The International Monetary Fund (IMF) has recommended that Pakistan strengthen its capacity at the Finance Division to lead and coordinate macro-fiscal forecasts to support budget preparation, as well as increasing forecast cycles and synchronizing them with the budget.
The Fund in its technical assistance report also recommended introducing a strategic phase to the budget process, in line with the Public Financial Management Act (PFMA) 2019 and the accompanying Budget Manual; including more guidance and binding ceilings in the Budget Call Circular; and undertake actions to minimize dual (“recurrent/capital”) budgeting.
The Fund asked Pakistan to consider reorganizing the Finance Division with a focus on its budget and budget management functions, to bring the structure into line with good international practice.
The international lender urged for implementing the Supreme Court ruling on supplementary grants No. 20 of 2013 that Supplementary Budget Statements be subject to the same scrutiny and procedure as the Annual Budget Statement, including ex-ante approval by the National Assembly of supplementary grants.
Relevant laws and rules can be amended to ensure greater certainty and clarity on the interpretation and application of this ruling, including potentially Article 84 of the Constitution. Propose the creation of a Contingency Reserve in the budget to maintain budget flexibility. Concurrently, the Auditor General of Pakistan (AGP) could conduct a special audit of the mechanisms and effectiveness of supplementary grants in past years.
The Fund further asked for preparing a PFM Digitalization Master Plan, establishing a high-level Steering Committee to oversee the coordination and implementation of the Plan, strengthening Fiscal Data Governance (FDG) practices, considering next steps after SAP life support ends in 2025, and reviewing the budget preparation and budget execution business processes in FABS.
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