Through the World Bank-supported Pakistan Improvement to Accounting and Auditing (PIFRA) project.
Supported by the U.K. Department for International Development.
Regulatory reform was started in September 2006 with the adoption of the System of Financial Control and Budgeting. Further development of higher level legal framework may be required in due course.
The rules require, among other things (a) reducing the revenue deficit to nil by end-June 2008; (b) achieving a debt/GDP ratio below 60 percent by June 2013; (c) annual reduction of debt by 2.5 percent of GDP; (d) issuance of guarantees to be less than 2 percent of GDP each year. Objective (b) was achieved in 2005–06, and the authorities advise that rule (c) continues to apply.
As of February 2007, private sector ownership of the banking and financial sector was about 86 percent and the government plans further divestment of shares in several domestic banks.
Total equity in nonfinancial enterprises stood at PKR 299.6 billion as of June 2004, with an average return on equity of 22.4 percent and considerable variation among enterprises. These data are to be brought up to date for 2007.
The first such statements, Fiscal Policy Statement 2006–07 and the Debt Policy Statement 2006–07, were published by the government of Pakistan on January 31, 2007.
That is, with the first year in FY 2004–5 and the third out-year in FY 2007–8. An MTBF budget was presented for two ministries (Health, and Population Welfare) for FYs 2005–08. For FYs 2007–10, 15 ministries will be presented in the MTBF format, and it is intended that all ministries will be covered in the 2009–12 MTBF presentation. The first year of the MTBF budget corresponds precisely to the appropriated and charged expenditures included in the annual budget for these ministries. Out-years beyond the budget year are not appropriated.
At present, at functional level only. Work is underway to prepare reports with an object-wise summary in early 2007.
The budget and accounting processes of government are currently highly centralized: financial advisors (FAs) from the MOF, attached to each ministry, supervise budget preparation and execution processes; nearly all payments are pre-audited and executed through the federal and provincial Accountant Generals (AGs) and the Controller General of Accounts (CGA).
These arrangements are recorded as spending when created and give direct authority for project managers to write checks against the public account. They are subject to ex post audit, but this is acknowledged to be weak.
Receipts grew from PKR billion 103.3 in FY 2004–5 to PKR billion 159.0 in FY 2005–6. Payments (that is, actual expenditure) from the accounts expanded from PKR billion 110 to 143.4 over this period. Increases occurred at both federal and provincial level, albeit more in the latter.
Assessment in this area is based on World Bank analysis.
Data compiled from IMF staff reports show that both tax and nontax revenue increased substantially over budget in 2003–04 and 2004–05 (most significantly in nontax receipts, by about 22.9 percent and 58.9 percent in the respective years). These increases were then taken up by increases in both current and development spending.
Total staff strength of the AGP as of November 2006 stood at 5251, of which,1919 are at a senior level of B-16 and above. Some 1302 staff have professional qualifications, 372 at degree level. Of the total, some 2162 are in the Provincial and District Audit Wing of AGP, which had to be substantially strengthened following implementation of the government’s decentralization strategy and the need for AGP functions to be carried out at district level.
A system audit of the National Highway Authority was completed successfully in June 2006 to demonstrate the application of the methodology to the AGP. This will be included in the AGP report to the parliament and serves as a model for more general application.
Provincial audit reports for FY 2001–02 are currently being discussed in relevant Provincial Assemblies of all four provinces. The audits of FY 2002–03 and FY 2003–04 of all provinces have been completed and submitted to relevant governors. In case of districts, audit reports for FY 2002–03 of only three districts of Punjab have been submitted, no other district audit reports have been prepared.
Auditor General’s (Function, Power and Terms and Conditions of Services) Ordinance, 2001, Section 11 (2).
Measures proposed by FAD staff in this update have been developed in consultation with other development partners and are dealt with in more detail in the main text of the IMF technical assistance report.
The staff technical review provides guidance on key areas where objects and functional mapping is required.
Or possibly as an element of the 10-year medium-term economic framework paper.
For instance, the full cost of energy subsidies could be estimated from the discounted value of the price differential between controlled and market prices (incorporating different policy assumptions in the analysis).
See Manual on Fiscal Transparency, IMF 2001 (Box 16, p. 44) for an illustration of a statement on fiscal risks.
Accelerating Economic Growth and Reducing Poverty: The Road Ahead, Government of Pakistan, December 2003.
The current appraisal, monitoring, and evaluation roles of the PDD, for instance, could be applied to projects redefined in terms of operational programs.