ISLAMABAD: The government has acknowledged that crowding out is a reality because of fiscal house not being in order as the National Assembly’s Finance Standing Committee expressed concern over lack of clarity and non-operationalisation of Sovereign Wealth Fund (SWF).

The meeting of the finance committee of the National Assembly presided over by Syed Naveed Qamar on Tuesday, first pointed out absence of finance minister before inquiring about the purpose of the fund and an official of the Finance Ministry besides Minister of State for Finance Ali Pervez Malik failed to satisfy or allay the committee’s concerns.

The chairman of the committee also wanted to know as to who would be answerable about the question in the parliament of the entities that have been transferred to the PSWF.

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The committee recommended that the entities that were transferred to the SWF may be clarified to maintain the previous status-quo, chain of command and reporting line until the decision of operationalisation or the abolishment of fund is finalised.

The meeting was further informed that a consultant has been hired by the government for advice on operationalisation and devising institutional framework of the Fund. An official anticipated a clearer position regarding the PSW Fund’s future within the next four months or by December 2024.

The chairman of the committee pointed out that it remains unclear whether the fund would become operational or abolished so if the concerned officials are not clear let the discussion be postponed till vagueness become clear.

The committee was also informed about Sovereign Wealth Fund, Companies, Marketing & Sale Plan, Status & Reporting System of the Companies including the chain of command, compliance with State-Owned Enterprises (Governance & Operation) Act, 2023.

The special secretary finance informed the committee that OGDCL, GHPL, PPL, NBP MPCL, PDFL, NJHPL are included in the Sovereign Wealth Fund.

Ali Pervez Malik said that there are various provisions of the law enacted by the previous government that still remain unclear of which the government is cognisant and working on it. The committee chairman and members raised concerns during the meeting regarding the clarity of several provisions within the enacted law, which have contributed to delays in the operationalisation of the Fund.

The Minister of State acknowledged lack of clarity – a major barrier –preventing the Fund from being fully operationalised into an institutional framework.

Furthermore, entities transferred to the Fund are currently required to maintain their previous status-quo, including their chain of command and reporting lines.

The chairman said that the companies transferred to the Fund were not reporting to their ministries and directed that clear written guidance be issued to address these reporting issues and re-establish normal operations.

Some members termed it a badly conceived law.

The committee recommended that the entities that stand transferred to the SWF may be clarified to maintain the previous status-quo, chain of command and reporting line until the decision of operationalisation or the abolishment of funds is finalised.

The committee was also briefed by the president National Bank of Pakistan (NBP) on the working and structure of NBP and stated that agriculture and SMEs were their priority sector.

The Minister of State for Finance admitted that crowding out is a reality because the fiscal house is not in order.

Copyright Business Recorder, 2024