ISLAMABAD: As parliament authorised the federal government on June 28 to impose over Rs1.7 trillion in additional taxes for the current fiscal year, it was also compelled to retrospectively approve a record Rs9.4tr for expenditure overruns and re-appropriations, nearly five times more than the previous year’s amount.
This massive overspending occurred despite claims of austerity and tight fiscal control by three successive administrations — PDM, caretakers and the incumbent coalition government — amid ongoing economic stabilisation efforts.
Most of these supplementary grants are described as “charged expenditure” out of the Federal Consolidated Fund, which is just presented to parliament for its information and is taken as approved without voting. Simply put, parliament cannot reject these grants because the amount has already been consumed.
Fresh budget documents released by the Ministry of Finance suggest that Finance Minister Muhammad Aurangzeb secured parliamentary approval for supplementary grants worth Rs9.374tr, 389 per cent higher than the Rs1.915tr approved a year earlier.
Paradoxically, almost 86pc (more than Rs8tr) of the expenditure overruns were booked against the last 45 days of the 2022-23 fiscal year, i.e. between May 16 to June 30, 2023.
This has raised the possibility that overspending in the just-ended fiscal year may turn out to be even higher, for which the government has reported only Rs1.3tr or 14pc of the supplementary grants, as of May 17.
The expenditure made in the subsequent 45 days (May 17 to June 30, 2024) would be disclosed only by the end of the current fiscal, another fait accompli for parliament. This puts a question mark on government processes leading to budget estimates and expenditures.
A substantial share of about Rs6.55tr (almost 70pc) in expenditure overruns was caused by massive borrowing by the government to repay or service existing debts, while some big chunks were consumed by the power sector’s circular debt and payments to K-Electric.
Of the Rs6.55tr supplementary grants, Rs5.043tr was required to repay domestic debt and Rs1.5tr to service domestic debt — both in the last 45 days of the fiscal year 2022-23.Additional funds included Rs214 billion for foreign debt servicing to the Asian Development Bank and Rs188bn for short-term loans from the Islamic Development Bank.
