ISLAMABAD: Following revenue slippages in the first quarter of the current fiscal year, the Ministry of Finance has asked various ministries and their autonomous bodies to provide details of their surplus funds and investments.
The ministries and their corporations have to submit updated details of surplus funds at their disposal and various investments along with their maturity period at the earliest, sources said.
No reason for the request for updated information about surplus funds has been mentioned in the finance minister’s letter.
The move aims to divert money to the Federal Consolidated Fund to bridge fiscal deficit
A senior official said it was a routine matter for the ministry to seek details of expenditures, investments, cash and surplus funds available at the disposal of various entities to ensure sound financial management. He said a circular had recently been issued to a few ministries and their subordinate entities to provide details of their accounts.
The Federal Board of Revenue (FBR) missed its first quarter’s collection target by around Rs56 billion.
An official at the Ministry of Commerce, however, assumed that these details would help the Ministry of Finance reach a decision to divert funds to the Federal Consolidated Fund in order to bridge the fiscal deficit.
He said a similar exercise was done a few years ago. Funds available at the discretion of the Ministry of Information Technology and Telecommunication were utilised to clear circular debt of the power sector.
He said a few insurance companies under the Ministry of Commerce, particularly State Life Insurance Corporation (SLIC), had around Rs10bn-12bn in their kitty and were already at the top of the privatisation list.
The government has given an undertaking to the International Monetary Fund (IMF) to achieve the fiscal deficit limit of 3.8pc of gross domestic product (GDP) in the current fiscal year. This would include a baseline deficit of 3.5pc and extraordinary spending of 0.3pc of GDP on the security and resettlement of internally displaced persons (IDPs).
Finance Minister Ishaq Dar has also committed with the fund to “finalise the transaction of SME Bank by end-December 2016, the divestment of government’s shares in Mari Petroleum to existing shareholders by October 2016 and the initial public offering of SLIC by end-March 2017.”
In line with this commitment, the government has to lower energy subsidies to 0.4pc of GDP and “rationalise current expenditures across all layers of the general government, while continuing to increase targeted social assistance in real terms and further improving the share of development spending.”
The minister had told the IMF that he would manage budgetary spending prudently and reduce non-critical current and capital expenditures to achieve the fiscal deficit target against the backdrop of slower growth in the collection of the Gas Infrastructure Development Cess (GIDC) and federal non-tax revenue. “In the case of any further deviation, we would take additional measures in order to achieve our revenue and budget deficit targets.”
Soon after coming to power in 2013, the government had diverted about Rs66bn of funds under the Universal Service Fund (USF) and Research and Development Fund (RDF) to the Federal Consolidated Fund to clear circular debt.
Amendments were made at the time to the rules governing the USF and RDF to enable the transfer of funds to the Federal Consolidated Fund, commonly known as Account No. 1.
A committee led by the then law minister had told the finance minister at the time that keeping funds in the accounts of commercial banks was not only a violation of the Constitution, but also general financial rules.
Various regulatory bodies like National Electric Power Regulatory Authority and Oil and Gas Regulatory Authority are also required under the rules to surrender their surplus funds to the federal treasury at the end of every fiscal year.