The Finance Division has unveiled the amended Public Finance Management Act (PFMA), 2019, effective through June 30, 2024, aimed at reinforcing the management of public finances in Pakistan. The amendments are designed to enhance fiscal policy implementation, clarify institutional responsibilities related to financial management, and strengthen budgetary oversight.
The updated Act outlines provisions for the custody and management of the Federal Consolidated Fund, detailing the process for the deposit and withdrawal of funds, and the handling of other public funds. It also defines the government’s responsibility to regulate and oversee financial transactions through the Public Account of the Federation.
One key change involves the budget strategy paper, which must be approved by the federal government by May 10 each year. This document will include medium-term macroeconomic and fiscal projections, government revenue and spending priorities, and indicative spending levels for various ministries and divisions. Once approved, the Finance Division will issue budget ceilings for each ministry based on these priorities.
The amended Act also introduces guidelines for government expenditures, requiring that all spending, whether recurrent or development-related, aligns with the approved strategic priorities. If there is a need for additional spending beyond the approved budget, the federal government has the authority to authorize supplementary expenditures from the Federal Consolidated Fund, subject to National Assembly approval.
In line with fiscal discipline, ministries, divisions, and autonomous organizations are required to submit anticipated savings in their accounts to the Finance Division by May 31 each year, with possible extensions granted in exceptional cases. Furthermore, the Act classifies public sector development projects into core national infrastructure projects and sectoral projects, each subject to strict planning and approval procedures.
To further streamline financial operations, the Finance Division, with federal approval, is tasked with developing policies for cash management systems across public entities, leading to a Treasury Single Account. The government will also form a committee to oversee the implementation of the Act and its regulations, ensuring alignment with global best practices in public finance management.
The Act also asserts its precedence over all other laws, requiring amendments to any conflicting regulations to bring them in line with its provisions.
