According to a Business Recorder exclusive, the federal budget has over-estimated its budgeted non-tax revenue by 56 billion rupees for the outgoing fiscal year by claiming in its revised estimates that the amount was realised through sale of 3G/4G licenses even though, as per Pakistan Telecommunication Authority (PTA) officials, no such transaction took place in 2014-15. And to further compound the befuddlement of PTA officials with respect to data presented in the budget PTA officials told Business Recorder that the 3G/4G license sale is not guaranteed in the next fiscal year and would depend on market conditions becoming conducive to such a sale; and distance themselves from the federal government’s decision to revise the figure upward by 15 billion rupees, to 65 billion rupees from the sale, which PTA officials maintained is not based on any estimates/projections given by them to the Ministry of Finance.
To add to Finance Ministry officials’ embarrassment their budget documents reveal a total revenue generation from the sale of 3G/4G licenses in 2014-15 and 2015-16 of 121 billion rupees – an amount that is grossly highly exaggerated. And this from a set of officials who receive a special bonus for preparation of the budget! One would do well to recall the Finance Minister’s budget speech wherein he maintained that “a key challenge for development is lack of an effective performance management and aligned compensation system in public sector resulting in large gaps in effective delivery of public services. Therefore, the most important single theme for reform across all areas is promotion of institutional efficiency through Performance Management and Compensation System at an individual, departmental or collective level. In this regard, the Prime Minister of Pakistan has constituted a Performance Based Remuneration Committee. On initial recommendations of the said Committee, a lump sum amount of Rs 1.0 billion is being allocated in the Budget 2015-16 for compensating high performance ministries/divisions and individuals for achieving pre-determined results”. The question unfortunately should have been how to penalise poor performance.
This is the first time that government collections under non-tax revenue have not only been so blatantly manipulated but, at the same time, have also been credibly challenged by the officials of the relevant organisation. This is indeed unfortunate and no doubt makes the government’s claim of the fiscal deficit of 5 percent in 2014-15 as per revised estimates unrealistic. Manipulation of key data, albeit the norm of several former governments as well, does nothing but tie the hands of the Finance Ministry in taking bold decisions with respect to undertaking reforms in the tax system as well as making informed decisions on public sector development programme (PSDP), a key component able to fuel growth and jobs in the economy. The Prime Minister during a recent post-budget cabinet meeting directed the Minister of Planning, Reforms and Development Ahsan Iqbal to reprioritise projects under PSDP and in this context one would hope that the Finance Ministry provides realistic expenditure targets to ensure that those projects that would benefit a maximum number are prioritised as opposed to those that benefit a limited number.
Claims of a budget deficit in an outgoing fiscal year made during the budget speech are routinely off by the amount of shortfall in tax collections, a shortfall that is attributable to unrealistic tax projections based on an over-ambitious growth rate. The norm till 2012-13 (the last year of the tenure of the PPP-led coalition government) was the Chairman Federal Board of Revenue (FBR) to hold a press conference/briefing on the last day of a fiscal year – 30th June – during which he provided figures of taxes actually collected under several heads instead of estimates as contained in the budget documents. This provided an opportunity to the general public to become aware of the extent of the shortfall between what was budgeted and what was actually realised. However Ishaq Dar has discontinued this practice, effective from 2013-14, his first year as the country’s Finance Minister, and chances are that this year too there might not be a briefing by the Chairman FBR wherein he may be asked tough questions. Accountability demands that there be routine interaction between the media and the attached departments of the Ministry of Finance including FBR and Pakistan Bureau of Statistics.
The text appeared as Editorial of Business Recorder today.