18 hours ago
IMF pushes for oversight of MPs' schemes
The International Monetary Fund has asked Pakistan to spend money on the parliamentarians' projects through regular approval processes by abandoning a special treatment and again urged to avoid mid-year budget adjustments without prior approval of parliament.
The IMF has also emphasised the importance of a budget strategy paper by recommending its publication six months before the presentation of the budget in a move that runs contrary to the finance ministry's practice of not timely publishing the strategy documents.
To enhance transparency, efficiency and affordability of the Public Sector Development Programme (PSDP), there is a need to integrate parliamentarians' projects into the PSDP process, stated the IMF in its Governance and Corruption Diagnosis Assessment report.
The government is supposed to officially release the report by the end of this month.
Unlike the approval of any project by the Central Development Working Party or the Executive Committee of the National Economic Council, the parliamentarians' schemes are approved by a Steering Committee on SDGs Achievements Programme without much scrutiny. Deputy Prime Minister Ishaq Dar chairs the steering committee.
These are small-scale schemes of community welfare, which also fall in the domain of the local governments barring the provision of electricity and gas.
In the last fiscal year, the government had spent at least Rs61 billion on the parliamentarians' schemes and Rs70 billion has been allocated for the current fiscal year for these small-scale projects. There have also been voices from within the country against spending on these schemes outside PSDP, which can cause wastage and less spending on the ground than the approved budgets.
The IMF has also recommended limiting the PSDP allocations for new projects to only 10% of the total allocations in order to avoid thinning out already sacred resources. There is a tendency in every government to announce and approve new projects despite the fact that the existing projects require over a decade for completion due to limited resources.
The IMF has asked the Ministry of Planning to rationalize the PSDP portfolio by retaining only high priority projects. The political expediency has distorted the PSDP allocations and the federal government spends on the projects, which are in the areas that are not even the responsibility of the center.
The government has also been running small schemes through the PSDP and funds allocated for these projects are also often misused. The planning ministry did not comment on this article.
Pakistan's overall public finance management remains weak and there is also a little appetite in the government for ensuring transparency and involving the cabinet and the Parliament in the pre-budget discussions.
The Ministry of Finance this year did not take the Budget Strategy Paper to the federal cabinet for its approval in violation of an Act of the Parliament.
However, the IMF has recommended that the Finance Ministry should advance the calendar of presenting and publishing the budget strategy paper to January and include macroeconomic and fiscal indicators in these papers. The budget is presented in June.
The global lender has further recommended that the government should also analyze the accuracy of previous macroeconomic forecasts and budget estimates after the end of the fiscal year.
The IMF, which since long has been urging Islamabad to abandon the tool of supplementary grants, again asked the government to respect Parliament's supremacy. It has recommended that the government should avoid mid-year budget adjustments without getting the Parliament's prior approval. In order to meet unexpected expenditures like natural disasters the IMF has recommended maintaining a contingency pool for such spending.
Currently, the government issues supplementary grants during the course of the fiscal year and gets the ex-post facto approval of the spending from the Parliament. Sometimes there are unforeseen expenses like the Rs5.8 billion allocation for flood-affected areas of the country on Tuesday.
But there has also been a practice to defer some expenditure at the time of approval of the budget to keep the overall size limited to the requirement of the IMF.
For instance, the Finance Ministry did not approve a subsidy for foreign remittances scheme in the budget due to limited space available. However, after the intervention of the Prime Minister's Office, it authorized a Rs30 billion supplementary grant a few days ago out of the contingency expenditure pool.
The fiscal year has just begun and the government has already started the process of giving supplementary grants to various ministries.
The Economic Coordination Committee on Tuesday approved a supplementary grant of Rs250 million for the National Security Division for its Strategic Policy Planning Cell. The expenses on setting up the cell should have been made part of the regular budget approved in June.
The ECC on Tuesday, on a proposal from the Finance Division, also approved the subsidy for RAAST QR Code based person-to-merchant payments to the tune of Rs3.5 billion.
In another important recommendation, the IMF has proposed to amend the Public Procurement Regulatory Authority law and rules to bring an end to preference in procurements for the state-owned entities and charitable organizations. It has urged the government to bring these changes aimed at ensuring transparency, efficiency and accountability in the public procurement process.
