ISLAMABAD: The International Monetary Fund (IMF) has recommended that Pakistan initiate legal reforms to curtail the federal government’s discretionary powers over supplementary grants. The proposed changes aim to enhance fiscal transparency and align Pakistan’s budget practices with global standards, while still allowing some flexibility in budget execution.

In its “Technical Assistance Report – Improving Budget Practices,” the IMF highlighted that Pakistan’s current practice lacks adequate parliamentary oversight, making it an exception compared to international norms. The report recommended that significant amendments to budgeted expenditures should require prior approval from the National Assembly.

The IMF also proposed a special audit, conducted by the auditor general, to evaluate the mechanism and effectiveness of supplementary grants over the past decade. The findings would help address inefficiencies and improve fiscal accountability.

The Fund noted that frequent reliance on discretionary budget adjustments without legislative input could result in poor fiscal forecasts, weak public policy costing, and ineffective budget control. It urged the government to redesign budget execution processes and align commitment controls with best practices.

To address these issues, the IMF referenced Pakistan’s Supreme Court judgment advocating for ex-ante parliamentary approval of supplementary grants. It suggested amending laws such as the Public Finance Management Act (PFMA) and General Financial Rules (GFR) to institutionalize this principle.

A 2019 attempt to amend Article 84 of the Constitution to mandate prior National Assembly approval for supplementary grants failed due to lack of support. However, the IMF emphasized that other mechanisms could still ensure compliance with the Supreme Court’s ruling.

These proposed reforms aim to strengthen fiscal discipline, promote transparency, and ensure greater accountability in Pakistan’s budgetary process.