By Abdul Wajid Khan

ISLAMABAD, Aug 17 (INP-WealthPK): Under a plan to maintain strict fiscal discipline, the Pakistan government has imposed ban on supplementary expenses, including development and current expenditures, during the current financial year (CFY) to contain fiscal deficit to a manageable limit, reports WealthPK.

According to an office memorandum issued by the Ministry of Finance under the subject of “Strategy for additional allocation and re-appropriation of funds”, in order to remain within the approved budgetary allocation, no additional funds through supplementary grant (SG) shall be considered by the Finance Division during the ongoing financial year.

However, it added, only under extreme and exceptional circumstances, such cases may be considered by the Finance Division after fulfilment of the following conditions by the principal accounting officers (PAOs).

The cases where no funds can be made available through re-appropriation and technical supplementary grant (TSG), shall require the following: the PAO certifies that all avenues have been exhausted, which is to be verified by the relevant accounting organization/office; the PAO provides valid justification and cogent reasons for demanding SG; examination by expenditure wing or concerned wing of the Finance Division; and recommendation of the budget wing.

The memorandum said these instructions and guidelines shall be applicable for both current and development expenditures, and shall be followed by all PAOs, heads of the departments or organizations or sub-ordinate offices and the accounting organizations/offices.

The ministry highlighted that the cases of the TSG shall not be considered during the first quarter of the CFY.

The cases of TSG shall be processed as per the following conditions:

Fulfilment of provisions of the Public Finance Management (PPM) Act, 2019 and Financial Management and Powers of Principal Accounting Officers Regulations, 2021; The request for provision of funds through the TSG shall be submitted to the concerned joint secretary (expenditure), Finance Division for examination, duly approved by the PAO, along with up-to-date budget utilization report, and availability of matching funds under other demand(s) or certificate regarding non-availability of saving in other demand(s) under the control of the PAO.

These conditions also require that the expenditure wing shall examine the TSG cases in detail and submit recommendation, either in support or otherwise of the proposal, with valid grounds and justifications for consideration by the budget wing of the Finance Division; the budget wing shall process the cases in the light of SAP system report, recommendation of the expenditure wing and availability of funds before submission to the finance secretary for consideration.

The conditions of processing the cases of TSG also include cases related to Public Sector Development Program (PSDP), which shall be processed through the Planning Division.

On approval of funds through TSG from the federal cabinet, the PAO shall submit the schedule of TSG, duly endorsed by the expenditure wing of the Finance Division, along with copies of the approved summary and decision of the Economic Coordination Committee (ECC) of the cabinet, ratification of the cabinet and surrender order to the director (budget computerisation) budget wing for entry in the SAP system.

Funds approved through TSG shall be released by the Finance Division keeping in view the funds availability and in line with release strategy; and no proposal for the TSG shall be processed in any case during the last month of the financial year.

The ministry has also made it clear that the re-appropriation of funds shall be allowed, within an approved ‘demand for grant and appropriation’, from one "head of account" to another "head of account", provided that no re-appropriation shall be made from employees related expenses (ERE) to any other "head of account" (non-ERE).

The memorandum said re-appropriation cannot be made from unreleased budget and no re-appropriation of funds shall be allowed in any case during the last month of the financial year.

According to the latest monthly economic outlook report of the Ministry of Finance, during July-May FY 2022, fiscal deficit increased by 5.2% (Rs3.468 trillion) against 3.9% (Rs 2.197 trillion) in the comparable period of last year.

Similarly, the primary balance posted a deficit of Rs945 billion (1.4% of GDP) in July-May FY22 against the surplus of Rs139 billion (0.2% of GDP) last year.

The total expenditure witnessed a sharp increase owing to a 33.1% growth in current spending. Higher growth in subsidies and grants jacked up the current spending during the period under review.

Experts emphasized that the government should focus on further streamlining tax recovery mechanism of the Federal Board of Revenue (FBR) to improve its tax recovery and resolve the issue of fiscal deficit. They said the government should take more steps to provide ease to taxpayers in tax submission. They have also asked the government to ensure maximum utilisation of modern technology to identify the potential taxpayers currently eligible for payment of tax but still out of tax net.

Credit: Independent News Pakistan-WealthPk