Public Finance Management Act 2022 key to reforms agenda

LAHORE:Reforms in the public finance management system and the promulgation of the Public Finance Management (PFM) Act 2022 is a major step towards the economic reforms agenda of the Punjab government.

Punjab Finance Minister Sardar Mohsin Khan Leghari expressed these views on the issuance of a formal notification for the promulgation of the Public Finance Management Act 2022 by the Punjab Assembly on Monday.

He said the implementation of the Act will make the budgeting process transparent and efficient. Budgeting guidelines laid down under the Public Finance Management Act 2022 will minimise the potential for the wastage of public money. Before the preparation of the budget, mid-term planning, covering three to five years, will be an integral part of the budgeting process, he added.

The minister said under the Act, the provincial government will be obliged to inform the institutions of their mid-term framework and the public sector departments will ensure the preparation of the budget accordingly. Under Article 119 of the Constitution, the preparation of the PFM Act was an important responsibility of the province, which the finance department had performed well, he added.

The Public Finance Management Act, 2022 will be helpful for all departments including the Finance Department and the Planning and Development Department in the implementation of public financing-related issues, he maintained. The minister appreciated the services of the Sub-National Governance Programme and the Foreign Commonwealth and Development Office in preparing the Act.

Explaining the various provisions of the Act, he said that under PFM Act, the allocation of funds during the budgeting process will be done based on outputs. Along with the allocation of funds in the budget, their goals and the period of their achievement will also be determined. The finance department will issue key indicators for the efficient use of funds and improvement in performance to all govt departments, which will be approved by the govt, he noted. The Act also includes a chapter on fiscal risk aimed at controlling the budget deficit.

In addition, the minister added that the Act also prescribes a debt ceiling that will ensure the soundness of the debt management system. Funds lapsed every year under the Act shall be made part of the provincial fund and these funds shall be utilised for the purposes for which they were earmarked when necessary.

Institutions, which are running on govt grants and subsidies, will be made self-sustaining, he explained. The revenue collected from the continuously loss-making institutions will belong to the treasury funds of the government, he further said.

Finance Secretary Wasif Khurshid said that the province needed a comprehensive PFM Act that would provide guidance in better performance of fiscal responsibilities, increase in tax collections, rationalisation of expenditure and debt management. All these matters are covered in the PFM Act 2022, he added.