LAHORE: The Public Finance Management Act 2022 has come into effect to bring transparency and efficiency in the handling of provincial funds and the budget-making process.
Under the new Act, budgeting guidelines have been set through which the government hopes to minimise the wastage of public money.
Under the new law, before the preparation of the budget, mid-term planning (covering three to five years) will be an integral part of the budget-making process. Moreover, the government will also be obliged to inform the institutions of their mid-term framework and public sector departments will ensure the preparation of the budget accordingly.
Within six months of the commencement of this Act, the Punjab Finance department will prepare a plan for the implementation of this Act. The plan will ensure that the provisions of this Act are fully implemented within three financial years following the year in which this Act comes into effect. After the implementation of law, the government intends to improve the performance of fiscal responsibilities, increase tax collections, and rationalise expenditure and debt management.
The Public Finance Management Act 2022 was prepared with the assistance of the sub-national governance program and the foreign commonwealth and development office, which states that the new law will regulate financial affairs in the public sector and matters relating to the provincial consolidated fund and public account of Punjab.
It further states, “It was necessary to regulate and manage financial affairs in the public sector in a comprehensive, efficient, transparent and sustainable manner contributing to long-term socio-economic stability and growth of the province; to make provisions relating to custody of the provincial consolidated fund, payment of money into that Fund, withdrawal of money there from, custody of other money received by or on behalf of the government, their payment into and withdrawal from the public account of Punjab; and to provide for the matters connected with or ancillary thereto in pursuance of Article 119 of the Constitution of the Islamic Republic of Pakistan.”
Punjab Finance Minister Sardar Mohsin Khan Leghari has formally issued a notification for the promulgation of new Act. He told the Business Recorder that the government has taken several initiatives, including reforms in the public finance management system and the promulgation of the Public Finance Management Act 2022 to bring positive changes in handling of the provincial finances.
“Under Article 119 of the Constitution, the preparation of the new law was an important responsibility of the province.
The Public Finance Management Act will be helpful for all departments, including the finance and planning and development departments, to handle public financing-related matters,” he said.
Explaining various provisions of the Act, Leghari averred that under the new law, the allocation of funds during the budget-making process will be based on outputs, meaning their goals and the period of their achievement will also be determined.
“The Punjab Finance department will issue key indicators to all government departments for efficient use of the funds and improving their performances and these indicators will be approved by the government.
The Act will also include a chapter on fiscal risk, aimed at controlling the budget deficit,” he added.
In addition, the minister said, under the Act, the government will be able to set an upper limit for debts to ensure the soundness of the debt management system. “Moreover, the lapsed funds under the Act would be made a part of the provincial fund and these funds would be utilised for the purposes for which they were earmarked when necessary,” he added.
According to him, institutions running on government grants and subsidies will be made self-sustainable while the revenue collected from the continuously loss-making institutions will belong to the treasury funds of the government.
Copyright Business Recorder, 2022
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