Punjab lost Rs 2.91b to bad debts | Pakistan Today

Punjab lost Rs 2.91b to bad debts

ISLAMABAD: The Punjab government suffered a loss of Rs 2.9 billion as it failed to recover loans forwarded to certain autonomous bodies having little payback capacity or eligibility to avail such loans, said a report by the Auditor General of Pakistan (AGP).
The report said the Punjab government granted loans in violation of rules to some financial and non-financial institutions for execution of various development and non-development projects from its own resources or through foreign donations, but some borrowers were reluctant to repay the loan, which had thus become bad debts.
Per Punjab Government Rules of Business, 1974, the Punjab Finance Department is responsible for proper financial management, supervision and control of provincial finances. Rule 2.33 of PFR VOL-I provides that every government servant should realise fully and clearly that he would be held personally responsible for any loss suffered by the government through fraud or negligence.
The report said that it appeared that the Finance Department granted loans to financial and non-financial institutions without considering their financial position, annual income and capacity to pay back the loan. When pointed out in October 2009, the department was of the view that due to weak financial position, the autonomous bodies could not pay back the government loans.
The matter was reported to the Principal Accounting Officer in November 2009. The AGP report recommended a thorough probe and necessary action against persons responsible for granting the loans. The report also recommended appropriate measures to avoid recurrence of such impropriety.
According to record, the Punjab government’s HUD and PHE Department under letter No SO (UD)1-12/2006, granted Rs 731.261 million loan to Multan Development Authority (MDA) against an ADP allocation, but the same was requested to be converted into a grant. The authority took the stance that since it (MDA) was not earning any income from the development projects, it did not accept any liability.
Similarly the Gujranwala Development Authority (GDA) requested the Finance Department to waive off Rs 490.271million loan granted to it for the construction of roads and sewage in parts of the city.
During 2008-09, the Finance Department also granted Rs l.695 billion to financial and non-financial institutions without considering their financial position, capacity to pay back and execute the assigned work. Details are as follows:
a) LDA was granted Rs 1,261.679 million for a grace period of three years payable in ten annual installments altering the grace period at the rate fixed for year 2008-2009. The last sanction number and date of the order was FD(L)l-53/2008(UD wing), dated March 17, 2009.
b) MDA was provided Rs 200 million for a grace period of three years payable in ten annual installments altering the grace period at the rate fixed for year 2008-2009. The last sanction number and date of the order was FD(L)l-197/2006(UD wing), dated January 15, 2009.
c) FDA was given Rs 187.532 million for a grace period of three years payable in ten annual installments altering the grace period at the rate fixed for year 2008-2009. The last sanction number and date of the order was FD(L)l-228/2006(UD wing), dated May 7, 2009.
d) RDA was given Rs 46 million for a grace period of three years and payable in ten annual installments altering the grace period at the rate fixed for year 2008-2009. The last sanction number and date of the order was FD(L)l-27/2006(UD wing), dated January 13, 2009.



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