Business organisations follow the process of strategic planning for setting goals. The process involves conducting a situation analysis to assess the internal and external environment in which the organisation operates, and goals are finalised after the due process. Budget is then prepared to identify resources required for the spending needs to achieve these goals.
Then these objectives are assigned, with the identification of specific responsibilities, so that accountability is possible.
The importance of a well-thought-out strategic plan is greater in the case of a country than for any organisation, due to its significant impact on the lives of millions.
Therefore, the government has all the human and other resources it needs to work on the planning process and to ensure a swift execution of the plan.
Despite all this, there are sharp deviations in actual figures vs budget in FY23, which casts doubt on the process.
Most importantly, the 5% GDP growth objective set at the beginning of the year was totally missed.
Assuming that the budget was prepared after considering all the limitations that existed while preparing the plan in 2022, the deviations in results should only be on account of the unknown subsequent developments.
The devastating floods at the beginning of FY23 could be considered as one of the unforeseeable factors at the time of planning.
However, the 1.5% growth reported in the agriculture sector, by the government, indicates a recovery.
In addition, the prices of commodities dropped 13% in the international markets as compared with Jun 2022. Despite these positive developments, inflation managed to go out of control vs the planned 11%.
Apart from the floods, it is difficult to think of any other significant unforeseen event.
The limitation of the funding sources available and the conditions attached to those was never unknown since the country was already under an IMF programme and it was in an advanced stage to reach a staff level agreement at the time of budget preparation in 2022.
If the government was following the plan it prepared for FY23, and the unknown event that happened after the year-end had limited impact, it is difficult to justify a 40% fall in PKR value against USD and a 2.9% contraction in the industrial sector during the year.
The significant variation between actual achievements and planned goals in FY23 cast significant doubt on the credibility of the budget process and its execution.
It is important to identify if there were flaws in the budget or errors in the execution.
An assessment is necessary for fixing the responsibility for improvement in the future.
The article does not necessarily reflect the opinion of Business Recorder or its owners
The writer is CEO at Kifayah Investment Management Limited
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