Bureaucracy plans to stop fund release without project documents
The bureaucracy has finally decided to meet all procedural requirements before disbursing funds under the prime minister’s directives, but it comes only after the budget for discretionary spending has surged to Rs73 billion in less than nine months of the current fiscal year.
Top bureaucracy of the Ministry of Finance and the Ministry of Planning decided last week that funds would not be disbursed in future without first securing approved project documents, said sources in the finance ministry.
The decision came days after the chief justice of Pakistan hinted at taking notice of discretionary development spending. The move also came following a surge in fund releases for discretionary spending that reached Rs73.8 billion in just eight and a half months. The figure constituted three-fourths of the annual allocation.
The decision was taken to bring some sanctity to the release of development funds ahead of general elections, sources said. Another reason was to ward off pressure from the bureaucracy and shift some responsibility on to politicians.
Prime Minister Shahid Khaqan Abbasi has so far issued about four dozen directives for allocating funds for the schemes being undertaken in the constituencies of National Assembly members of the ruling party.
The government’s five-year term is going to end in early June and elections are expected in July.
The discretionary spending flouts the Supreme Court’s judgement in the case of former premier Raja Pervez Ashraf who had given roughly Rs45 billion for spending in his constituency and adjoining areas.
Now, the people concerned would also be required to secure approval of a scheme from a competent forum, be it provincial government or federal government body, sources said. These people would also be responsible for securing administrative approval from the executing agency.
According to the current practice, after getting the PM’s directive, MNAs or their staff would start visiting the finance ministry and the planning ministry for securing the release of funds. However now, the finance ministry will authorise spending only after approval of the scheme.
The planning ministry would sanction the budget after seeing authorisation and administrative approval of the project, sources said. So far, the prime minister has issued more than 45 directives for politically motivated schemes.
“The planning ministry will not release funds without first meeting the formalities,” said Planning Secretary Shoaib Siddiqui while confirming the development. This would dismiss the perception that ministries were not acting on the PM’s directives, he said.
The premier’s directives would be honoured and the planning ministry had so far cleared all the directives after meeting the formalities, the secretary said, claiming provincial governments were not sending approved schemes, but were throwing responsibility on the planning ministry.
From July through March 16 of the current fiscal year, the planning ministry distributed Rs73.8 billion for spending on gas, electricity and road projects in the constituencies of lawmakers of the PML-N and allied parties, according to documents.
Mobile broadband subscriptions surge to 51.2 mn
Mobile broadband users in Pakistan have reached 51.2 million, bringing the total broadband base to 53.6 million, according to the recent data released by the Pakistan Telecommunication Authority (PTA).
The country’s overall mobile subscription based has increased to 148 million, which is 72.9% of the total population, according to data for the period ending February, 2018.
While teledensity in the country has reached to three-fourths of the total population, mobile broadband penetration is still low at 25% of the population.
On the other hand, subscribers of next generation mobile service (NGMS) increased from 49.4 million in January to 51.2 million in February.
Zong’s 3G subscribers dropped from 9.1 million to 8.9 million in the period under review, while its 4G subscription increased drastically in the month from 5.1 million to 5.8 million.
Experts in the industry believe the surge is due to the migration of Zong’s users from 3G to 4G.
Jazz increased its 3G users from 14.5 million to 14.9 million as well as its 4G subscribers from 2.2 million to 2.6 million.
Telenor’s 3G users increased from 10.8 million to 10.9 million while 4G subscribers surged from 1.9 million to 2.2 million. The company witnessed a 14% increase in the 4G category.
Ufone, which offers only 3G services, saw its subscriptions surge to 6 million against 5.9 million subscribers last month.
Country lags behind in policy implementation: minister
The government strongly believes in building consensus on the economic agenda and in this regard Punjab has engaged diverse stakeholders, including the private sector and the academia, in order to come up with an enabling economic policy for exporters and manufacturers, said Punjab Finance Minister Ayesha Ghaus Pasha.
Speaking at a symposium titled ‘State of the Economy and Future Priorities’, Pasha said, “Regardless of whoever comes to power, the economic policy must respond to real needs and aspirations of all the stakeholders.”
The event was organised by Friedrich-Ebert-Stiftung Pakistan and Sustainable Development Policy Institute on Wednesday. It coincided with the launch of two books on Pakistan’s economy which included ‘Growth and Inequality in Pakistan’ by Dr Hafiz A Pasha and ‘Pakistan’s Agenda for Economic Reforms’ by Dr Vaqar Ahmed.
“Our government also believes that economic policy should be export-oriented, led by the private sector and in alliance with sustainable development goals (SDGs),” the Punjab finance minister said.
“We must acknowledge that in Pakistan we have always been good in coming up with policies but lag behind in implementation.”
The minister cited high cost of energy and lack of enabling tax mechanism as major constraints for investors and manufacturers. “With the help of consultation with stakeholders, our government is seriously working on removing all these impediments and the forthcoming provincial budget will be reflective of this approach,” she added.
Speaking on the occasion, Hafeez Pasha emphasised that future economic agenda of the government must respond to the critical challenges stemming from the fragile state of economy.
“At a juncture when the nation is all set to hold new elections, experts are busy discussing the national economic agenda beyond CPEC; some key economic reforms are becoming crucial for the future economic roadmap and an equitable economic structure has become more significant,” he said.
Loose milk to be sold at PKR 94 per litre in Karachi
After a few days of controversy over the retail price of milk in the city, all stakeholders finally agreed on Tuesday to fix Rs94 as the price of per litre milk.
This was decided at a meeting chaired by Commissioner Aijaz Ahmed Khan. Sources privy to development told that the commissioner will now present the proposed rate of Rs94 before the court, which had earlier ordered him to resolve the issue.
After a dispute between retailers and wholesalers, the price of milk soared from Rs85 to Rs100 per litre, burdening consumers.
Among others who attended the meeting included the representatives of milk wholesalers, retailers, consumer rights organisations, the bureau of the supply and livestock departments and various others.
“After a separate meeting with whole sellers and retailers, the commissioner will present the proposed rate in court,” an official said.
The court had directed on March 20 the Karachi commissioner to fix and notify the price of loose milk per litre within 10 days.
Buying & sourcing houses: TDAP organises symposium
The country’s first Buying and Sourcing Houses Symposium was held in Karachi on Monday, organised by the Commerce Division and Trade Development Authority of Pakistan (TDAP).
The event attracted representatives of buying houses of leading retail chains and international brands based in Pakistan. Speaking on the occasion, Commerce Secretary Mohammad Younus Dagha stated that buyers and sourcing agents play an important role in enhancing exports of a country by acting as a bridge between manufacturers and foreign buyers.
“The latest international trends in products especially textile, leather and footwear are set by sourcing agents as per demands of foreign buyers,” Dagha said. The participants also shared constructive proposals on how to make Pakistan an attractive destination for sourcing by international buyers.
They proposed that sourcing parks should be set up in the country where all facilities required by the buying houses are provided through a one-window facility.
It was also highlighted that in the past many buying houses relocated out of Pakistan due to security situation, with participants urging for incentives like subsidised office space to attract them back to the country since the security situation has improved.
Lack of coordination causing indecisiveness on core challenges
Economic decision-making of the government has slowed down for the past few months as important issues, including the offshore tax amnesty scheme, sales tax refunds and a decision on the new free trade deal with China, remain pending due to lack of inter-ministerial coordination.
The Federal Board of Revenue (FBR), Finance Division, Economic Affairs Division and Commerce Division are facing a communication gap on critical issues that involve inter-ministerial consultations, said government sources in these divisions.
There is also ad-hocism and indecisiveness with matters not being taken to their logical end despite inter-ministerial meetings, said the sources.
However, internal matters of the Finance Division and FBR have not been greatly affected and most issues where other ministries are not involved are being settled at the usual speed of the bureaucracy, said the sources. Things started changing after October last year and the bureaucracy also became stronger after the exit of former finance minister Ishaq Dar, they added. Dar was known as a tough administrator and a task-oriented minister.
At least one federal minister has recently complained that his secretary became more powerful, said the sources. The minister and secretary of another economic ministry were also at loggerheads over certain government transactions.
The finance ministry is also not taking Minister of State for Finance Rana Mohammad Afzal on board on important matters. He has hardly been invited to important meetings and so far attended only one preliminary meeting on the budget and one on offshore amnesty that was held in the PM’s Office, said the sources. The special secretary finance is seen attending most of the meetings.
Source contacted the adviser to prime minister on finance, commerce minister and minister of state for finance for their views. But they did not comment.
On important matters, the Finance Division and FBR are not on the same page, which has delayed decision-making, said the sources. So far only one meeting between FBR and the Finance Division has been held in the Q Block on the budget, which the government wants to announce on April 27. Unlike the past, the entire top hierarchy of finance ministry did not attend this meeting and the finance adviser also left the meeting in-between, the sources said.
So much so, the finance ministry announced the April 27 budget date without formally consulting with the FBR, the sources added. The FBR spokesperson did not comment when asked whether the finance ministry formally consulted before announcing the date.
The decision about paying Rs50 billion sales tax refunds has remained pending despite a public announcement by Prime Minister Shahid Khaqan Abbasi to clear these refunds by February 15. The sources said that the government remained indecisive on whether refunds would be paid by lowering this year’s annual tax collection target or raising funds against sovereign guarantees.
The decision has to be taken by the finance ministry in consultation with the Prime Minister’s Office.
The sources said that despite holding many meetings, the prime minister has not yet given the final date for tabling a special law in parliament for giving an offshore tax amnesty scheme. Another issue that required a decision was whether to also issue a domestic tax amnesty scheme.
The matter of offshore tax amnesty scheme is also pending before the Supreme Court of Pakistan.
The FBR’s thinking is that the government should immediately introduce the offshore amnesty bill in parliament and by that time the Supreme Court’s recommendations will also be known. During one of the last meetings held on the issue in the PM’s Office, the participants left one after another before reaching a consensus, showing the government’s seriousness on the matter, the sources said.
PKR 80 bn settlement plan in jeopardy
The Rs80 billion plan to settle circular debt suffers delay as the Auditor General of Pakistan is reluctant to conduct pre-audit of the debt to make way for the payment.
The Economic Coordination Committee (ECC) of the cabinet had approved the plan on March 7 and decided to immediately pay Rs80 billion to power producers and fuel suppliers, out of Rs526 billion worth of dues aimed at easing their financial constraints.
However, a senior official of the Ministry of Energy (Power Division) said that after the approval of the debt settlement plan, the Power Division had approached the auditor general to conduct pre-audit of the circular debt for paying the amount to different energy firms.
However, the auditor general was reluctant to conduct pre-audit and was not responding to the Power Division.
On coming to power in 2013, the incumbent government had cleared Rs480 billion in the power sector debt in one go, but this time around the ECC is more cautious and only wants to clear the invoice-based energy cost.
The auditor general at that time had raised objection to payment of huge amount and said it was released to the energy companies without conducting the audit of dues against each company.
The Ministry of Energy official said that the objection raised by the auditor general had led to a controversy and even the National Accountability Bureau (NAB) had taken notice of the issue. This time, he added, the Power Division wanted the auditor general to conduct pre-audit of the dues but it had not been responding to the Division for 10 days.
The official said the auditor general was jeopardising the debt settlement plan and a delay in payment to power producers would lead to aggravating the loadshedding situation in the country. He said that power plants were facing a difficult situation due to the circular debt, adding that after the payment of Rs80 billion, the government would be able to manage the circular debt to some extent.
The official said a further delay in the payment would lead to shutting down of the power plants which would, in turn, lead to increase in loadshedding in different parts of the country.
The Rs80 billion debt would be cleared after obtaining loans from commercial banks and the cost of debt servicing would be recovered from consumers through monthly bills. The consumers would pay 43 paisa per unit to service the debt.