ISLAMABAD: Parlia­ment will be required to give post-facto approval to a record Rs1.248 trillion supplementary grants for expenditure overruns and re-appropriation, budget documents show.

When compared to Rs545 billion that had been regularised last year, the documents presented by the Ministry of Finance (MoF) show 130 per cent higher supplementary grants which required parliament’s nod.

Subsidies, power sector, water division, defence services, health-related expenditures, civil armed forces and related agencies stand out in exceeding budgetary allocations, according to the ministry documents.

Large parts of the supplementary grants also relate to the fiscal year 2019-20 which should have been approved with current year budget and some other expenditures even pertain to FY2018-19 which were supposed to be approved under Articles 80-84 of the Constitution.

This also puts a question mark on the processes leading to budget estimates and expenditures.

The MoF in a written statement explained that those expenditures could not be met from within the budgeted allocations under various grants and appropriations and ‘could not have been legitimately postponed during a financial year’.

It sought regular and technical supplementary grants worth Rs488bn for fiscal year 2020-21 including an expenditure overrun of Rs203bn. Also, the MoF is seeking approval for Rs590bn grants for FY2019-20 including expenditure overruns of Rs442bn. Another Rs170bn amount pertained to grants and appropriations against FY2018-19.

The technical supplementary grant means surrender of funds from one expenditure head and its authorisation for use in another usually without any major fiscal burden, but supplementary grants is confirmation of expenditure overrun or spending without a legal sanction and has a direct bearing on government finances.

The major regular supplementary grants for FY2020-21 include Rs204bn unsanctioned expenses by power sector, Rs36bn.23bn by armed forces, Rs58bn subsidies etc, Rs25bn for National Health Services and Rs40bn of Federal Board of Revenue (FBR). The total defence expenditure during current year stood at Rs1.327tr during the current fiscal year and not the Rs1.295tr as reported in key budget statements.

The major chunk of power sector’s expenditure overrun pertained to Rs177bn tariff differential subsidy to distribution companies including Rs16bn to K-Electric and about Rs10bn as interest payments on Energy Sukuk bonds, which is a question mark over financial estimates by the power and finance divisions. Another Rs59bn expenditure overrun this year was again on account inadequate subsidy allocation for Azad Jammu and Kashmir (Rs27bn) and inter-Disco tariff differential Rs32bn).

An additional Rs40bn without approval of the parliament were paid to exporters on account of refunds withheld by the FBR during current year while Rs25bn pertained to purchase of Covid-19 vaccine and payment of outstanding dues to advertisements. Another Rs23bn supplementary grant relates to loans and advances of the federal government.

Ex-post facto approval has also been sought for Rs14bn supplementary grant on account of power tariff-related economic stimulus package for SMEs in FY2019-20 on top of another Rs22bn under same head for the same year that had been approved as part of current year’s budget. Interestingly, the original grant on this account in 2019-20 budget stood at Rs226.5bn, which has now been put at Rs262bn. About Rs7.2bn was paid to Pakistan State Oil on account of foreign exchange losses.

It has been claimed that a major block grant of Rs417bn was required to meet subsidies and expenditures in financial year 2019-20.

Normally, the regular supplementary grants are meant to provide for expenditure for purposes not foreseen at the time of finalisation of demands for grants. Such supplementary grants put additional burden on the budget.

A number of these supplementary grants are described as charged expenditure out of the federal consolidated fund, which is presented before parliament mainly for information as the amount has already been consumed.

A supplementary grant of Rs9.8bn was paid to Pakistan International Airlines in the form of cash support this year for separation scheme of its surplus employees. A major part of Rs36bn supplementary grant went to defence services, including Rs18bn for Special Security Division (SSD) South, Rs5bn recurring expenditure of SSD North and about Rs4bn for internal security duty besides Rs5bn for fencing the border with Iran.

Published in Dawn, June 15th, 2021