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Dam fund returns

June 17, 2019

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DROP by drop, some semblance of sense is beginning to find its way to the whole ‘dam fund’ conversation. When the Supreme Court looked at the Rs10.6bn that have been deposited in the fund thus far and learned that the entire amount seems to be sitting in current accounts that yield no return, and that, with the rise of inflation, are losing close to Rs10m per day, it was right to be alarmed. Fact is, this is one of those things that is always taken into account whenever large quantities of money are being handled by any institution or entity. In most cases, however, where even a bit of competence is available, such things are thought of and sorted out before, not after, the large quantity of money materialises. Idle money evaporates. This is common knowledge, and the fact that these donations were allowed to sit in unproductive accounts for such a long period of time means that the trust of the donors that their money would be properly utilised had been dealt a blow at the very outset of the whole affair.

Now that the court has decided to place the funds in 10-year paper — from the sounds of it since the National Bank of Pakistan is offering a return of 12.6pc on them — further questions of an equally critical nature arise. What tenor is the return for? Meaning, for what time period will the funds be put away to ensure this annual rate of return? Second, what happens to the interest earned, considering the amount could be larger than Rs1bn a year? Does it get compounded or will it be drawn and used elsewhere? If it is compounded, that means the funds are locked away for an extended period of time, and somebody might want to inform Wapda of this because some of its people have come on the airwaves announcing that they have plans for utilising these funds. If the interest is to be withdrawn, where will it be used?

Instead of venturing further down this road, and taking on the task of fund managers, the Supreme Court would be well advised to find an alternate use for the money — one that adheres to the spirit in which it has been donated. When the former chief justice launched the whole enterprise, he clearly did not know what he was doing. Everything about the fund was made up along the way, with no foresight about how the money would be placed, how the amount would be utilised — or whether or not it is the job of the court to be running such an effort in the first place. Now that this unfinished business has been left for posterity to tackle, the best thing would be to use the funds to finance small dam construction in Balochistan and call it a day.

Published in Dawn, June 17th, 2019