ISLAMABAD: Despite the government’s claims of tight fiscal discipline, Finance Minister Ishaq Dar has asked the parliament to give post-facto approval of record Rs2.415 trillion supplementary grants for expenditure overruns and re-appropriation.

Budget documents suggest that the parliament would be required to approve about 25pc higher supplementary grants later this month when compared to Rs1.95tr it regularised last year. This put a question mark on the processes leading to budget estimates and expenditures. Documents placed before the parliament by the Ministry of Finance indicate that subsidies, power sector, water division, defence services, health-related expenditures, civil armed forces and related agencies stand out in exceeding budgetary allocations.

The ministry said the amounts that it was seeking approval as fait accompli pertained to May 16 to June 30 of FY22 from July 1 to May 15 for FY23 after the conclusion of budgetary processes for respective years and overran allocations approved by the parliament and yet remain legally unapproved as required under articles 80-84 of the Constitution.

The ministry in its written statement said these expenditures were those which could neither be met from the allocated budgetary resources nor be legitimately postponed during these financial years. It seeks regular and technical supplementary grants worth Rs2.415bn including regulatory supplementary grants of Rs501bn for the entire period.

The technical supplementary grant means a surrender of funds from one expenditure head and its authorisation for use in another account or organisation but generally without any major fiscal burden. The regular supplementary grants are confirmation of expenditure overrun or spending without a legal sanction and have a direct additional bearing on the public kitty.

As such the major regular supplementary grants for FY22 include Rs40bn unsanctioned expenses on account of PM’s package for reduction in electricity rates, another Rs62bn on PM’s incentive package on petroleum prices and paid to oil companies out of budget and Rs130bn ways and means advances to the provinces. Thus, total regular expenditure overruns in the last few days of FY22 amounted to Rs232bn.

Likewise, the regular supplementary grants for FY23 amounted to about Rs269bn including Rs206bn for additional expenditure on the revised circular debt management plan of the power sector, Rs57bn paid out of public kitty for meet liabilities of Kuwait Petroleum Limited against PSO and Rs5.7bn for PM’s relief package and cheaper wheat flour in KP.

The technical supplementary grants included a Rs24bn additional expenditure for special security divisions of the army, fencing of the Pak-Iran border, development of naval bases of Ormara and Turbat, Rs143bn for energy revolving fund for Chinese power producers, Rs65bn for Reko Diq liabilities, over Rs3bn on publicity campaigns etc.

Rs20bn supplementary grants were also approved for parliamentarians’ development schemes, and another Rs80bn for other different development schemes in various cities and districts. As such, the total technical supplementary for FY23 stood at Rs629bn. The technical supplementary grants for the last few days of the FY22 on the other hand amounted to Rs1.286tr.

Some of the major among them included Rs72bn expe­n­diture overrun in defence services, including Rs51bn of Pak-Army and over Rs15bn of navy and airforce, Rs221bn power sector tariff subsidies, Rs142bn subsidies on petroleum products and LNG subsidies to the export sector and residential consumers, over Rs78bn unseen increase in pensions and retirement benefits, Rs30bn subsidy to Utility stores and fertiliser, Rs20bn to Pakistan rangers, frontier constabulary and coast guards etc and Rs5bn on separate railway pensions.

Another major expenditure overrun pertained to Rs249bn on Naya Pakistan Certificates and Rs80bn in other foreign debt servicing.

Published in Dawn, June 13th, 2023