Explainer: The budget-making process in Pakistan

Budgets are mostly laced with hype and controversies and this year is not any different for the Pakistan Government. This is the first time in history that a government elected for a tenure of five years is going to present six budgets.

It has already triggered a debate over the legality of the government’s move to present a budget that will continue after completion of the incumbent administration’s tenure.

It seems that this will be the first year in five years’ term of this government when an un-elected person, Dr Miftah Ismail, who currently holds the position as an Advisor to the Prime Minister, would deliver a budget speech.

Traditionally budgets are announced by an elected member of the National Assembly or Senate.

Also for the first time, the budget is being presented nine weeks before the closing of the ongoing fiscal year.

Understanding the budget-making process

A budget is an estimate of income that reflects the country’s social, economic, fiscal and financial responsibilities for a set period of time. A budget is a government document presenting the government’s proposed revenues and spending for a financial year.

Known as the Annual Financial Statement of the country the budget presented is according to the governing law covered by various articles of the constitution of the country. The bill can be tabled either in National Assembly or in the Senate. But the money bill can only be tabled in National Assembly, the lower house of the parliament.

This document is presented by the finance minister and after passage of the finance bill in the parliament, approved by the President within 30 days of its passage to become a law.

The fiscal year in Pakistan starts from July 1st. The Budget proposals, made by the Finance Ministry and considered and approved by the Cabinet, are presented in the Parliament. There is no formal provision in the rules of procedure for a pre-budget discussion or consultation on the part of the Ministry to engage the public or the Parliament on fiscal matters and issues.

When approved by the Cabinet, the Finance Minister, on behalf of the Government, delivers his Budget speech in the National Assembly.

No other business is allowed in the House on that day.

The stages of the discussion of the Budget are as follows:

General Discussion on the Budget
Discussion on Appropriations
Discussion and voting on Demands for Grants

What are the Parliamentary rules?

According to the Rules of Procedure of the National Assembly, the Speaker allots days for the different stages of the Budget. It requires two days to lapse between the days the Budget is presented and the first day of the General Discussion. The Rules prescribe that not less than four days should be allotted for the General Discussion. Any member can move a cut-motion to reduce the amount of demand. Each Demand for Grant is discussed and voted upon. Consequently, a Vote of Account is taken and the Finance Bill is passed. The Budget is submitted to the Senate for recommendations. The Senate can make recommendations on the Budget to the National Assembly within seven days. These recommendations are not binding on the National Assembly.

The debate duration

The annual budget generally is presented in the National Assembly during the 2nd week of June and is passed by the beginning of last week of June. This process generally takes 12 to 17 working days for the various stages in budget debates.

Since 2003, it had been made essential that the budget statement is copied to the Senate at the same time as its presentation to the National Assembly. The Senate which is upper house of the Parliament can discuss the budget proposals and make recommendations to the National Assembly. These recommendations are accepted upon the federal government’s approval.

Some of the areas in which the Parliamentary Budget Process in Pakistan needs urgent improvement are as follows:

There are currently 41 National Assembly standing committees and Senate of Pakistan has 28 standing committees. Each of this committee is corresponding to a federal ministry or division.

The period allowed between the presentation of Budget and its passage is too short for any meaningful debate or input by parliamentarians.
There is no provision and tradition of parliament led pre-budget consultation with parliamentarians, civil society and citizens at large.
Individual parliamentarians and the Parliament as an institution, lack the infrastructure to give research and analysis support for an effective Budget debate in the Parliament.
The Budget relating to Defense services lacks details. Even the distribution among the three services such as Army, Air Force and Navy is not provided.
The Standing Committees both of National Assembly and Senate, which are mostly formed in line with the Ministries and Divisions, have not been assigned any role in the Budget process. Even the Standing Committees on Finance does not play any role in the Budget process.