rs110 Billion Irregular Spending on MPs’ Projects Raises Concerns
ISLAMABAD:
In a move that has raised eyebrows, the federal government allocated Rs110 billion to development schemes after the close of the fiscal year, defying established fiscal rules and compromising budgetary discipline. This expenditure, detailed in official documents, is part of the Public Sector Development Programme (PSDP) and appears to have been directed towards projects championed by parliamentarians and ruling party affiliates.
Irregular Spending Post-June
Despite implementing a cash-based accounting system, which mandates the surrender of surplus funds before the fiscal year’s end, the government made substantial outlays beyond this deadline. Such actions not only jeopardize the quality of spending by increasing the risk of wastage and leakage but also contravene both the Public Finance Management Act of 2019 and the fiscal prudence rules of 2023.
Records reveal that by the end of the fiscal year 2023-24, the Ministry of Planning had reported PSDP expenditures totaling Rs641.7 billion. However, the actual spending amounted to Rs751.7 billion, marking an excess of Rs110 billion. This discrepancy highlights a significant deviation from the planned budgetary limits.
Violation of Fiscal Rules
The unplanned expenditure directly violates the Assan Assignment Account rules, which stipulate that unspent budgets must be surrendered by respective offices as per government instructions, failing which they are considered lapsed. Furthermore, Section 12 of the Public Finance Management Act requires all ministries and divisions to surrender anticipated savings in their budgets to the Finance Division at least 25 days before the National Assembly presents the budget. Given that the budget was presented on June 12, ministries were expected to surrender surplus funds by the end of May. However, the government failed to adhere to these requirements.
Breakdown of Irregular Spending
Out of the Rs110 billion irregular expenditure post-June, Rs24.4 billion was allocated for foreign loans against various projects. These loans were earmarked for the Federal Board of Revenue (FBR), water resources, and the National Transmission and Despatch Company (NTDC). This figure also surpasses the Rs732.2 billion PSDP spending figure announced by the Ministry of Finance last month, indicating a discrepancy of nearly Rs20 billion.
The spending pattern reveals a significant increase in allocations to projects favored by parliamentarians, with expenditures rising from Rs48 billion to Rs56.8 billion after the fiscal year-end. This includes an additional Rs8.7 billion allocated to schemes supported by parliamentarians. The development budget, which Parliament had approved at Rs950 billion, was drastically reduced by the Finance Ministry to accommodate increased interest payments.
Impact on Other Projects
The irregular spending also impacted other critical areas. For instance, Rs14.3 billion was spent on the merged districts of Khyber Pakhtunkhwa after the fiscal year’s end, bringing the total expenditure to Rs46 billion. Similarly, the National Highway Authority received an additional Rs36 billion, raising its total spending to Rs122.5 billion.
Provincial projects also saw a boost, with Rs7.2 billion allocated after the fiscal year’s close, totaling Rs16.6 billion for these projects. Additionally, Rs1.5 billion was spent on climate change projects, while the housing ministry’s road infrastructure schemes received an extra Rs7.8 billion, pushing the total to Rs24.4 billion. The NTDC and Revenue Division were similarly granted extra funds, amounting to Rs10.8 billion and Rs9.2 billion, respectively.
Conclusion
The federal government’s irregular spending on development schemes post-June has raised concerns about fiscal discipline and adherence to established financial management rules. The significant deviation from planned budgets and the increased allocations to projects favored by parliamentarians underscore the need for stricter oversight and adherence to fiscal regulations. As the government continues to navigate its budgetary challenges, the implications of these expenditures will likely affect future fiscal policies and budgetary allocations.