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In recent years, Pakistan’s fiscal deficit has been consistently higher than budget estimates by an average of 25 per cent, due to inadequate revenue projections, weak expenditure controls, and supplementary grants. These chronic mistakes have undermined the integrity of the federal budgeting process.
The technical assistance report 2024 highlights poor implementation and budget execution despite the enactment of the Public Financial Management Act in 2019. The Governance and Corruption Diagnostic Assessment (GCDA) 2025 has raised serious concerns about Pakistan’s public financial management system, highlighting persistent shortcomings in budget execution and fiscal transparency that erode fiscal discipline and trust in the budgetary process.
The budget preparation process in Pakistan is currently “bottom-up,” based on the demands of various ministries rather than strategic fiscal planning.
The lack of timely fiscal projections and expenditure caps has left medium to long-term fiscal goals at a considerable distance from annual budgets. This disconnect has made it more difficult to exercise expenditure discipline and to give discretionary reallocations within the fiscal year. Macro-fiscal functions in Pakistan lack coordination, as the Macro-Fiscal Policy Unit (MFPU) remains underdeveloped and unable to generate timely forecasts for budget preparation; it typically produces outdated forecasts in March, as the budget preparation process starts in January.
