Phase I – Setting the Budgeting Framework:
This Phase primarily covers planning aspects of budgeting and consists of activities undertaken for resource projection, inter-sectoral prioritization, identification of relevant strategies for resource mobilization and public investment, and determination of expenditure ceilings for Ministries and Sectors. This also includes setting financial planning framework, fiscal framework, budget strategies and communication of budgeting instructions to the government entities / DDO’s;
Phase II – Preparation of Detailed Budget Estimates:
Under this Phase Line Ministries / Divisions undertake preparation of budget estimates for both Expenditure and Receipts. Budget ceilings (for expenditure) as communicated by the Ministry of Finance / Planning Commission are further distributed at DDO level and DDO’s prepare their detailed estimates accordingly. Budget submissions from DDO’s are made at Ministry Secretariat and necessary reviews/analysis/assessments are carried out to ensure that overall budget demands are within the expenditure ceilings as communicated by MoF / Planning Commission.
Phase III – Review, Analysis and Finalization of Budget Estimates:
The budget estimates as submitted by Line Ministries & Divisions are analyzed and reviewed in detail at Ministry of Finance before onward submission to the Cabinet for approval and for presenting the same before the National Assembly. This Phase requires the Ministry of Finance to asses expenditure against and receipts into the Consolidated Fund for a financial year in consultation with the key stakeholders (Ministries / Divisions / Planning Commission). Meetings of Pre-priorities Committee, Priorities Committee and Annual Plan Coordination Committee (APCC) are held and budgets are discussed, reviewed and approved. Aggregate PSDP (for federal government and provinces) is discussed and approved at the meeting of National Economic Council (NEC). Budget estimates for Current and Development components, before being presented in the National Assembly, are finalized by MoF and Planning Commission and are presented to the Cabinet.
Phase IV – Consideration of the Budget by the National Assembly & Senate:
After Cabinet approval, the budget consisting of Annual Budget Statement along with supporting budget publications is laid before the National Assembly for consideration and authorization. Schedule of Authorized expenditure is submitted to the Senate where it debated upon. As per Article 73(1) and (1A) of the Constitution, a copy of the Money Bill should be sent to the Senate for the consideration and making recommendation to national assembly within fourteen days. National assembly considers the recommendations of the Senate and after the Bill has been passed by National Assembly (with or without the incorporation of the recommendations of the senate) it is forwarded to the president of Pakistan for seeking his assent.
Phase V – Authorization of Expenditure:
After the Annual Budget Statement has been considered and the demands for grants approved by the National Assembly, the Ministry of Finance then prepares, in the same form as the Annual Budget Statement, a statement which is called the Schedule of Authorized Expenditure, specifying:
- the grants made or deemed to have been made by the National Assembly; and
- The several sums required to meet expenditure charged upon the Consolidated Fund, but not exceeding, in the case of any sum, the sum shown in the statement laid before the National Assembly.
Phase VI – Execution of the Budget:
Expenditure allowed to be incurred under the Schedule of Authorized Expenditure, is distributed to the concerned Ministries / Divisions. Actual incurrence of expenditure authorized under the Schedule of Authorized Expenditure, and the realization of the estimated receipts included in the Annual Budget Statement, are monitored and controlled by the concerned Ministries, Divisions / authorities;
Phase VII – Post Budget Allocations:
If an amount allowed to be spent during a financial year under the authority of the Schedule of Authorized Expenditure is not expected to be spent before the close of the financial year (or is expected to be spent only partially), the savings expected are surrendered to the Ministry of Finance by the Ministries / Divisions concerned, through the Statements of Excesses and Surrenders. Resultantly, necessary adjustments (upward / downward revisions) are made by Ministry of Finance to the budget estimates (earlier approved by the Assembly);
Phase VIII – Review & Audit:
After the close of the financial year, when audit of the accounts for that year is completed, the Auditor General of Pakistan submits the following reports, relating to that year to the President of Pakistan:-
- Appropriation Accounts and the Audit Report thereon.
- Finance Accounts.
- Commercial Accounts and the Audit Report thereon.
These reports indicate, among other things, what budget has been spent and what irregularities (if any) committed by the executing agencies in the management and control of the amounts placed at their disposal for expenditure. These reports are laid before the National Assembly, and examined and disposed of in the manner specified in the concerned rules & regulations.
Phase’s l to IV are completed before the commencement of the financial year to which the Annual Budget Statement relates. Phase V is executed immediately after the National Assembly and the Senate complete their consideration of the Annual Budget Statement. Phases I to V covers all the steps involved in budget preparation and finalization. Post budget preparation activities (execution, monitoring, control, and auditing) are covered in Phases VI to VIII. Phases VI and VII are implemented during the course of the financial year to which the Annual Budget Statement relates, whereas the final phase (Phase VIII) is undertaken during the year, or years, subsequent to that financial year.