The hollowness of Pakistan’s budget exercise
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June is budget time in Pakistan. The financial year closes on June 30 and a fresh authorization is needed from the national and provincial assemblies to collect and spend money for the new year. Budget sessions of the two houses of parliament and the four provincial assemblies are called usually in the first or second week of June which last approximately till the third or fourth week of the month.
The annual budget statements have to be passed by the respective assemblies before the month comes to an end so that the president and provincial governors are able to sign them into law before the start of the new financial year.
The budget making process starts some eight months in advance involving almost all government ministries and departments, who forward their respective budget estimates to the finance division for compiling the federal budget and to the provincial finance departments for provincial budgets.
The Planning Commission works on the proposals of development works. Standing committees of the national assembly shadowing various ministries and divisions also forward their recommendations for the Public Sector Development Programme. Leading chambers of commerce and industry meet to prepare proposals and submit them to the finance ministry as an annual ritual. Many other trade and industry bodies representing various sectors such as textiles, sugar, automobiles, etc. additionally engage with the government to lobby for their interests ahead of the budget presentation. Professional bodies like those of chartered accountants hold pre-budget discussions and the mass media, both print and electronic, extensively covers pre-budget and budget deliberations.
But this flurry of activities is primarily a ritualistic exercise reminiscent of the time annual budgets used to carry some sanctity. Now budget estimates are merely an indicative set of figures which are liable to change in many ways during the course of the year. This almost endless flexibility in numbers is not limited to this year’s budget because of the COVID-19 crisis. It has in fact been routine for the last few decades, if not more.
This flurry of activities is primarily a ritualistic exercise reminiscent of the time annual budgets used to carry some sanctity. Now the budget estimates are merely an indicative set of figures which are liable to change in many ways during the course of the year. This almost endless flexibility in numbers is not limited to this year’s budget because of the COVID-19 crisis. It has in fact been routine for the last few decades, if not more.
Ahmed Bilal Mehboob
Pakistan and Bangladesh happen to be the only two countries in the world where governments have the constitutional authority to change approved budget as they deem fit during the year and report the changes including any excess spending to the parliament as a supplementary budget along with the next year’s budget. Parliament then has practically no choice but to approve the changes ex post facto.
Article 84 of the constitution of Pakistan allows the government a huge liberty to play with the budget. Article 91 of the Bangladesh Budget gives the same powers to their government. Denmark is another country where changes in the approved annual budget are allowed but only after seeking and obtaining advance approval by the Parliamentary Finance Committee. In almost all other democratic countries, prior parliamentary approval is required to make any change in the approved annual budget.
Almost all Pakistani governments have made use of this constitutional ‘facility’ and the supplementary budget statements have become an almost integral part of the annual budget statements.
The Supreme Court gave an opinion, but not a judgment, in 2013 which required the government to seek prior approval of the National Assembly for any changes following the passage of the annual budget, but this opinion was modified the following year and ever since the government’s unbridled powers continue.
It is not only the constitutional provision which has blunted the parliamentary authority on matters of public finance. Another practice by the innocuous name ‘block allocations’ by the Prime Ministers and Chief Ministers has also rendered the budget exercise quite hollow.
Under this practice, a chunk of money is allocated for a particular sector, say, education, without giving any details. The chief executives are then free to use this ‘block allocation’ the way they deem fit.
On top of all this, the budget debate in the parliament, especially the National Assembly, is a mere formality as on average, only 14 days are allocated for debate on such a substantive subject involving voluminous documents running into the thousands of pages.
Parliamentary committees have no role in the budget process. This is in stark contrast to India where parliamentary committees scrutinize budget statements and the debate continues for up to 75 days.
It is surprising that parliamentarians have been silent on such a grave breach of their parliamentary privilege for so long. Isn’t it about time that parliament amends the constitution, and its relevant laws and rules, and restores parliamentary authority on public finance management in line with global democratic norms?
*The writer is the president of Pakistan-based think tank, PILDAT; Tweets at @ABMPildat
