FBR seeks technical supplementary grant of Rs 4.152 billion

Federal Board of Revenue (FBR) has sought technical supplementary grant of Rs 4.152 billion to meet expenditures of head office and field formations, well informed sources told Business Recorder.

Presently, FBR and its field formation are facing acute shortage of funds under the mandatory head of accounts which cannot be shifted to the next financial year 2020-21. Moreover, FBR and its filed formations have been incurring expenditure under various heads on day to day basis for the achievement of Disbursement Linked Indicators (DLIs) under Pakistan Raises Revenue Program, resulting in further deterioration of the financial constraints.

Revenue is of the view that in case of non provision of additional funds, FBR's day to day operations are badly suffering which would adversely affect the achievement of revenue targets for the financial year 2019-20 and achievement of DLIs.

Pakistan Raises Revenue (PRR) program was signed between Government of Pakistan and International Development Association with FBR as an implementing agency. As per the financing agreement an amount of $ 400 million is to be awarded as loan over a period of five years. There are two components of PRR program, component -1 of $ 320 million would be provided to FBR as budgetary grant through Ministry of Finance and component-2 amounting to $ 80 million would be provided as Investment Project Financing (IPF). Component -1 is based on Disbursement Linked Indicators whereby pre-agreed amounts would be allocated annually subject to achievement of Disbursement Linked Results (DLR).

In addition, FBR is also striving hard to achieve the revenue targets. However, the limited budgetary allocations for the current year are seriously hampering FBR's efforts to accomplish this objective. The existing budgetary allocation is grossly disproportionate to meet the essential and inevitable requirements during the financial year 2019-20 for the normal operations as well as implementation of the PRR program.

Finance Division allocated budget of Rs 26.541 billion for the current financial year 2019-20 against demand of Rs 35.540 billion resulting in shortage of Rs 6.999 billion against the actual demand of FBR to meet the essential requirements.

The sources said, during the current fiscal year 2019-20, FBR has created 23 new field formations throughout the country under three demands of FBR but no additional allocation of funds was made by the Finance Division. Accordingly, FBR was constrained to meet budgetary requirements from existing budgetary allocation for financial year 2019-20 which is seriously affecting its operations and would compromise the achievement of objectives under targets.

According to sources, $ 26.5 million out of component-1 have been given as advance for achievement of program development indicators namely increased tax to GDP ratio, broadened tax net, reduced compliance burden for taxpayers and reduced hours spend for customs clearance at the borders along with achievement of DLIs such as transparent tax system, simplified and automated FBR core business progresses, organizational effectiveness and transparency etc. for the first year of the program i.e. 2019 to be spent by June 2020 and this amount has already been credited in government account as confirmed in SBP. Moreover, Finance Division has conveyed its concurrence to provide budgetary resources for implementation of PRR program.

Revenue Division has requested Finance Division to allocate additional funds amounting Rs 4.152 billion through technical supplementary grant from Pakistan Raises Revenue (PRR) program for the current financial year 2019-20, to meet the mandatory and inevitable expenditures for the achievement of DLIs and to supplement budgetary resources for expenditures being incurred in this regard. As per financing agreement future disbursement of PRR program funds is linked with successful completion of DLRs.

Revenue Division has requested the ECC to approve technical supplementary grant of Rs 4.152 billion to meet obligatory expenditure under 45 heads of FBR, 46-customs and 47-inland revenue for current fiscal year.

A summary regarding the recovery of outstanding wharf age of Rs 1.696 billion on import of LNG by Pakistan State Oil (PSO) was submitted to ECC on August 30, 2019 and Cabinet Division has conveyed the following decision of October 30, 2019" the ECC considered the summary on August 30, 2019 submitted by the Ministry of Maritime Affairs regarding recovery of outstanding wharf age of Rs 1.696 billion on import of LNG by PSO and committee under the chairmanship of Minister for Economic Affairs comprising Minister for Power, Advisor to the Prime Minister on Institutional Reforms and Austerity. Secretary Petroleum Division to look into the issue outstanding dues of PQA, against PSO holistically and submit a report, and its recommendations within two weeks to the ECC for consideration. The committee may co-opt Chairman PQA and Managing Director PSO as its members. Ministry of Maritime Affairs will provide secretariat support for the committee,"

As per decision of the ECC a meeting was held on November 27, 2019 under the chairmanship of Minister for Economic Affairs and recommended" having heard arguments of both the parties and examination of facts and keeping in view the strong contract in the financial health of both organizations, it would be in the national interest, that PSO at this time is eased out by way of settlement of long standing amount payable by them to PQA. It is recommended that outstanding amount of Rs 1.696 billion be paid in 10 equal installments without interest over a period of next 10 years."

However, Ministry of Maritime Affairs disagreed with the recommendations of the committee and proposed that liabilities may be paid during the tenure of the present government i.e. by May 2023.