Skip to main content

Pakistan lacks system for recording, reporting debt

By shahbaz rana

 Jul.27,2019

World Bank draft report finds no mechanism to regulate public assets

ISLAMABAD: Pakistan lacks a consolidated system for recording and reporting its debt and there is also no mechanism to regulate public assets that results in discrepancies and non-reconciliation of hundreds of billions of rupees worth of funds.

The final draft report of the Public Expenditure and Financial Accountability Assessment (PEFA) 2019 of the World Bank has pointed out glaring deficiencies in the management of government assets and liabilities.

These findings are tantamount to charge-sheeting the Ministry of Finance. The report covers three fiscal years from 2015-16 to 2017-18 but the bureaucrats responsible for executing these functions still occupy their positions in the Ministry of Finance. The problems that have been identified in the report also remain largely unaddressed.

The World Bank draft report showed that Pakistan performed poorly on the pillar of management of assets and liabilities. Four critical indicators fall under this pillar. These are fiscal risk reporting where the country got B grade, public investment management (D plus), public asset management (D) and debt management (B plus).

Pakistan’s budget has lost credibility: World Bank

Debt management

The joint assessment by the World Bank and the European Union showed that Pakistan’s debt management practices and controls were largely satisfactory and the assessment gave B plus grade.

It gave B grade on recording and reporting of debt and guarantees. “Most of the information relating to domestic and foreign debt and guarantees is reconciled on a quarterly basis. However, there is no consolidated system for recording and reporting of debt,” says the report.

At present, the State Bank of Pakistan (SBP), Ministry of Finance and economic affairs ministry separately record domestic and external debt data. “Due to the involvement of various entities at different levels, there is a need for a consolidated system regarding reporting of all transactions related to debt and guarantees,” suggested the World Bank.

The World Bank noted that the project “Improve Financial Reporting and Auditing” (Pifra) introduced the Government Financial Management Information System (GFMIS) but linkages through a dedicated and specialised module for debt management between the Economic Affairs Division, Ministry of Finance and the SBP “need to be in place”.

There are differences between debt data of the government and SBP. The discrepancy in numbers is found in quarterly tables of fiscal operations and those reported by the SBP in monetary survey, it added.

Owing to the violation of Fiscal Responsibility and Debt Limitation Act of 2005, the World Bank gave B rating on the approval of debt and guarantees. The country managed to secure A rating on the sub-indicator of debt management strategy.

Fiscal risk reporting

The fiscal risk reporting indicator measured the extent to which fiscal risks are reported. Due to adverse rating on the sub-indicator of monitoring of public corporations, Pakistan was given B rating.

“The fiscal risks are often not reflected adequately in the budget and contribute towards variances in expenditure from the budget, undermining the credibility of the budget,” said the report.

The finance ministry does not monitor all the state-owned enterprises (SOEs) and it is keen to seek financial reports from only those SOEs that provide dividends, according to the final draft report. It secured C grade on monitoring of public corporations.

The country got B grade on the sub-indicator of contingent liabilities and other fiscal risks. The government reports explicit contingent liabilities but does not account for implicit contingent liabilities including potential bailouts to SOEs, expected change in policies and legal cases, according to the report.

“Contingent budget line is not included in the budget. While the explicit contingent liabilities are being monitored, it is a concern whether they are being incorporated into the budget,” noted the joint World Bank and EU assessment.

Public asset management

The indicator assessed the management and monitoring of government assets and transparency of asset disposal. The country fared poor on all four sub-indicators, resulting in overall D grade – the lowest score on the board.

The report underlined that there is no mechanism to consolidate and monitor financial assets at the federal level. There is also no practice of recognising the securities in terms of held for trading, held till maturity or available for sale, noted the report. The government also does not publish information on performance of its financial assets.

The World Bank report stated that there “was a major issue with reconciliation of bank accounts”. Government funds in private bank accounts amount to Rs1.4 trillion and these funds could not be audited.

There is also no monitoring of non-financial assets and the government does not maintain record as per age, location and usage, according to the report. Budget books also do not carry a list of assets disposed of during the course of a fiscal year.

Foreign exchange: SBP reserves fall 4.9% to $7.6b

Public investment management

Due to the planning ministry’s failure in economic analysis of projects, selection of projects and poor costing and monitoring, the World Bank has given the lowest score of D plus on public investment management indicators.

“The PSDP includes both approved and unapproved projects; generally, unapproved projects have not gone through the same scrutiny, studies and approval process as the approved projects,” according to the report.

Although the World Bank report covers last three years of the Pakistan Muslim League-Nawaz (PML-N) government, the Pakistan Tehreek-e-Insaf (PTI) government has recently added 52 unapproved projects of its allied party to the PSDP under political expediency in this fiscal year’s PSDP.

Published in The Express Tribune, July 27th, 2019.



https://tribune.com.pk/story/2022239/2-pakistan-lacks-system-recording-reporting-debt/?amp=1

Comments

Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

The Rise of China-Europe Railways

https://www.csis.org/analysis/rise-china-europe-railways

The Rise of China-Europe RailwaysMarch 6, 2018The Dawn of a New Commercial Era?For over two millennia, technology and politics have shaped trade across the Eurasian supercontinent. The compass and domesticated camels helped the “silk routes” emerge between 200 and 400 CE, and peaceful interactions between the Han and Hellenic empires allowed overland trade to flourish. A major shift occurred in the late fifteenth century, when the invention of large ocean-going vessels and new navigation methods made maritime trade more competitive. Mercantilism and competition among Europe’s colonial powers helped pull commerce to the coastlines. Since then, commerce between Asia and Europe has traveled primarily by sea.1Against this historical backdrop, new railway services between China and Europe have emerged rapidly. Just 10 years ago, regular direct freight services from China to Europe did not exist.2 Today, they connect roughly 35 Chinese…

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…