The annual federal budget is more than just a financial blueprint of the country for the next 12 months; it is a crucial legal instrument that underscores the government's fiscal priorities and strategic vision for the nation. In Pakistan, as in many other countries, the budget is a cornerstone of parliamentary accountability, linking the executive's plans with the legislature's scrutiny. However, despite the procedural framework established by the Constitution, the effective role of Pakistan's parliament in the budgeting process is often undermined by political dynamics and structural inefficiencies. This article delves into the historical evolution of budgetary controls, the current challenges faced by Pakistan's parliamentary system, and proposes reforms to enhance legislative oversight and fiscal transparency.
In the Western world, the contest for budgetary control began centuries ago and became the main tool for building a relationship between the subjects and their monarchs. In the 19th century, the modern budgetary system originated in Britain, where the executive would recommend a budget, the legislature would approve it, and the executive, along with the parliament, would oversee its implementation. During the 20th century, the budget became the principal tool for legislative scrutiny and executive control of subordinate departments in the United States. In most developing countries, the budget has become a principal vehicle for legislative scrutiny of administration.
In Pakistan, the budget process goes through four stages: it begins with the issuance of a Budget Call Circular, which invites proposals for expected revenues and expenditures by all federal ministries and divisions and finalising of the budget by the Finance Ministry; secondly, approval of the budgetary proposals by the federal cabinet; thirdly, the budget is presented to federal parliament for deliberation upon it and eventual vote of account on it; finally, it gets presidential assent which gives legal cover to it.
The Constitution of Pakistan 1973 specifies the role of the federal parliament and elaborates upon the relationship between the federal parliament and the executive during the budget-making processes. Article 73 explains the legislative procedures for the money bill, as it states that the money bill, including the federal budget, shall originate in the National Assembly, provided that simultaneously a copy of such a bill shall be transmitted to the Senate, which may, within 14 days, make recommendations thereon to the national assembly which shall consider the recommendations of the Senate and can pass it with or without incorporating these recommendations. It shall be subsequently presented to the President for assent.
Political factors, however, have a considerable influence on active or actual role of the federal parliament in decision-making for the budget and its parliamentary oversight.
It is the finance ministry, with a rather bloated central bureaucracy, which dominates the entire budgeting process from its initial drafting to the final execution
However, certain factors may prevent the parliament from actively participating in legislative oversight of the budget, including the undemocratic structure of political parties, the predominance of the executive in the budget-making process, compositional structure (bicameral) and unequal legislative powers in approving budget between the national assembly and the Senate; the way consensus is reached within the parliamentary parties; for their re-election, the dependency of members on parties; information asymmetries between members of the parliament and of the government; over-dependency on the bureaucrats; lack of political will of parliamentarians to exercise their power combined with their incompetence, with few exceptions, to understand the complexity of budget processes; and, lack of coordination between parliamentary committees and floor activities.
All of these influences may be of equal importance. However, the following five factors are quite important to be highlighted here: firstly, no formal engagement of the federal parliament and parliamentary committees in ex-ante budget process; secondly, less time to debate the budget in the parliament; thirdly, no powers of Senate, the other half of the parliament, to amend federal budget which causes predominance of the executive as it obtains its authority from the national assembly enjoys the power to approve federal budget and provide parliamentary support to the executive alone; fourthly, under Article 84, the federal government's discretionary power to authorise expenditure from the Federal Consolidated Fund, if in respect of any financial year it is found that the amount authorised to be expended for a particular service or that a need has arisen for expenditure upon some new service not included in the annual budget statement; and finally, there is no proper rule of procedures to exercise the post-budget oversight by the parliament itself and its committees.
In developed democracies, a parliament plays an active role in the national budget at various stages: firstly, it is actively involved in the ex-ante pre-budget debates on its draft; secondly, it debates and approves this draft; thirdly, it oversees post-budget execution of the annual budget plan; and, fourthly, parliament reviews and approves the supplementary budgets that modify the actual budget approved by it; and, lastly, it also examines and debates the reports of the auditor agencies.
In Pakistan, neither the parliament nor the parliamentary committees are engaged in ex-ante pre-budget debates or the budgetary draft-making process. Rather, it is the finance ministry, with a rather bloated central bureaucracy, which dominates the entire budgeting process from its initial drafting to the final execution.
Arguably, this overdependence on the bureaucracy, combined with the predominance of the executive embedded in the Constitution that prevents the parliament from performing an active role in budgeting. Moreover, the lack of political will to exercise the power by the parliamentarians and their inability to understand the complexity of budgeting also undermines the parliamentary supremacy as ex-ante and post-budget overseer of the federal budget.
It is advisable to present a draft of the budget at least two to three months prior to the beginning of the new fiscal year so that the parliamentarians can have a much longer time to understand its complexity, review its details and suggest amendments in government's estimates
To ensure the parliament's active role in the budget-making process, there is a need to revisit the constitutional framework describing the role of and the relationship between the parliament and the executive during the budget processes and learn lessons from overseas experiences.
When it comes to revisiting the constitutional framework, two articles (73 and 84) need to be amended. In Article 73, it is the national assembly which enjoys the power to approve the federal budget and the Senate of Pakistan, the other half of the federal parliament, as a chamber of provinces enjoys only recommendatory power on money bills. It is equally important to empower the Senate as a chamber of provinces with financial powers.
Similarly, Article 84 needs to be revisited to bind the federal government to seek the prior consent of the parliament for expanding an allocation in the name of supplementary grants for a particular service. The parliament may pass a law to specify the particular reasons for the supplementary grants and their prior ratification. Amongst others, a pertinent example of this is Japan's Public Finance Act 1947, which binds the cabinet to mention and get their supplementary grants and their particular purposes from the Diet, the national legislature of Japan.
There are some lessons to be learnt from overseas experiences which can expand the effective role of parliament in budgeting and its ex-ante and post-budget oversight. Firstly, a pre-budget orientation debate should be held around the middle of the year, preceding the new budget year, along with performance reports for the previous year in the parliament, as it happens in many countries, including Brazil, France and Sweden. Such practice will help parliamentarians become aware of the government's fiscal policies and provide the government with multiyear fiscal targets that the government prioritise in its updated budget plans. Secondly, it is advisable to present a draft of the budget at least two to three months prior to the beginning of the new fiscal year so that the parliamentarians can have a much longer time to understand its complexity, review its details and suggest amendments in government's estimates. In about 85% of Organisation for Economic Cooperation and Development (OECD) countries, the budget is presented three to four months prior to its final approval from the parliament.
Similarly, it is presented about eight months prior to the new fiscal year in the American Congress. Thirdly, the parliament may be entrusted with the power of audit of implementing the budget, which is virtually, under the present constitutional framework, regarded as the prerogative of the executive through the Auditor General of Pakistan that presents its report to the parliament, but the parliament does not enjoy the power to order an inquiry of such malpractices in using the budget spending. To enhance parliamentary oversight of the budget, a board of advisors consisting of subject-experts in the Public Accounts Committee as practised in the UK. Fourthly, the rules of the procedures are needed to ensure the minister concerned appears before the parliamentary committees, answers all the questions regarding ex-ante budget and post-budget plans, and the composition of committees may coordinate with members' expertise to achieve productive budgetary oversight. Finally, to achieve fiscal consolidation and sustainable development, some secondary law may be introduced as a legal instrument to provide the government with budgetary flexibility without undermining the parliament's budgetary prerogatives and its legislative oversight role.
It is not advisable to give the legislature unrestrained budget amendment authority, which may deteriorate fiscal discipline. However, it is essential to provide the legislature with an active role in all budget-making stages and systemic collaborations between the legislature and the executive to promote fiscal transparency and democratic governance in modern democratic cultures.