Weeding out graft: NEC may abolish PM’s discretionary fund

Jun 10, 2013

Sources say the P&D minister Ahsan Iqbal (L) and finance minister Ishaq Dar (R) have in principle decided not to allocate any money for the prime minister’s discretionary budget.

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ISLAMABAD: The National Economic Council (NEC) may abolish the prime minister’s discretionary funds today (Monday), in a bid to eradicate massive corruption and pre-empt the misuse of taxpayers’ money under the pretext of development at the constituency-level, The Express Tribune has learnt.

According to sources in the finance ministry, Finance Minister Ishaq Dar and Planning and Development (P&D) Minister Ahsan Iqbal have agreed in principle to not allocate any money under the head of the Peoples Works Programme-II (PWP-II) – the head set aside for discretionary spending by the prime minister.

But the final decision in this regard will be taken by the NEC. The proposal will be tabled before the council’s meeting which will be chaired by Prime Minister Nawaz Sharif, they added. The NEC will approve next year’s federal and provincial development plans and endorse the macroeconomic framework for the fiscal year 2013-14. The meeting will be attended by chief ministers and their representatives as well.

Bringing an end to the 27-year old practice of discretionary spending by the premier will mark the beginning of good governance at the Centre and will be the first concrete step aimed at the eradication of corruption from the country.

The discretionary fund was introduced by late premier Mohammad Khan Junejo in fiscal year 1986-87 with a sum of about Rs1.3 billion. Over the years, the head was enlarged by successive governments and reached its peak under the previous Pakistan Peoples Party-led government. Former premier Raja Pervaiz Ashraf spent a whopping Rs47.5 billion, allegedly in an attempt to lure voters.

The Supreme Court also took suo motu notice of Ashraf’s spending spree as premier.

In their proposal for abolishing the PM’s discretionary budget next year onwards, however, the finance ministry has set aside Rs22 billion for the same purpose. The ministry has also proposed a Rs5 billion allocation under PWP-I, which will now be renamed as the Tameer-e-Wattan Programme after the PML-N government decided to keep the head open.  However, according to sources, the government has decided to make the process transparent to ensure full utilisation of the taxpayers’ money.

At least 20% of the money allocated to various schemes under PWP-I are allegedly wasted on account of kickbacks – something a previous National Assembly standing committee has admitted.

In a similar move, the new government may also on June 12 announce a ban on the duty-free import of luxury vehicles for government functionaries, the sources revealed further.

President reconstitutes NEC

President Asif Ali Zardari, on the advice of Prime Minister Nawaz Sharif, notified the reconstitution of the NEC on Sunday.

The council now includes Finance Minister Dar, P&D Minister Iqbal, Water and Power Minister Khawaja Asif and Industries Minister Ghulam Murtaza Jatoi. The four ministers were nominated by Nawaz for the council. Apart from the chief minister of Balochistan, the remaining three chief ministers have also nominated their finance ministers for the NEC. Balochistan Chief Minister Dr Abdul Malik Baloch has nominated MPA Abdul Rahim Ziaratwal.

The PM has nominated his four ministers, Ishaq Dar, Ahsan Iqbal, Ghulam Murtaza Khan Jatoi and Khawaja Mohammad Asif as NEC members. The three provincial chief ministers who are also members of the NEC have nominated their finance ministers on the NEC while Balochistan’s chief minister has nominated Abdul Rahim Ziaratwal, the member of Balochistan Assembly, on the NEC panel.

The NEC will approve next year’s Public Sector Development Programme (PSDP).

The finance ministry had originally proposed a Rs450 billion federal development budget, against the current fiscal year’s Rs360 billion budget. According to sources, however, the new government has since decided to jack up next year’s spending significantly and may allocate at least Rs540 billion to provide impetus to growth and create more space for energy sector projects.

It is not yet clear how the federal government will create additional space for more development spending, as its tax machinery has become virtually dysfuctional.

Apart from the federal development budget, the NEC will also approve the annual development plans for the four provinces. Initially, the Punjab government had proposed Rs217 billion, Sindh Rs200 billion, Khyber-Paktunkwha Rs90 and Balochistan Rs38 billion. The accumulative provincial development budget has initially been proposed at Rs545 billion but the sources said there are indications that they may be increased.

The NEC will also approve macroeconomic indicators for the next fiscal year. The original proposal was to set the Gross domestic product growth target at 4.4% and inflation at 8% but the sources said the Gross Domestic Product target may also be revised.

Published in The Express Tribune, June 10th, 2013.