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The budget process in Pakistan

A budget is an estimate of income and expenditure for a set period of time. It also reflects the country’s social, economic, fiscal and financial responsibilities. It tells government’s future policies for the country. It is also a starting point towards generating economic activities throughout the fiscal year. The practice of presenting budgets and fiscal policies to parliament was initiated by Sir Robert Walpole as Chancellor of the Exchequer of United Kingdom.

A government budget is a government document presenting the government’s proposed revenues and spending for a financial year that is often passed by legislatures, approved by the chief executive or president and presented by the finance minister to the nation. The budget is also known as the Annual Financial Statement of the country. This document estimates the anticipated revenues and expenditures of the government for the ensuing financial year. The budget presented in any country is according to the governing law covered by various articles of constitution of that country. In Constitution of Pakistan there are various provisions relating to budget. The budget when proposed is a bill before the parliament and once accepted is an act of parliament. The procedure for general bills establishes that a bill can originate either in National Assembly or in Senate. But the money bill can only be originated in National Assembly.

Articles of the constitution of Pakistan relating to the budget are: 

Article 73: procedures with respect to money bills “when a Money Bill, including the Finance Bill containing the Annual Budget Statement, is presented in the National Assembly, a copy thereof shall be transmitted to the Senate which may, within fourteen days, make recommendations thereon to the National Assembly; and] 35[(1A) The National Assembly shall consider the recommendations of the Senate and after the Bill has been passed by the National Assembly with or without incorporating the recommendations of the Senate, it shall be presented to the President for assent.”

Article 77: tax to be levied by law only. “No tax shall be levied for the purposes of the Federation except by or under the authority of Act of Majlis-e-Shoora (Parliament)”.

Article 80: annual budget statement: “The federal government shall, in respect of every financial year, cause to be laid before the National Assembly a statement of the estimated receipts and expenditure of the Federal Government for that year, in this Part referred to as the Annual Budget Statement”.

Article 81 tells us about the expenditure charged upon Federal Consolidated Fund

Article 82 relates to expenditure charged upon the Federal Consolidated Fund may be discussed in, but shall not be submitted to the vote of, the National Assembly. Article 83 is about Authentication of schedule of authorised expenditure by the Prime Minister Article 84 is about the Supplementary and Excess and the procedure of it to be laid down before National Assembly for approval.

Budget once passed by the National Assembly is transmitted to the President for approval. The President must give his approval within 30 days. Once it receives presidential approval, it becomes a law.

The fiscal year in Pakistan starts from 1st July and ends on 30th June. All the budget-related activities are being done in between these two dates. The budget preparation starts as early as October when Budget Call Circular sent to various ministries and divisions asking them to submit their tentative for the upcoming financial year by the Ministry of Finance and Planning Commission. From November to February, these ministries and divisions submit their budget proposals to the concerned quarters. In March and April, these proposals are thoroughly scrutinised by the Finance Ministry. After the scrutiny, the formulation of budget proposal is being done. Consideration and approval of these budget proposals are done during the months of May and June which after the finalisation become the part of Annual Budget Plan. The budget after approval of Cabinet presented in the National Assembly, which being debated by Parliament and finally passed by National Assembly and with the assent of President of Pakistan it becomes Act of Parliament. If the government is failed to get the approval of budget from National Assembly it get dissolved automatically.

The annual budget generally presented in the National Assembly during the 2nd week of June and is passed by the beginning of last week of June. This process generally takes 12 to 17 working days for the various stages in budget debates.

Since 2003, it had been made essential that the budget statement is copied to the Senate at the same time as its presentation to the National Assembly. The Senate which is upper house of the Parliament can discuss the budget proposals and make recommendations to the National Assembly. These recommendations are not binding upon the federal government to be accepted.

The role of parliamentary parties is not as significant as it is supposed to be either ruling parties or parties in the opposition. In Western democracies the opposition parties have a shadow cabinet which makes their recommendations related to their ministries and critically analyses the working of the government. The parliamentary parties don’t make organised advance preparation for budget debate. The parliamentary parties hold meetings before presentation of budget and during two days break between presentation and debate but these are formal meetings only in which some financial experts might give them briefing.

The budget which is being presented in parliament and approved by it, but still one can see that there is a limited role of Parliament in budget-making process and it can be enhanced through standing committees. There are currently 41 National Assembly standing committees and Senate of Pakistan has 28 standing committees. Each of this committee is corresponding to a federal ministry or division. However, the current structure and practice excludes standing committees from any role in budget process and by amending in the rule of business the standing committees can have a greater say while allocating budget to any ministry or division. During the budget-making process, the civil society is not being consulted. The budget-making process can be more efficient and effective if all the stakeholders taken on board before finalisation of budget proposals.

(The write is additional director at Pakistan Institute for Parliamentary Services)

Mir Shai Mazar Baloch, "The budget process in Pakistan," Business recorder. 2014-08-10.
Keywords: Economic issues , Economic system , Economic policy , Economy-Pakistan , Budget process , Political issues , National assembly-Pakistan , Pakistan