ISLAMABAD, March 9: The federal finance ministry has diverted about Rs15.06 billion export development funds (EDF) for bridging the yawning current expenditure deficit, leading to poor implementation of export promotion measures in the last few years, Dawn has learnt.
The finance ministry had withheld the amounts collected from export proceeds since 2005-06, which had been diverted to other sectors, especially to dole out hefty salaries and perks to ministers, state ministers, advisors and special assistants.
Of the total amount collected, the Musharraf-led government had withheld Rs1.266 billion. The PPP-led coalition government withheld an all-time high of Rs13.794 billion in the last five years.
The export development surcharge (EDS) is levied on all exports at the rate of 0.25 per cent of fob value of goods.
As per law, the entire receipts of EDS are transferred to Export Development Fund (EDF) in the following year.
The government used these funds for implementation of measures to facilitate and enhance exports from the country.
The total amount collected on export proceeds since 2005-06 was Rs23.538 billion until 2011-12.
However, the finance ministry released only Rs8.853 billion during the period under review, leaving a big portion of Rs15.06 billion stuck up with the finance ministry.
The year-wise break-up showed that an amount of Rs842.123 million was withheld in 2005-06; Rs424.338 million in 2006-07; Rs1.589 billion in 2007-08; Rs2.760 billion in 2008-09; Rs2.127 billion in 2009-10; Rs3.738 billion in 2010-11 and an amount of Rs3.578 billion 2011-12, respectively.
A well-placed source in the commerce ministry told Dawn that the cabinet meeting, headed by Prime Minister Raja Pervez Asharaf, on Jan 30 last had decided that all funds collected as EDS should be transferred to the commerce ministry.
A necessary mechanism is being worked out for this purpose, the source added.
For the year 2012-13, the finance ministry allocated only Rs1.508 billion which is much below the expected amount to be raised as EDS.
The finance ministry released only Rs452.619 million in the last eight months of the current fiscal year.
The implementation of the first strategic trade policy framework (STPF-2009-12) failed apparently because of non-availability of funding for the implementation of the measures announced.
Another STPF 2012-15 was announced recently, to be implemented with a funding of Rs26 billion in a period of three years. Keeping the past trends in notice, it is believed that the new policy would also only remain on paper.
Analysts said the implementation of trade policy is the least priority of the government. However, many developing countries have increased their export earnings for meeting the rising requirement of foreign exchange and minimising the need for seeking loans to build up foreign exchange reserves, they added.
“This is exporters’ money and can only be used for facilitation of exports and the government has no right to divert such funds for other purposes as per law,” the source declared.