National Institute of Management

Islamabad
SYNOPSIS

Module Reference:
Public Financial Management
Mode: 4
Topic: Budget Formulation Process
Guest Speaker: Mr. Muhammad Jan
Submitted By: Sabahat Khusro
Service Group: Intelligence Group
Sponsor DS: Ms. Seemi A.Khan
Date of Lecture: 21-06-2023
 Synopsis
Topic: Budget Formulation Process
Honorable Guest Speaker has served in the Asian Development Bank, Election Commission of Pakistan,
and Pakistan Railway. He has completed his MBA, and M.Sc. from Peshawar and ICMA. His lecture has
two parts. The first part of his lecture consisted of the formulation of the budget. He presented in a very
good manner. I was assigned the second part of the lecture for synopsis. He started the second part after the
Tea break. He has discussed

Guest speaker Mr. Muhammad Jan shed light on how the Budget is formulated. He explained articles 80(2),
120, and 83. It also distinguishes expenditure on revenue accounts from other expenditures.

Section 4 of the Public Finance Management Act, 2019:

It provides that the Federal Government shall lay before the National Assembly, an Annual Budget
Statement including a statement of the purpose and estimates for each demand for the grant, statement of
contingent liabilities of the Federal Government, and a statement of fiscal risk.

Article: 78(2), 118(2)

Public Account is defined as all money received by or on behalf of the Federal/Provincial Government,
other than the Consolidated Fund or deposited with the Supreme Court or High Court or any other court
established under the authority of that government.

Article 79 Constitution of the Islamic Republic of Pakistan 1973:

The custody of the Federal Consolidated Fund, the payment or money into that Fund, the withdrawal of
money therefrom, the custody of other money received by or on behalf of the Federal Government, their
payment into, and withdrawal from, the Public Account of the Federation, and all matters connected with
or ancillary to the matters aforesaid shall be regulated by Act of Parliament or until provision in that behalf
is so made, by rules made by the President.

Article 80(1), 120, Constitution of the Islamic Republic of Pakistan, 1973:

The Federal/Provincial Government shall, in respect of every financial year, cause to be laid before the
Federal/Provincial Assembly a statement of the estimated receipts and expenditure of the Federal
/Provincial Government for that year, it referred to as the Annual Budget Statement.
Article 80(2), 120, Constitution of the Islamic Republic of Pakistan, 1973:

The Annual Budget Statement shall show separately;

The sums required to meet expenditure are described by the Constitution as expenditure charged
upon the Fed/Provincial Consolidated Fund and the sums required to meet other expenditures
proposed to be made from the Fed/Provincial Consolidated Fund and shall distinguish expenditure
on revenue account from other expenditure.

Article 84 Constitution of the Islamic Republic of Pakistan 1973:

If in respect of any financial year, it is found that the amount authorized to be expended for a particular
service for the current financial year is insufficient, or that a need has arisen for expenditure upon some
new service not included in the Annual Budget Statement for that year or that any money has been spent on
any service during a financial year in excess of the amount granted for that service for that year.

Charged and voted expenditures:

The annual budget statement shall show separately

The sums required to meet expenditure described by the constitution as expenditure charged upon the fed /
provincial consolidated fund payable to the President & other expenditures relating to his/her office, Judges
of the Supreme Court, The Chief Election Commissioner, The Chairman & Dy. The Chairman of the Senate,
The Speaker & Dy. Speaker, The Auditor General, Wafaqi Muhtasib, Officers and servants of the Supreme
Court, Auditor General, CEC, Secretariats of the Senate & NA.

Authentication of schedule of authorized expenditure

The PM shall authenticate by his signature a schedule specifying –

(a) The grants made or deemed to have been made by the National Assembly under Article 82, and

(b) The several sums required to meet the expenditure charged upon the Federal Consolidated Fund
but not exceeding, the case of any sum, the sum shown in the statement previously laid before the
National Assembly.

(Article 83 Constitution of the Islamic Republic of Pakistan 1973)

Procedure For Supplementary Budget:

• Examination of the proposals for supplementary grant and technical supplementary grant;

The Finance Division shall examine proposals for supplementary grants (to be undertaken
in case of financial exigencies) or technical supplementary grants and shall provide its
opinion to the Economic Coordination Committee of Cabinet or Federal Cabinet or render
advice to the principal accounting officers.

Supplementary and excess grants:

The federal government shall have the power to authorize expenditure from the federal consolidated fund,
whether the expenditure is charged by the constitution upon that fund or not, and shall cause to be laid
before the National Assembly a Supplementary Budget Statement or, as the case may be, an Excess Budget
Statement, setting out the amount of that expenditure, and the provisions of Articles 80 to 83 shall apply to
those statements as they apply to the annual budget statement

Article 84, Public Finance Act 2019:

There is hereby enacted the Public Finance Management Act, of 2019, stated that an Act to strengthen the
management of public finances with the view to improving the definition and implementation of fiscal
policy for better macroeconomic management, clarifying institutional responsibilities related to financial
management, and strengthen budgetary management, In exercise of the powers conferred by section 27 of
the Public Finance Management Act, 2019, the Finance Division is pleased to approve it.

Budget Cycle:
It consists of the following steps:
Preparation, Authorization, Implementation, monitoring, review Policy formation,
Budget Preparation Process:
(1) Issuance of Budget Call Circular to the Principal Accounting Officers (PAOs)
(2) Submission of Budget forecast by the Principal Accounting Officer
(3) Review and approval of budget estimates and additional demands (current + development) by the
Demand Review Committee
(4) Preparation of Budget Strategy Paper and its presentation in the Cabinet
(5) Issuance of Indicative Budget Ceilings for current and development budget to all PAOs
(6) Filling of the BO/NIS Forms
(7) Submission of forms by Ministries / Divisions for the Current Budget and Development Budget
In the last, he assigned two assignments to all members. One was regarding the directorate of Education
FATA Peshawar to formulate the budget for 2023-2024. The Second was regarding the formulation of
the estimated budget for 2023-2024 for general Administration. During the session, he has taken
questions and replied in a very good manner.

Name: Sabahat Khusro

Dept: Intelligence Bureau
Dated: 21-06-2023