The momentum of election campaigns is gradually building, marked by the presence of floats blaring party songs, the emergence of colourful party flags and banners, the distribution of leaflets and the holding of projection meetings. Central leaders are making flying visits to crucial constituencies.
Concurrently, social media teams are gearing up, and both print and electronic media have initiated specialised coverage. Party camps are beginning to surface and advertising campaigns are taking shape. Despite the escalating activity, the discourse on the actual scale of spending by candidates and political parties and funding sources for election campaigns has yet to receive the attention it deserves.
Despite the substantial increase in the budget of the Election Commission (ECP), responsible for orchestrating the vast electoral process, keen observers anticipated its spending to remain a modest portion of overall election expenditure in 2024. Contesting parties and candidates employ various strategies and manoeuvres to build a winning campaign at any cost. Privately, numerous candidates have admitted that the actual election expenditures of serious contenders far surpass the officially notified limits.
In Elections 2024, following recent amendments, the Election Commission of Pakistan (ECP) has sanctioned national assembly candidates to allocate up to Rs10 million for their campaigns, while provincial assembly aspirants are allowed a budget of Rs0.4m. In one National Assembly constituency, normally, there are three provincial assembly seats.
Numerous candidates have admitted that the actual election expenditures of serious contenders far surpass the official limits
In absence of a comprehensive research exercise or a verifiable dataset on total election expenditure, reliance on estimates becomes inevitable, with figures reaching into hundreds of billions. One such approximation suggested that the cost of the 2018 elections amounted to Rs440 billion, which was 10 per cent higher than the 2013 election spending. Based on these estimates and accounting for current record inflation, it would not be surprising if the total cost rose to Rs660bn in 2024, approximately 50pc more than the expenditure in 2018.
The Election Act grants the ECP the authority to monitor expenditures and enforce rules by employing corrective measures, including issuing show cause notices, imposing fines, or even disqualifying candidates found in violation of the election rules and code of conduct. However, as disclosed by a senior source within the ECP, the commission refrains from investigating the source of funds utilised by candidates and parties unless they receive a written complaint alleging some form of wrongdoing.
The background research, coupled with interviews with candidates regarding their campaigns and funding sources, revealed the presence of numerous private lenders in the market, besides their personal savings and help from friends and relatives. These lenders are reportedly providing short-term credit spanning three to six months at interest rates as high as 40pc, and remarkably without any formal paperwork.
The system is believed to operate on trust and recommendations, with severe personalised consequences for any kind of breach of trust. Additionally, some officials within the Ministry of Finance were also found to be aware of these practices.
A senior official shared an intriguing insight, revealing that certain lenders operating in Khyber Pakhthunkhwa and Sindh have cleverly branded their schemes with Islamic titles such as ‘Musharika’ and ‘Mudarba’, to garner attention and appeal.
Efforts were made to seek comments from the Chief Election Commissioner and the spokesperson of the ECP regarding the scale and sources of campaign funding. However, as of the report’s filing, their responses had not been received, despite the absence of any observed election-related withdrawals from formal saving platforms like banks, national saving schemes, mutual funds, etc.
In discussing the matter, Rashid Chaudhry, National Coordinator, Free and Fair Election Network (Fafen), highlighted the alteration in the Election Act concerning bank accounts designated for electioneering. He noted that previously, candidates were required to open a new account specifically for election purposes that required fresh deposits for financing campaigns.
However, now a candidate is allowed to designate any existing bank account for their election campaign, with the obligation not to use this account for any other purpose until the election cycle ends. This provision could partly account for the absence of bank withdrawals, as the declared account might already have a balance sufficient to cover the election budget.
A senior source within the ECP mentioned earlier that the scrutiny of financial records commences post-elections when candidates submit their balance of accounts. This official highlighted that the financial cell of the ECP has already scrutinised the credentials of nominees to prevent tax defaulters from securing a seat in a legislative body.
Our contacts in the Federal Board of Revenue (FBR) confirmed receiving about 2,000 queries from ECP regarding candidates with outstanding tax demands. These candidates had to settle their tax liabilities to obtain an FBR clearance certificate, a prerequisite for qualifying to contest elections.
“We are vigilant and committed to ensuring that all candidates adhere to the spending limits, but delving into the sources of election funds is beyond our mandate unless a complaint is lodged,” an official asserted, defending the ECP’s position.
However, he expressed uncertainty about the specific government entity responsible for tracing and tracking the flow of money that emerges and circulates within an election cycle.
A prominent economist dismissed concerns about electioneering and its funding, stating, “Why the surprise? The government may be bankrupt, but people are remarkably resourceful. It is understandable if they choose to keep a big part of their savings beyond FBR’s reach in the form of cash, dollars and gold. Instead of viewing it negatively, we should appreciate the new opportunities for service providers during the election cycle, contributing to a positive uptick in economic activity.”
He criticised an oversized, sluggish and self-serving government focused on extracting money through taxes and levies without delivering commensurate public services. The economist dismissed the concept of black money, asserting, “I see no problem here. In fact, the parallel economy lends resilience and keeps things moving in the country.”
A lawyer, uncertain about the government entity responsible for monitoring political finance, contended that an operation of this magnitude in Pakistan would not be feasible without the active collusion and patronage of the ‘nexus of barons, bankers and brokers.’
In the discussion on the subject, Dr Farooq Sattar, Senior Deputy Convener, Muttahida Qaumi Movement (MQM) Pakistan, currently contesting for a National Assembly seat from Karachi, expressed scepticism about the possibility of perfectly free, fair and transparent elections in Pakistan, given the prevalence of the informal economy and the absence of limits on cash transactions.
While acknowledging the challenges, he did endorse the idea of gaining a better understanding of the flow of cash to assess the scale of the election economy. Dr Sattar mentioned that, in his opinion, a budget of Rs10m is adequate for a NA candidate in Karachi.
According to senior sources in the finance division, State Bank of Pakistan (SBP) and Financial Monitoring Unit (FMU), the realm of political finance, predominantly conducted in cash, does not fall under their purview. Their focus is on monitoring, investigating and regulating transactions and dealings within the formal sector, with priority attached to cases linked to politically exposed persons, that are traceable.
Published in Dawn, The Business and Finance Weekly, January 29th, 2024
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