The Ministry of Finance admitted full ignorance regarding the whereabouts of over Rs821 billion, except Rs6.458 billion, that the National Accountability Bureau (NAB) claimed to have recovered since its formation 16 years ago in a parliamentary testimony on Wednesday (3rd November).
The Senate Standing Committee on Finance, surprised to learn that the ministry was unaware of the enormous difference between claims and actual funds received by the national treasury, decided on Wednesday to request assistance from Pakistan’s auditor general for a special audit.
The parliamentary group was particularly dissatisfied with the recent rupee depreciation and its disastrous impact on inflation.
Tanveer Butt, Additional Finance Secretary, told the panel that non-tax revenue from NAB recovery had totaled only Rs6.458 billion over the previous 16 years.
In response to questioning, Mr. Butt stated that the finance ministry had no idea where the remaining funds went or how they were being used. He said that the finance minister was unable to inquire about the remaining Rs815 billion from the anti-graft watchdog. Furthermore, he added, “The money was not being deposited in government accounts. It is not known in which account the NAB had deposited the recovery of Rs821 billion.”
The committee agreed to write to the Pakistani Auditor General and the Director-General of the National Accounts Bureau (NAB) to request that they appear before the next meeting.
The sum recovered by the NAB would also be audited, according to Senator Talha Mahmood, the committee’s chairman.
In a report provided to the Senate committee, NAB claimed:
- Rs76 billion in voluntary refunds or plea bargains.
- Rs122 billion in bank loan default recoveries.
- Rs60 billion in loan restructuring recoveries.
- Rs46 billion in court fines.
- Nearly Rs500 billion in indirect recoveries.
Senator Saleem Mandviwala claimed that cash obtained from the UK’s National Crime Agency had not been put in the national budget and was perhaps still being kept back.
While expressing disagreement with the finance ministry and the justifications put forth by the State Bank of Pakistan for exchange rate losses, the committee members called the government’s policies “disastrous” for the country.
The committee concluded that, despite an Rs57 per dollar depreciation, the government was only able to raise exports by 3%, while the impact on inflation was disastrous.
Senator Talha stated that while the impact of devaluation was initially absorbed, the huge inflation became unpleasant. People were less interested in whether the exchange rate was false or genuine, he claimed, because they were concerned about rising commodity prices.
According to the Senate committee chairman, “We are completely dissatisfied with your briefing and will write to the governor of SBP” as some members called State Bank Governor Reza Baqir’s statement in London, in which he said devaluation had benefited many overseas Pakistanis, “uncalled for.”
SBP Deputy Governor Murtaza Syed admitted that currency rate movements affected inflation but claimed that the recent depreciation had little impact on inflation because prices were fueled by food and energy costs in the global market.
Senator Talha stated that the rupee was under strain principally due to dollar smuggling from Pakistan into Afghanistan and mentioned an individual from whom a large sum of money was captured in Lahore.
The SBP deputy governor agreed with the committee chairman that the primary benchmark for determining the exchange rate was the market supply and demand scenario. The meeting was informed that after entering the IMF program, a flexible exchange rate was introduced.
The committee resolved to seek clarity from the SBP governor in London, as well as a mechanism from the SBP for intervening in the currency rate market.
Senator Abbasi demanded that the committee be informed about recent conversations with the International Monetary Fund (IMF), but the additional finance secretary stated he was unable to provide a full response and requested more time to obtain specifics of the negotiations.
The chairman of the Senate committee agreed to summon the financial adviser and other officials to a briefing to learn more about the latest IMF deal.
