ISLAMABAD: The federal government has notified the updated Public Finance Management Act, 2019, incorporating amendments up to June 30, 2024, aimed at strengthening fiscal discipline, transparency and accountability in the use of public funds.
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.
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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