‘PTI govt failed to mobilise revenue in KP’

PESHAWAR: The Auditor General of Pakistan’s report has revealed that the former PTI government in KP failed to mobilize the revenue as compared to the expected targets due to which the province was facing a severe financial crisis. The expenditures were not controlled during the financial year 2021-22 and 2022-23 but rather increased.

Former provincial minister Taimur Saleem Jhagra rejected the statistics and said that the Tehreek-e-Insaf government had increased the provincial revenue from Rs30 billion to Rs70 billion over three years, but the PDM federal government withheld Rs275 billion funds.

He said due to depreciation of rupee against the dollar, the debts of the province increased from Rs359 billion to Rs530 billion, for which Shehbaz Sharif, Maulana Fazlur Rehman and Zardari were responsible.

Taimur said that during the PTI era, the financial condition of the province was stable but in the last year, the financial situation had deteriorated.

The financial attested audit reports of 2021-22 and 2022-23 were presented to the governor Khyber Pakhtunkhwa, who raised serious concerns over the deteriorating financial health of the province. He directed the chief secretary and finance secretary to take remedial measures to improve the financial discipline by following audit recommendations. Khyber Pakhtunkhwa spent only Rs1,135 billion against the budgeted spending of Rs1,669 billion. The main reason for underspending was a shortfall in the province’s own-source revenues and non-availability of cash in Account I of the Khyber Pakhtunkhwa government. The provincial source revenues declined from Rs124 billion to Rs112 billion during the financial year 2022-23. Out of the total savings, Rs307 billion was spent in development activities, which is 24 percent of the planned expenditure for development schemes. The total budgeted expenditure for 2022-23 remained at Rs1,669 billion and the actual revenue realized during the year stood at Rs1,101 billion, making a shortfall of Rs568 billion. The audit report reveals that to cover the shortfall, funds amounting to Rs34 billion were withdrawn from the public account GP fund and pension contributions in the past two years. Foreign debts were also obtained to meet the deficit, without proper planning.

The audit report says Rs281 billion were incurred more than the final grant during the financial year 2022-23. It is worth mentioning that Rs36.5 billion were incurred more than the final grant in the year 2021-22. A supplementary grant was punched in the SAP and was made available to the departments for expenditure. However, the same was not approved by the provincial assembly or the provincial cabinet.

The development expenditure amounting to Rs83 billion was mis-classified as operating expenditure which caused an overstatement of operating expenditure and understatement of development expenditure. The province received billions of rupees directly from foreign lenders and donors but these receipts were not accounted for. The province realized debt amounting to Rs70 billion. Of them, Rs21.7 billion was not recorded in the financial statements.

The province is taking loans spontaneously. The province does not have any future borrowing estimates and debt projections. Loan agreements amounting to Rs353 billion were signed without the establishment of the project implementation units. Thus, the loans cannot be properly utilized for the intended purposes. Foreign funds amounting to Rs10 billion were retained by the finance department to cover its cash deficits, instead of releasing the same to the projects. Funds amounting to Rs21 billion were received by the province but were not accounted for.

The auditors said no policy has been formulated and implemented for domestic debt. In the current economic situation, where the local currency has lost its exchange value, the province still persistently obtained foreign loans, increasing foreign debt from Rs359 billion to Rs530 billion in 2022-23. Instead of paying interest and commitment charges during the grace period, the same were capitalized resulting in unjustified capitalization of Rs4.9 billion funds in one financial year.

“Another alarming fact is that the province has shifted its objective of taking loans from development activities to operating activities,” the report said.