Islamabad, Nov 19: IMF Flags Major Issues in Pakistan’s Budget-Making Process. With differences of up to 55% between the FY2022-23 budget and actual spending, the International Monetary Fund (IMF) has discovered significant issues with Pakistan’s budget-making and execution procedures.
According to TheNews, these variations are mostly attributable to supplemental funds that were authorized without first undergoing legislative review, which resulted in financial instability. The IMF’s Technical Assistance Report: Budget Practices states that Pakistan has made significant in-year changes as a result of its frequent use of technical and supplemental grants. These grants, which came to a total of Rs. 1,910 billion in FY23, caused the current budgets to peak at 54.7% over the initial allocations.
In addition to exogenous shocks like the historic floods in 2022, Pakistan’s economic problems have been exacerbated by the country’s growing public debt, which is consuming 60% of its income in interest payments. The fiscal situation has been further exacerbated by policy lapses. The lender has recommended fiscal restraint, which includes turning the 1.3 percent GDP primary deficit from FY23 into an FY24 surplus.
The research suggests upgrading Pakistan’s Public Financial Management (PFM) system and budget preparation and execution as ways to address these issues. According to the IMF, ineffective dual budgeting issues and disjointed Finance Division activities are the result of inadequate coordination between organizations.
The 2023 caretaker government’s moderation in using supplemental grants is an example of how the IMF has underlined the necessity for balanced ways to streamline budget flexibility while retaining legislative supervision.
Apart from continuous efforts in debt management, state enterprise control, and public investment planning, the study also aims to strengthen fiscal discipline through the implementation of digital technology and institutional reforms.
