BUDGET CYCLE

IN PAKISTANBy

SUMREEN SHAHID

OVERVIEW

BUDGET CYCLE IN PAKISTAN

• Introduction

• Budget basics

• Budget process in Pakistan

• Budget cycle

• Preparation of budget

• MTBF components

• MTBF process

• Conclusion

INTRODUCTION

• The budget of the state is one of the most important policy documents. Here the ideas are translated into implementable policies prioritized by the allocations of funds. In Pakistan, the government and the parliament eagerly anticipate the moment in the month of June when the state budget is tabled in Parliament.

BUDGET BASIS

• A budget is the government's financial plan describing the proposed expenditures and the means of financing them.

• An excess of government's proposed expenditures over its estimated revenues is called a 'budget deficit‘.

• An excess of revenues over the expenditure is generally termed 'budget surplus‘.

STEPS IN BUDGET CYCLE

• SETTING OF BUDGET POLICY AND PRIORITIES

The first stage of budget cycle usually covers setting of budget priorities, policies and initiatives by the national/provincial cabinet

• BUDGET PREPARATION

The preparation and submission of budget estimates of expenditure and receipts

Cont.…

• AUTHORIZATION

• Submission of the annual budget statement before

the national/provincial assembly.

• Approval by the national/provincial assembly after it

is debated/discussed in the assemblies

• Authentication by the prime minister/chief minister.

Cont.….

• EXECUTION

• Communication of the budgets to the spending

ministries, administrative departments and respective

accountant general office/accountant general of Pakistan

revenue by ministry of finance/finance department

• PERIODIC REVIEW

• This covers periodical review of financial performance

and the achievement of policy objectives by spending

departments

MTBF PROCESS

• The MTBF involves preparation by line ministries of three-year expenditure estimates within the ceilings provided by the Ministry of Finance (for the recurrent budget) and by the Planning Commission (for the development budget).

Top-Down

• It is built on the Medium Term Fiscal Framework

(MTFF), which is developed for reporting to the

Assembly under the Fiscal Responsibility and Debt

Limitation Act (2005). The MTFF establishes

available resources.

• A Budget Strategy Paper (BSP) which is prepared

annually (in October and February each year) and

provides an analysis of pressures on the budget and

the options for sectoral expenditure in the light of

government priorities. The BSP is prepared by

Division and the Planning Commission jointly.

Cont.….

• The setting of indicative budget ceilings for

the recurrent and development budgets for

each line ministry (initially the MTBF

ministries) at the start of the budget

preparation process – based on the analysis

of the BSP

Bottom Up

• Replace the traditional process for budget preparation,

which is driven upwards by the spending units, with a top-

down process within each line ministry whereby the

senior management of the ministry direct the budget

preparation process

• Strengthen the definition of the services (outputs) to be

delivered by each ministry

• Identify the costs of delivering each service, initially by

mapping the current allocation of expenditure onto

outputs, thereby providing a ‘baseline’ cost-per-output

CONCLUSION

• An annual budget(s) should be adopted by every governmental unit

• The accounting system should provide the basis for appropriate budgetary control.

• A budget, when adopted according to procedures specified in state laws, is binding upon the administrators of a government.

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