Pakistan allocates under 4% of budget to socio-economic services, audit reveals

About 93% of supplementary grants, amounting to over Rs8 trillion, were not approved by parliament and remained unspent: report

The Auditor General of Pakistan (AGP) has raised alarm over the nation’s deteriorating financial management, revealing that less than 4% of the Rs38.67 trillion budget is being allocated for socio-economic services.

Dawn reported that the AGP’s annual audit report for the year 2023-24 points out that about 93% of supplementary grants, amounting to over Rs8 trillion, were not approved by parliament and remained unspent, representing a significant loss of public resources.

The report identifies major financial management issues within the federal government during the fiscal year 2022-23, including unnecessary allocation of supplementary grants, poor budget management due to the demand of funds without proper need assessment, and the lapse of funds due to the non-surrendering of budgeted amounts in time.

A key concern highlighted by the AGP is the escalating cost of debt servicing, which is severely limiting spending on essential socio-economic services, thereby impacting the living standards of citizens. 

The report states that debt servicing accounted for approximately Rs25 trillion, or 84% of the total expenditure of Rs29.6 trillion, in FY22. This burden increased to Rs34 trillion, or 91.4% of the Rs38.67 trillion budget, in FY23.

The AGP’s report, mandated under articles 169 to 171 of the Constitution, is presented to the president and parliament to prompt corrective actions, recoveries, or regularizations as deemed necessary.

The report further details that 96.26% of the budget in FY23 was spent on general public services, which includes debt servicing, defense, and civil government expenses. This left only 3.74% of the budget for socio-economic functions, a significant decrease from the previous year’s allocation of 16.07%.

In addition to these concerns, the AGP noted that nearly 93% of supplementary grants, totaling Rs8.049 trillion, were issued without parliamentary approval during FY23. The report also reveals an increase in the receipt of domestic floating and permanent debts, which rose to Rs25.17 trillion and Rs7.29 trillion, respectively, in FY23 compared to the previous year’s figures.

During the fiscal year 2022-23, the federal government repaid Rs22.63 trillion in floating domestic debt, Rs2.46 trillion in permanent domestic debt, and Rs3.24 trillion in foreign debt. The AGP’s findings underscore the urgent need for improved financial management to ensure that more of the national budget is directed towards critical socio-economic services.

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