Govt forms body to end ‘statistical discrepancy’

ISLAMABAD: At a time of surfacing allegations of figure fudging, the government has constituted a high-powered committee to find out solutions related to ‘statistical discrepancy’ on permanent basis which had ranged between Rs215, Rs212 billion and Rs177 billion respectively in last three consecutive financial years, The News has learnt.

In the aftermath of getting details of statistical discrepancy that had become permanent phenomena at end of every fiscal year, Federal Secretary Finance Shahid Mehmood constituted a high-powered committee with the mandate to find out solution to this lingering problem as it demonstrated the accounting and reconciliation system of the country’s accounts was virtually collapsed for all practical purposes.

Despite utilising millions of dollars under PIFRA project which had kick-started in 2000-2001, the business processes were not modernised as accounts were not reconciled with the vouchers of incurred expenditures and by end of the day and there was no solution to arising problem of discrepancy. After end of the fiscal year, no heed was paid to resolve the issue of previous year. In principle, it should have been resolved but it did not happen.

In a latest development, the Senate Standing Committee on Finance under the chairmanship of Senator Saleem Mandviwalla deferred this issue for next meeting scheduled to be held tomorrow (Thursday) on the request of Finance Ministry as earlier the Senate Panel had put it on the agenda for taking up the issue of double booking of Rs64 billion of Pakistan Development Fund Limited (PDFL) as non tax revenues to understate the budget deficit for fiscal year ended on June 30, 2017.

The statistical discrepancy in fiscal year 2013-14 stood at Rs215 billion including Rs167 billion because of non-reconciled accounts at federal level and remaining Rs48 billion because of four provinces.

This statistical discrepancy was hovering around 0.85 percent of GDP in fiscal year 2013-14. The government had received $1.5 billion as gift from Saudi Arabia and received as external grants. When this money was booked as inflows it could not be booked again on account of discrepancy.

Despite making efforts of several days from all officials concerned, it is not yet cleared whether this amount was made part of statistical discrepancy in 2013-14 or not. In principle, the Finance Ministry could not book the same amount under two heads.

However, they claimed that they did not utilise the amount in 2013-14 to reduce the budget deficit. When they received this gift from the Saudi Arabia they put the amount into PDFL. In last fiscal year 2016-17, the government utilised money for acquiring shares of two power projects and paid Rs64 billion to the government as non-tax revenue receipts in order to achieve reduction in the budget deficit.

Now the remaining amount of Rs93 billion against total parked amount of Rs157.198 billion or $1.5 billion has been lying with PDF which can be utilised for investing into any viable public or private sector infrastructure development projects in months and years ahead, said one top official of Finance Division.

However, one former finance secretary did not agree to the stance taken by the Finance Ministry high-ups arguing that once this amount was booked as part of financing now it could be utilised as expenditure instead of government revenue as non-tax receipts.

Now the IMF should come forward and explain whether it could be termed as double counting or part of normal process for calculating the deficit, he further argued but wished not to disclose his name.

Saudi Arabia had given gift of 1.5 billion dollars or Rs157.198 billion to Pakistan during the financial year 2013-14 and the government had shown through fiscal operation published at the website of Finance Division as part of external grants by putting into PDF.

Finance Ministry’s top official, who is known as guru of fiscal data, told The News that this grant money was treated as part of capital receipts and placed as below the line item. He explained that this amount was not used to reduce the budget deficit for fiscal year 2013-14 rather it was treated as financing item.

He said the IMF had scrutinised the gifted amount of $1.5 billion as at that time Islamabad was under the IMF funded programme of Extended Fund Facility (EFF). “We had satisfied the IMF team at that time because there was nothing wrong committed by the economic managers,” he argued.

This money, he said, was never taken as government revenue receipts but it was a foreign grant placed under external financing. This was booked as expense of federal government as grant in aid to Pakistan Development Fund Limited (PDFL).

The PDFL, the official said, has been incorporated as a non-banking financial institution with the objective of financing/investing in infrastructure projects. The PDFL identified two power projects Haveli Bahadur Shah and Balloki owned by National Power Parks Management Company (Pvt) Limited (NPPMCL) where it could make investments out of available funds. After holding extensive consultations with stakeholders including Ministry of Water & Power, the PDFL injected money in these two projects and acquired shares worth Rs64 billion which was paid to the federal government as non-tax revenue receipts. Now this treatment as non-tax revenue receipts, he said, would help the government for reducing the budget deficit up to the extent of Rs64 billion.