Rs83.3 billion in federal spending under Raja unaccounted for


As much as Rs83.3 billion spent during the nine-month tenure of former prime minister Raja Pervez Ashraf are unaccounted for, revealing serious flaws in the reporting and accounting system used by the government.

Released on Thursday, a summary of the fiscal operations of federal and provincial governments for the July-March 2012-13 period showed that Rs83.3 billion has been recorded in national accounts as a “statistical discrepancy”.

This is not the first time such a sizable amount of funds remains untraceable, despite the fact that the country is implementing the Rs9.6 billion World Bank-funded Project to Improve Financial Reporting and Auditing (PIFRA). PIFRA is aimed at ensuring that real-time information of every public transaction taking place in the system is available.

The details of the federal government’s expenses reveal that the previous government spent Rs1.1 trillion more than its income during its last nine months in office – a gap budget-makers had anticipated would cover almost the entire fiscal year.

Interestingly, the finance ministry has under-pitched the budget deficit in terms of percentages, using the obsolete size of the economy of Rs23.6 trillion to work out the deficit figure. It is important to note that the Governing Council of the Pakistan Bureau of Statistics and the National Accounts Committee have already approved 2005-06 as the new base year of the economy, under which the new size of the economy has shrunk to Rs22.9 trillion. On the basis of the old base year, the finance ministry has said the federal budget deficit is 4.65% of GDP. On the basis of the new base year, the budget deficit actually comes to around 4.8% of GDP.

The previous federal government borrowed the entire amount of the shortfall from the domestic market, as net foreign loans in this period remained a negative Rs4.2 billion. These massive borrowings for budgetary support left virtually nothing for the private sector, resulting into a credit crunch followed by an increase in unemployment.

In nine months, gross federal income remained roughly Rs2 trillion. The major reason behind the increase in income was the release of $1.9 billion by the United States on account of the Coalition Support Fund. Tax revenues, meanwhile, accounted for Rs1.4 trillion.

Out of the total income, the federal government gave Rs893 billion to provinces as their share in federal taxes, leaving itself with less than Rs1.1 trillion.

Against this income, the government spent Rs2.2 trillion in nine months, out of which Rs772 billion was spent on interest payments. Defense spending remained at Rs405.8 billion, while federal development spending – including a sum of Rs42.5 billion spent at Ashraf’s sweet will – remained at Rs203 billion.