The Finance Division has unveiled the amended Public Finance Management Act, 2019, with effect through June 30, 2024, marking a significant step toward strengthening the management of public finances in Pakistan. The amendments aim to improve fiscal policy implementation, clearly define institutional responsibilities related to financial management and enhance oversight of the budgetary process at the federal level.
Under the updated framework, greater clarity has been provided on the custody and management of the Federal Consolidated Fund. The Act outlines detailed procedures for the deposit and withdrawal of funds and establishes rules governing the handling of other public funds. It also defines the federal government’s responsibility to regulate and oversee financial transactions conducted through the Public Account of the Federation, reinforcing accountability in public fund usage.
A major change introduced by the amended Act relates to the budget strategy paper, which is now required to be approved by the federal government by May 10 each year. This document will serve as a cornerstone of the budget process and will include medium-term macroeconomic and fiscal projections, the government’s revenue and expenditure priorities and indicative spending levels for individual ministries and divisions. Once approved, the Finance Division will issue binding budget ceilings for each ministry based on these strategic priorities.
The amendments also introduce clearer guidelines governing government expenditure. All spending, whether recurrent or development-related, must align strictly with the approved strategic priorities outlined in the budget strategy paper. In cases where additional expenditure becomes necessary beyond the approved budget, the federal government is empowered to authorise supplementary spending from the Federal Consolidated Fund, subject to approval by the National Assembly, reinforcing parliamentary oversight.
To promote fiscal discipline and efficient resource use, ministries, divisions and autonomous organisations are now required to submit details of anticipated savings in their respective accounts to the Finance Division by May 31 each year. The Act allows for extensions only in exceptional circumstances, signalling a move toward tighter controls on unutilised or excess allocations.
The amended law also introduces a structured classification of public sector development projects. Projects are divided into core national infrastructure projects and sectoral projects, each category subject to specific planning, appraisal and approval procedures. This classification is intended to improve prioritisation, ensure alignment with national development goals and reduce inefficiencies in project execution.
In an effort to modernise and streamline public financial operations, the Finance Division, with federal approval, has been tasked with developing policies for cash management systems across public sector entities. This process is expected to lead to the establishment of a Treasury Single Account, aimed at improving cash visibility, reducing idle balances and strengthening overall fiscal control.
To ensure effective implementation, the government will establish a dedicated committee to oversee the execution of the amended Act and its accompanying regulations. The committee will monitor compliance, address implementation challenges and ensure that Pakistan’s public finance management framework aligns with global best practices.
The amended Public Finance Management Act also asserts its overriding authority over all other laws. Any existing rules or regulations that conflict with its provisions are required to be amended to ensure consistency, reinforcing the Act’s role as the primary legal framework governing public financial management in Pakistan.
Together, these amendments reflect the government’s intent to strengthen fiscal governance, improve budget credibility and enhance transparency in the use of public resources, at a time when disciplined financial management is critical for economic stability and reform.
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