ISLAMABAD: Finance Division has reportedly decided to avail direct credit lines from banks/ financial institutions to raise financing for national security, without following Public Procurement Rules 2014, well informed sources told Business Recorder.
Sharing the details, sources said Finance Division in its letter on February 09, 2023 requested PPRA to allow exemption from Rule-12 of Public Procurement Rules, 2004 so that Finance Division may be able to have direct credit lines from banks/ financial institutions to meet financial requirements of the country.
Finance Division stated that in terms of Article 166 of the Constitution of Pakistan and Rules of Business, 1973, it is authorized to raise domestic debt through domestic government securities/ bank loans or any other domestic borrowing instruments, other than those issued by the Central Directorate of National Savings.
According to Finance Division, government is experiencing significant issues on its cash balances because of increased deficit financing. The existing procedure depends upon participation of the banks to raise domestic borrowings.
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However, due to recent changes in market dynamics which include increase in Policy Rate by SBP and imposition of ADR (Advances to Deposit Ratio) related tax, banks are reluctant to participate through auctions. The option of raising debt from SBP is also restricted owing to recent amendments in the SBP Act as part of the IMF conditions in the ongoing program. This has necessitated exploring diversified funding avenues through direct credit lines both from Islamic and conventional banks or other financial institutions to fulfil government’s funding needs.
Finance Division further added that to have direct credit lines from financial institutions requires government to follow Public Procurement Rules, 2004 in order to seek bids from the institutions. In the current situation, financing has to be taken on an emergency basis, and in this regard, normal procurement process cannot be followed.
Moreover, issuing of advertisements in the local and international press for raising such financing will result in further deterioration in market perception. Hence, in order to seek such commercial financings from domestic financial institutions, Finance Division requires exemption from Rule-I2 of PP Rules, 2004.
Furthermore, Finance Division referred to the previous exemption provided by Cabinet Division from PPRA Rules, 2004 for incurring of foreign loans/ credit facilities vide its letter dated February 03, 2014. In addition to that a summary was also moved to the Prime Minister on January 16, 2023, which was approved by the Prime Minister with the stipulation that an exemption from PPRA Rules 2004 may be sought from PPRA.
In this regard, Finance Division has requested the PPRA to allow exemption from Rule.12 of PP Rules, 2004, so that it may have direct credit lines from banks/ financial institutions to meet financial requirement of the country.
In terms of the Rule 12 of the PP rules, 2004, procuring agencies are required to advertise procurement on the Authority’s website, print media and procuring agency website as the case may be in accordance with the defined financial limit for the advertisement specified under the said rule.
Deviation from the advertisement is permissible with the prior approval of the Authority subject to the following conditions prescribed under Rule-14 of the PP Rules, 2004: (i) the proposed procurement is related to national security and its publication could jeopardize national security objective; and (ii) the proposed procurement advertisement or notice or publication of it, in any manner, relates to disclosure of information, which is proprietary in nature or falls within the definition of the intellectual property which is available from a single source.
Finance Division, sources said, is of the view that issuing the advertisement in the local and international press for raising such financing will result in further deterioration in market perception.
The sources said, PPRA Board, in its forthcoming meeting will accord exemption from Rule-12 of PP Rules, 2004, so that the government can avail direct credit lines from banks/ financial institutions.
Copyright Business Recorder, 2023