Govt issues updated PFM Act 2019 with amendments
Enacted originally in 2019, the legislation was part of broader fiscal reforms demanded by international lenders to plug loopholes in budgetary management, strengthen debt sustainability, and enhance oversight of public spending.
The latest amendments expand the scope of fiscal responsibility and ensure that all government entities, including autonomous organisations and state-owned enterprises, remain accountable, while defining the roles and responsibilities of the Ministry of Finance, divisions, and public entities.
As per the law, the federal government shall, in respect of every financial year, cause to be laid before the National Assembly, Annual Budget Statement consistent with Articles 80 and 81 of the Constitution including a statement of the purpose and estimates divided into [major objects]for each demand for grant.
World Bank approves restructuring of $380m PFM programme
Each demand for grant may indicate budget estimates of the ensuing year, initial budget estimates and revised estimates of outgoing year and provisional actual expenditure of year Prior to outgoing year. The Annual Budget Statement shall also contain- (a) Statement of contingent liabilities of the Federal Government; and (b) statement of fiscal risks.
The Act mandates disclosure of all sovereign guarantees and contingent liabilities—a step seen as essential for regaining the confidence of international lenders.
All government expenditures, whether from a recurrent or development demand for grant, shall be based on well-defined plans and the strategic priorities approved in budget strategy paper as per section 3.
According to the revised statute, the Finance Division has been empowered to regulate budgetary processes, cash management, issuance of guarantees, and borrowing, with stricter reporting and disclosure requirements. It also binds the government to set medium-term fiscal objectives, improve debt sustainability, and ensure fiscal transparency, besides publishing comprehensive debt sustainability analyses on a regular basis.
If monies have been appropriated by the National Assembly [for a fund established under any law or with the approval of the Federal Government], the Finance Division shall notify rules or regulations and issue directives for the management and control of such a fund. Any statutory instrument shall— (a) State the purposes for which the special fund has been established; (b) identify the principal accounting officer responsible for its operations; and (c) specify that the cash balances of such funds shall form part of Public Account of the Federation. Such funds shall be subject to audit by the Auditor General of Pakistan. The amendments expand oversight of public entities and autonomous bodies, requiring them to submit financial statements and refrain from unauthorized borrowing. The auditor general of Pakistan has been given greater audit powers, while the Public Accounts Committee (PAC) has enhanced authority for parliamentary scrutiny.
The Act would help align Pakistan's fiscal framework with international best practices, improve investor confidence, and curb leakages in public spending. It also strengthens coordination between the federal and provincial governments for fiscal responsibility.
The updated law comes at a time when Pakistan is under pressure from international lenders to enhance transparency in public finance and ensure prudent debt management.
Copyright Business Recorder, 2025
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Gen Ziaul Haq promised elections within 90 days; they actually exceeded 1000 days. He put Bhutto to the gallows on trumped charges of conspiracy to murder. In a split decision of the Supreme Court, 4-3 verdict, he was still hanged. Zia knew Bhutto alive would be a danger to him, little did he know, that the ghost of Bhutto would continue to prevail over the politics of Pakistan. Gen Zia irrevocably damaged Pakistan. Gen Zia moved quickly to install himself as President while still donning the uniform of COAS. The decade of 1978-88 can best be described as the 'dark ages'. He ruthlessly ruled for 11 long years, destroying every single state institution. Fate and destiny removed him in August, 1988. The air crash was fatal. The Soviets had earlier invaded Afghanistan in 1979. We chose to become a frontline state. The consequences we continue to face. The social fabric of Pakistan was badly affected. We saw the rise of drugs and gun culture. 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The decade until 2008 was largely ruled by the military in accompaniment with a civilian facade. President Musharraf, who started off as Chief Executive, was elected President by the assembly. This period was where our economy grew by almost 7 percent every single year. The tragic event of 9/11 happened and the USA launched a full scale attack on Afghanistan in pursuit of Osama bin Laden. Pakistan again with little choice got embroiled in this war, that was to later become another Vietnam for the US. Just as in the period of Gen Zia, the reaction of the Jihadis targeted civilian areas of Pakistan. Suicide bombings was the order of the decade. Innocent lives were lost. President Musharraf opened up electronic media, more than 50 channels were launched. Freedom of press gained momentum. Privatisation took a spiral. Banks and other key industries were denationalised. After 3-4 years of economic stability, political turmoil set in through the lawyers' movement. President Musharraf was negotiating a political deal with popular Benazir Bhutto. The deal fell through. Elections were announced. In a public meeting at Rawalpindi, where earlier a serving prime minister was gunned down, she too fell victim to an assassin's bullet. A great tragedy had struck. She was a leader who was this time more mature than before to lead effectively. But nature had other designs. Her assassination led to postponement of elections, but once held, expectedly, PPP swept the elections. Pakistan remained on the see-saw of uncertainty but it gained political stability. The government completed its term. A lot of credit must go to President Zardari for his political sagacity and foresight in initiating the revocation and annulment of section 58-2B. The President's office was defanged. A triumph for parliamentary democracy. During 2008-2018, peaceful transitions happened inspite of all elections being declared as controversial by independent analysts. The Panama leaks led to the replacement of the prime minister. During this time, a third potent force emerged as threat to the two dominating political parties. The 2018 elections were an Imran Khan (IK) phenomenon. The elections yet again were found to be not fair and highly controversial. The government of Imran Khan was removed through political engineering; his government lost the vote of confidence. IK's government was marred by ineffective decision making. In fact all the ministers appeared to receiving on-the-job training. Leadership is not merely about personal excellence, it is more about the ability to put together a team of the competent and to give them a direction; a vision of shared goals and objectives. IK failed to do that in-spite of his best efforts and intentions. He paid a price for having mediocrity surrounding him from all directions. Pakistan wasn't prepared for a honest but incompetent leadership. Corruption and competence universally move in tandem, albeit regrettably. We are in the midst of the decade that started from 2018 and will last till 2028. The government installed following yet another controversial elections (of year 2024) has been beset with the task to improve the economy. We came to a near miss of getting to be classified as a nation on default. The economic policies now being pursued are aiming at long-term gains. Elected governments must not focus on next elections but must have a very long-term view and vision for the country. Our economy is fledgling. We are living on borrowed money. Borrowing can be dangerously intoxicating for individuals as well as nations. The quickly we realise to live within means the better. No country has become rich or self-sufficient based on borrowings, we will have to learn to earn revenue for ourselves before we start to spend. The deficit of all types keep gnawing at our future. The country needs to adopt a growth strategy that is housed in the growth of exports of goods and services. Inward remittances are holding us up but these aren't reliable and sustainable sources of funding. The Special Economic Zones must receive attention. We have to direct our energies by seeking investment from overseas. Aids and grants are not the answer. Foreign exchange must be earned to beef up FX reserves. Deposits from friends will make us all parasites. Entrepreneurs should be encouraged through policies for setting up industries for finding new business avenues, for exploring new markets, for introducing high speed technology into processes and systems. We have thus far ignored sub-Sahara markets. There is an imperative need to make inroads into unexplored markets. CPEC cannot remain a slave to slogans of being 'game changer', there is need to take action to make it profitable for us. Generally speaking, there should be greater empowerment for decision making alongside strict accountability standards. The process of accountability must remain above board and not be subjected to become a medium of political harassment. In these columns where the imagination has to restricted by the number of words, it is painfully difficult to present a full and comprehensive picture of how things are and how things should be. In a score plus two years, Insha Allah, Pakistan will celebrate the 100th anniversary of its founding. Our children, grandchildren and great grandchildren will have to be different than us. Of course only for better. Hope is a great elixir of life. Optimism is not an option but a necessity. As a tail-piece, my son who recently watched an old PTV program of Neelam Ghar on YouTube asked me how come the audience was able then to answers tough questions from Islamic history, Urdu and English literature; how come the audience seemed more disciplined, and how come they were 'happy' to receive a 'Water cooler' for the right answers? As against this he remarked, in some TV program of recent days he said, people are given scooters for correctly remembering the multiplication table of two, three and four? He was baffled, he said. I am speechless, is all I said, in response. Do we have an answer? Copyright Business Recorder, 2025
