The IMF has identified significant problems in Pakistan’s budget preparation and implementation processes, revealing that deviations from the approved budget reached a record high of 55% in FY 2022-23 due to supplementary grants.
The findings were outlined in the IMF’s technical assistance report on budget practices in Pakistan, emphasizing the need for stronger financial institutions and reforms.
The report highlighted that changes in the size and composition of expenditures, largely through supplementary and technical grants approved without prior parliamentary scrutiny, undermined the credibility of the budget.
In fiscal year 2023, supplementary grants alone accounted for 21.9% of the approved budget, with deviations in development and recurrent expenditures peaking at 54.7%.
The IMF noted that Pakistan’s fiscal challenges are exacerbated by high public debt, which consumes 60% of budget revenues for interest payments, coupled with unbudgeted subsidies, external shocks, and policy delays. The government now faces the task of converting the initial deficit of 1.3% into a surplus for fiscal year 2024 while maintaining basic social and development expenditures.
The report proposed reforms to improve macro-financial forecasting, strengthen budget preparation, and ensure stricter implementation controls. She criticized Pakistan’s fragmented budget practices, which lack clear direction, financial constraints, and coordinated oversight. An ineffective dual budgeting system and outdated budget recall publications were cited as additional weaknesses.
Upon implementation, the International Monetary Fund noted the executive branch’s excessive reliance on supplementary grants, which represented 14% of approved spending in recent years, along with another 13% of technical grants. He called for a balanced approach in emergency situations that require legislative approval and comprehensive mechanisms to prevent excessive spending and the accumulation of arrears.
The report also recommended taking advantage of digital technologies and strengthening the public financial management system to address these challenges. The report noted progress in areas such as oversight of state institutions, debt management, and the Treasury Single Account, but stressed that reforms should focus on effective budget monitoring and transparency to restore fiscal discipline.