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ISLAMABAD: A caretaker setup is empowered to procure new external loans but not to impose new taxes when the national assembly stands dissolved; however, it is authorised to release funds to meet the budgeted expenditure though not for any additional funds for any purpose.

This was stated by high level sources in the Economic Affairs Division (EAD) and Finance Division.

The PTI-led government budgeted foreign assistance of $14.088 billion for the current financial year, including $13.871 billion loans and $217.44 million grants from multilateral and bilateral sources. There would be no issue in materializing the committed assistance till June 2022, an EAD official told Business Recorder.

Pakistan has already received $12.178 billion from multiple financing sources in the first eight months (July-February) of 2021-22 including $2.623 billion from foreign commercial banks (21.5 percent).

The Khan-led administration signed new loan agreements during the first quarter of fiscal year 2021-22 of $2.313 billion with multilateral development partners and foreign commercial banks - $628 million were signed with multilateral development partners and $686 million with foreign commercial banks.

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A senior official in the Finance Division told Business Recorder that the budget for the current fiscal year - expenditure and revenue – was approved by the National Assembly and therefore funds would continue to be released to Ministries and Divisions or other heads against the approved budget. There is a quarterly funds release policy against the approved budget and this is being implemented, sources added.

A Secretary of a ministry operates as a Principal Accounting Officer (PAO), who will continue to manage day to day routine affairs of his ministry after the dissolution of the federal cabinet; however, PAOs are likely to be extremely cautious in taking any policy decision as that maybe fraught with considerable risk, he added.

Clarity is required urgently, a worried Finance Division official told Business Recorder, adding the role of the Caretaker setup disallows them from taking take any policy level decision unless there is an emergency.

Article 86 of the Constitution of Pakistan would apply to a caretaker set up which states: “notwithstanding anything contained in the foregoing provisions relating to financial matters, at any time when the National Assembly stands dissolved, the federal government may reauthorize expenditure from the federal consolidated fund in respect of the estimated expenditure for a period not exceeding four months in any financial year.”

A senior official involved in the budget making process told Business Recorder on condition of anonymity that everything was almost at a standstill due to the ongoing political impasse. He added that virtually no decision making was being done at present and only internal work in ministries and divisions was being carried out.

Copyright Business Recorder, 2022


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