The Auditor General of Pakistan (AGP) has published 300 pages of objections to Pakistan’s defense spending during the last fiscal year 2023-24. The report, which was released recently, highlights discrepancies in the accounts. Some expenditures are non-transparent and unauthorized. Moreover, there have been instances of non-recoveries and over and advance payments. Expenses totaling Rs566.29 billion, including those from the second phase of the preceding fiscal year’s audit and the first phase of the last fiscal year’s audit, amounting to Rs335.63 billion and Rs230.66 billion, respectively, were covered in this round of audit.
It found that payments were made in violation of the Defense Services Regulations, whereby applicable taxes were not deducted, financial powers were split, public procurement rules were violated and unauthorized work was executed, among other issues. The AGP’s report noted that efforts to address audit objections have been inadequate. It highlighted that out of the 1974 directives of the Public Accounts Committee (PAC), the Ministry of Defense only complied with 659 directives. Similarly, the Ministry of Defense Production also complied with 109 directives out of the 372 directives issued to it. Therefore, it called on the principal accounting officers to address this matter.
The report also highlighted that the audit revealed irregularities, including bypassing of rules for awarding contracts and ignoring the competitive bidding process. While secrecy of the defense work was cited as the reason for several measures, the auditors noted that exemptions in this regard were not obtained from the defense secretary despite the auditor insisting on doing so following the audit. According to the report, the Departmental Audit Committee (DAC) had told the departments concerned to regularize the expenditures via the competent authority, but these directives were not implemented. The AGP, therefore, called on the authorities to hold an inquiry into the matter and to fix responsibility for these discrepancies.
Socio-economic services
The audit for the fiscal year 2023-24 also highlights the financial irregularities of the federal government. The AGP noted that the government had allocated less than 4% of the total budget for socio-economic services in the country. This figure is minimal when looked at with reference to the Rs38.67 trillion budget. Moreover, the public’s resources were wasted as the Rs8 trillion, or 93% of the supplementary grants were not approved by the parliament.
The audit report also takes stock of the spending during the fiscal year 2022-23, wherein it highlighted discrepancies, including poor management of the budget and the unnecessary allocation of supplementary grants. It also noted that due to the funds diverted towards debt servicing, Pakistan is left with limited capacity to spend on socio-economic services, thus curtailing the uplifting of the people of Pakistan.
Power sector
Moreover, the report also revealed that the power sector was bleeding the country dry as leakage of Rs4.5 was identified in the audit. The AGP issued 442 pages of objections, wherein it reported instances of non-recoveries, poor management of finances and assets, overbilling, and over-payments among other issues. The audit noted that despite being required to report the distribution companies’ failure to recover bills, the Central Power Purchasing Agency (CPPA) did not do so. The audit found Rs2.53 trillion to be due from the distribution companies.
The report noted that there had been a lack of accountability in the sector and corrective measures were not paid due attention, which is why the leakage in the power sector had brought the country’s economy to the edge. It is worth mentioning here that the constitution mandates the AGP to highlight these issues and present them to the president and parliament for necessary action.