PTI government keeps Parliament in dark about Rs27 trillion excess spending

The Pakistan Tehreek-e-Insaf (PTI) government kept the Parliament in the dark about Rs27 trillion excess spending over the course of 3.5 years it was in power, SAMAA TV has revealed citing budget documents the current government has presented in the National Assembly.

The huge sum of money, drawn from the Federal Consolidated Fund, was spent on servicing of domestic and foreign debt, to provide for the ad hoc relief for government employees, and to cover additional expenses incurred due to the falling value of the Pakistani rupee and increasing fuel prices.

However, the PTI government failed to lay these expenditures before the parliament in the form of ‘excess demands for grants and appropriation’ as the government is required to do under Articles 80 to 84 of the Constitution that provide for budgetary procedures.

The Rs27.1 trillion the PTI government hid from the Parliament was never made part of the budget documents in the past three and a half years, SAMAA TV Lahore Bureau Chief Naeem Hanif reported.

There is no precedent of a government hiding such a big amount from the Parliament, he said.

The issue was first raised in the Public Accounts Committee (PAC) by PML-N leader and then-PAC Chairman Rana Tanvir Hussain in January 2022.

The current government has now presented excess demands for grants and appropriations for fiscal years 2018-19 to 2020-21 before the Parliament with the annual budget.

In a preface to the excess demands, Finance Secretary Hamed Yaqoob Sheikh has referred to the PAC meetings and the direction issued by the top parliamentary body on finance. “The PAC vide OM dated 6th January, 2022 has directed Finance Division to get approval of the excess expenditure of all Divisions/Departments from the National Assembly without waiting of printed PAC Reports,” he said.

The preface also reads that “Article 84(b) of the Constitution, requires that the Excess Budget Statement is to be laid before the National Assembly in terms of provisions of Articles 80 to 83, which equally apply to the Annual Budget Statement. Furthermore, Section 25 of Public Finance Management Act, 2019 states that the Public Accounts Committee recommends the excess expenditure to stand as charge to Federal Consolidated Fund.”

The Constitution allows the federal government to spend money in excess of budgetary allocations by drawing on the Federal Consolidated Fund. The government can either ‘charge’ these expenditures upon the Fund or declare them ‘voted’.

Voted expenditures need to be approved by the National Assembly while expenditures charged upon the Consolidated Fund are not subject to a vote in the National Assembly. However, in either case, the excess spending must be laid before the House for discussion, according to the Constitution.

Zulfikar Ali Mehto, a finance expert, says the government’s failure in presenting excess demands before the Parliament may entail grave consequences as international bodies could accuse it of fudging figures.

“It is huge mistake and financial mismanagement of the PTI government,” he said.

He said that the total declared excess expenditure under the PTI rule was Rs84 trillion and now the missing Rs27 trillion must be added to it.

SAMAA TV’s Islamabad Bureau Chief Khalid Azim said that although the double-entry system accounting prevents unaccounted spending, the bigger question is why the former government was forced to hide these expenditures and this must be investigated. If it was not deliberate then it raises questions about the competence and if it was deliberate then the intention must be revealed, he said.

He called for a probe into the role of PAC and the Auditor General of Pakistan who did not raise the issue before January this year. The chairmanship of the PAC was held briefly by then-Opposition Leader Shehbaz Sharif during the PTI rule and then by Rana Tanvir.

Government use fudging to paint their performance is good light, he said.

What was spent

There are some spending that could be charged upon the Federal Consolidated Fund while others have to be declared “voted” and must be approved by the National Assembly, Khalid Azim says.

The budget documents submitted by the current government to the National Assembly reveal that for fiscal years 2018-2019, 2019-20, and 2020-21, the government charged a total of Rs26.766 trillion upon the Fund and declared Rs333.354 billion under “voted” excess spending.

The biggest excess spending, which was swept under the carpet, came in the year 2018-19 and stood at Rs22.44 trillion. Of this money, Rs21.93 trillion were charged upon the Fund voted expenditures and Rs254.2 billion.

The next year’s hidden excess spending stood at over Rs221 billion. In the third year, the seemingly secret excess spending again rose to Rs4.7 trillion.

Where did the money go

Most of the money — Rs26.76 trillion or all of the charged expenditure — went to debt servicing, but it is notable that a large chunk of Rs26.35 trillion was spent on domestic debt servicing, including repayment of domestic debt.

Rs420.61 billion was spent on servicing of foreign debt, including Rs127.35 billion on the repayment.

Voted excess demands came from several government departments including Pakistan Post, Defence Services, and Railways.