Act XV of 2019 · 18 pages
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THE PUBLIC FINANCE MANAGEMENT ACT, 2019
CONTENTS
CHAPTER I
PRELIMINARY
1. Short title, application and commencement
2. Definitions
CHAPTER II
BUDGET MANAGEMENT
BUDGET PREPARATION AND PRESENTATION
3. Budget strategy paper
4. Annual Budget Statement
5. Plan based Government’s expenditure
6. Grant-in-aid
7. Receipt of grants by the Government
8. Tax expenditure
9. Performance based budget
10. Changes in schedule of authorized expenditure
11. Re-appropriation of funds
12. Surrender of savings
CHAPTER III
DEVELOPMENT PROJECTS AND
MAINTENANCE AND USE OF PUBLIC ASSETS
13. Classification of development projects
14. Preparation of development projects
15. Quality assurance
16. Technical approval
17. Inclusion of development projects in demands for grants
18. Monitoring and evaluation of development projects
19. Budgetary provision for maintenance of assets
20. Utilization of public assets
Page 1 of 18
CHAPTER IV
CONTROL OF PUBLIC FINANCE
CONSOLIDATED FUND AND PUBLIC ACCOUNT
21. Federal Consolidated Fund
22. Custody of the Federal Consolidated Fund and Public Account of the Federation
23. Expenditure from Federal Consolidated Fund and Public Account
24. Withholding of authorized appropriations
25. Excess expenditure
26. Commitment control system
27. Delegation of financial powers
28. Chief finance and accounts officer
29. Chief internal auditor
CHAPTER V
TREASURY MANAGEMENT
30. Cash management
31. Government banking arrangements
CHAPTER VI
SPECIAL PURPOSE FUNDS
32. Special purpose funds
CHAPTER VII
ACCOUNTING AND REPORTING
33. Controller General of Accounts
34. Mid-year reporting of budget developments
35. Year-end government performance monitoring report
CHAPTER VIII
PUBLIC ENTITIES
36. Public entities
37. Self-generated revenues
38. Preparation of accounts
39. Audit
40. Dissolution of public entity
CHAPTER VIIIA
NON TAX REVENUE
40A. Policy and administration
40B. Levy and collection
40C. Deposit in Federal Consolidated Fund
40D. Late payment surcharge
40E. Recovery of non tax revenue by Commissioner (Inland Revenue)
CHAPTER IX
REMOVAL OF DIFFICULTY AND POWER TO MAKE RULES
41. Removal of difficulty
42. Power to make rules
43. Budget manual
44. Implementation and improvement
45. Overriding effect
Page 2 of 18
THE PUBLIC FINANCE MANAGEMENT ACT, 2019
[30th June, 2019]
AN
1
ACT
to strengthen management of public finances with the view to improving definition and implementation
of fiscal policy for better macroeconomic management, to clarify institutional responsibilities related
to financial management, and to strengthen budgetary management;
WHEREAS matters mentioned above are pivotal for reducing public debt and management of
public finances;
AND WHEREAS as defined under Article 79 of the Constitution of the Islamic Republic of
Pakistan, it is expedient to provide for regulating the custody of the Federal Consolidated Fund, the
payment of moneys into that Fund, the withdrawal of moneys therefrom, the custody of other moneys
received by or on behalf of the Federal Government, their payment into, and withdrawal from, the
Public Account of the Federation, and all matters connected with or ancillary thereto;
AND WHEREAS to give elaborate mechanism of public finance management as envisaged in
Articles 78 to 88 2[* * *] and 160 to 171 of the Constitution and to guide budgetary management
processes, financial and fiscal controls, cash and banking arrangements, and financial oversight of
public entities;
It is hereby enacted as follows:—
CHAPTER I
PRELIMINARY
1. Short title, application and commencement.—(1) This Act may be called the Public
Finance Management Act, 2019.
(2) It shall apply to all matters of the Federal Consolidated Fund and Public Account of the
Federation and all other matters of the Federal Government connected with or ancillary thereto.
(3) It shall come into force at once.
2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,—
(a) “appropriation” means the assignment to meet specified expenditure of funds at
the disposal of the assigning authority;
(b) “Auditor-General” means Auditor-General of Pakistan appointed under Article
168 of the Constitution;
(c) “authorization of expenditure” means payments and withdrawals from the
Federal Consolidated Fund and Public Account of the Federation against
approved budgetary provisions deemed to be duly authorized unless it is
specified in the schedule of authorized expenditure;
1
This Act was enacted vide section 18 of the Finance Act, 2019 (Act No. V of 2019).
2
Omitted by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 3 of 18
(d) “bank” means the State Bank of Pakistan or any office or agency of the State
Bank of Pakistan and includes any bank acting as an agent of the State Bank of
Pakistan in accordance with the provisions of the State Bank of Pakistan Act,
1956 (XXXIII of 1956);
(e) “commitment” means an obligation to make a future payment, the funds for
which are reserved against the allocated budget of an entity;
(f) “constitution” means the Constitution of the Islamic Republic of Pakistan;
(g) “Controller General of Accounts” means the person appointed under the
Controller General of Accounts (Appointment, Functions and Powers)
Ordinance, 2001 (XXIV of 2001);
(h) “contingent liability” means a financial liability that may arise or come into
being if one or more events occur;
(i) “Federal Consolidated Fund” means the Federal Consolidated Fund of the
Government of Pakistan created under Article 78 of the Constitution;
(j) “financial propriety” means the compliance of law, rules, regulations,
maintaining high standard of prudence, vigilance, due diligence and ensuring
value for money while incurring expenditure and collecting government
receipts;
(k) “financial year” means the financial year as defined under Article 260 of the
constitution;
(l) “Government” means the Federal Government;
(m) “medium-term” means budgetary estimates for a rolling three-year budgetary
horizon. This includes current estimates, which are to be appropriated by
Parliament, and two additional or ‟outer” years’ estimates;
1
[(ma) “non-tax revenue” means revenues received by the Government in terms of
clause (1) of Article 78 of the Constitution, and the recurring income of the
Government from investments and provision of services but does not include
those mentioned in clause (3) of Article 160 of the Constitution;]
(n) “outcomes” means the effects of outputs on targeted audience;
(o) “outputs” means service delivered;
(p) “prescribed” means prescribed by rules;
(q) “principal accounting officer” means the secretary of a Division or any official
notified as principal accounting officer, responsible for exercising financial
propriety in management of public funds and having accountability to
Parliament for the economic, efficient and effective use of resources.
Explanation.—The term “secretary” shall include the secretary general,
principal secretary, secretary or acting secretary to the Government of Pakistan
in charge of a division and where there is no secretary, the additional secretary
or joint secretary in charge of a division;
(r) “Public Account” means the Public Account of the Federation as defined under
Article 78(2) of the Constitution;
1
Ins. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 4 of 18
(s) “public moneys” mean the moneys forming part of the Federal Consolidated
Fund and the Public Account of the Federation;
(t) “public servant” means a public servant within the meaning of section 21 of the
Pakistan Penal Code (Act XLV of 1860);
(u) “re-appropriation” means transfer of funds from one head of account of
appropriation to another such head of account ¹[within one demand for grant];
1
[Provided that no re-appropriation shall be made between funds
authorized for expenditure charged upon the Federal Consolidated Fund and
other expenditure.]
1
[(ua) “revenue collection office” means a ministry, division or its attached
department or subordinate office responsible for collection, monitoring and
reporting of non-tax revenue;]
(v) “supplementary grant” means budget grant within the meaning of Article 84 of
the Constitution;
2
[(w) “technical supplementary grant” means appropriation or authorization, as the
case may be, of additional funds to a demand for grant against—
(i) surrender from another demand for grant; or
(ii) anticipated saving received by the Finance Division; or
(iii) unbudgeted revenue receipt deposited by Provinces or Entities in
Federal Consolidated Fund for a specific purpose; or
(iv) unbudgeted foreign grants received or deposited by foreign governments
or international donors in Federal Consolidated Fund for a specific
purpose.]
(x) “tax expenditure” means the revenue which Government foregoes through the
provisions of tax laws that allows deductions, exclusions or exceptions from the
taxpayer’s taxable expenditure income or investment, deferral of a tax liability
or preferential tax rates;
(y) “treasury single account” means a banking arrangement for the consolidation of
government financial resources in one bank account or multiple bank accounts
linked to one main account through which the government transacts all its
receipts and payments; and
(z) “voted expenditure” means expenditure other than the charged expenditure
specified in the annual budget statement referred to in Article 82(2) of the
Constitution.
1
Ins. and added by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
2
Subs. by the Finance Act, 2024 (Act No. X of 2024), s. 11.
Page 5 of 18
CHAPTER II
BUDGET MANAGEMENT
BUDGET PREPARATION AND PRESENTATION
3. Budget strategy paper.—(l) The Federal Government shall approve the budget strategy
paper containing quantified macroeconomic and fiscal projections for the medium-term by 1[tenth of
May] of each year. It shall be published as well as placed on the Finance Division’s official website.
The paper shall indicate strategic priorities of the Government revenue and spending policies and
specify indicative levels of spending in various Ministries and Divisions. Upon approval of the paper,
the Finance Division shall issue indicative budget ceilings to Ministries and Divisions.
(2) The Minister for Finance shall 2[also presented discuss the budget strategy paper with the
Standing Committees] for Finance and Revenue in the Senate and the National Assembly.
(3) The Federal Government may extend the deadline mentioned in sub-section (1) in case of
extreme requirement.
4. Annual Budget Statement.- (1) The Federal Government shall, in respect of every financial
year, cause to be laid before the National Assembly, Annual Budget Statement consistent with Articles
80 and 81 of the Constitution including a statement of the purpose and estimates divided into 2[major
objects for each demand for grant].
(2) Each Demand for grant may indicate budget estimates of the ensuing year, initial budget
estimates and revised estimates of outgoing year and provisional actual expenditure of year prior to
outgoing year.
(3) The Annual Budget Statement shall also contain-
(a) statement of contingent liabilities of the Federal Government; and
(b) statement of fiscal risks.
2
[5. Plan based Government’s expenditure.—All government expenditures, whether from a
recurrent or development demand for grant, shall be based on well-defined plans and the strategic
priorities approved in budget strategy paper as per section 3.]
6. Grant-in-aid.—The Federal Government may approve grant-in-aid for individual, public
and private institutions, local bodies and other non-political institutions and associations as it may
consider appropriate in the manner as may be prescribed.
7. Receipt of grants by the Government.—(1) Grants made to the Government by a foreign
Government or by any other person shall be received by the Economic Affairs Division and Finance
Division on behalf of the Government.
(2) The Finance Division shall, in collaboration with representatives of donors, reach
agreements and issue instructions concerning the management of such grants.
1
Subs. by the Finance Act, 2023 (Act No. XXXIV of 2023), s. 9.
2
Subs. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 6 of 18
8. Tax expenditure.—The Federal Government shall, in respect of every financial year cause
to be laid before the National Assembly, Finance Bill consistent with Article 73 of the Constitution
including a statement of estimated tax expenditure of the Federal Government.
9. Performance based budget.—(1) The Federal Government shall, in respect of every
financial year, cause to be laid before the National Assembly a medium-term performance based
budget 1[report] along with the Annual Budget Statement.
(2) For each principal accounting officer, the medium-term performance based budget 1[report]
may include policy and goals, past and future expenditure, outputs and outcomes and related
performance indicators and targets.
10. Changes in schedule of authorized expenditure.- If in respect of any financial year it is
found—
(a) that the amount authorized to be expended for a particular service for the current
financial year is insufficient, or that a need has arisen for expenditure upon some
new service not included in the Annual Budget Statement for that year; or
(b) that any money has been spent on any service during a financial year in excess
of the amount granted for that service for that year,
the Federal Government shall have power, as prescribed, to authorize expenditure from the Federal
Consolidated Fund, whether the expenditure is charged by the Constitution upon that Fund or not, and
shall cause to be laid before the National Assembly Supplementary Budget Statement or, as the case
may be, an Excess Budget Statement, setting out the amount of that expenditure, and the provisions of
Articles 80 to 83 shall apply to those statements as they apply to the Annual Budget Statement.
11. Re-appropriation of funds.—Principal accounting officers may sanction, 1[by thirty-first
day of May each] year, re-appropriation of funds from one expenditure item to another within a budget
grant in the manner as may be prescribed 1[:]
1
[Provided that in an exceptional case of exigency, the Finance Division may extend the
prescribed time limit before the close of the financial year.]
12. Surrender of savings.—(1) All Ministries and Divisions, their attached departments and
sub-ordinate offices and autonomous organizations shall surrender to the Finance Division 1[by thirty-
first day of May each year], all anticipated savings in the grants or assignment accounts or grant-in-
aid controlled by them 1[:]
1
[Provided that in an exceptional case of exigency, the Finance Division may extend the
prescribed time limit before the close of the financial year.]
(2) The Finance Division shall communicate the acceptance of such surrenders before close of
the financial year and where requirement is justified, shall provide for equivalent amount in the next
financial year budget.
1
Ins., subs. and added by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 7 of 18
CHAPTER III
DEVELOPMENT PROJECTS AND MAINTENANCE AND USE OF PUBLIC ASSETS
13. Classification of development projects.—Projects defined in public sector development
programme shall be classified as:—
(a) core projects in national infrastructure requiring complex planning, design and
implementation procedures. The Planning Commission shall designate projects
as such in accordance with the criteria notified in official Gazette; and
(b) sectoral projects, projects undertaken by specific sectors, Ministries and
Divisions which are required to enhance the development of that sector or
Ministry or Division and do not fall under the above category of core projects.
14. Preparation of development projects.—(1) All development projects shall be prepared
in conformity with procedures, processes and templates defined by the Planning Commission.
(2) Cost and benefit analysis and risk assessment of all development project proposals, in
excess of a threshold size prescribed by the Planning Commission, shall be undertaken.
15. Quality assurance.—Development project proposals which exceed in their total cost
thresholds defined by the Planning Commission shall be subject to quality assurance. Such quality
assurance shall be undertaken by an individual/body which is independent of the
sector/Ministry/Division that has initiated the preparation of the development project proposal.
16. Technical approval.—(1) All development project proposals shall be subject to a technical
approval process. Technical approval shall only be granted to projects which are compliant with the
standards and procedures set by the Planning Commission.
(2) Findings and recommendations of the independent quality assurance reports and cost and
benefit analysis and risk assessment, where required as per sub-section (2) section 14, shall be taken
into account by these forums while considering the development project proposals.
17. Inclusion of development projects in demands for grants.—(1) No development project
shall be considered for inclusion in demands for grants that has not been granted technical approval.
(2) No development project shall be considered for inclusion in demands for grants unless it is
provided with a budget allocation for the coming year which fully reflects the proposed project cost
for each year.
18. Monitoring and evaluation of development projects.—(l) Development projects shall be
subject to the following forms of monitoring and evaluation, namely:—
(a) monitoring of progress during implementation;
(b) evaluation of the project on completion; and
(c) in case of the projects with a total cost exceeding a threshold to be set by the
Planning Commission, an independent impact assessment within five years after
completion of the projects.
(2) Timelines, forms and formats and guidance on conducting monitoring and evaluation and
reporting shall be as may be prescribed.
Page 8 of 18
19. Budgetary provision for maintenance of assets.—(1) Every Ministry and Division shall
include in its demands for grants adequate funds dedicated for operation and maintenance of the
physical infrastructure assets under its supervision.
(2) The Planning Commission shall define adequacy requirements for different categories of
physical infrastructure expressed as the ratio of the annual provision for maintenance and the current
market value of the asset.
20. Utilization of public assets.—(1) Principal accounting officers shall ensure that the
maximum possible returns are achieved on each and every asset falling under the oversight of the
Ministry and Division.
(2) The returns on a public asset may include utilization of the asset for delivery of one or more
public services or a financial return accruing to the Government from utilization of the potential of the
asset.
(3) With a view to achieving the maximization of returns on public assets, government may
establish sovereign wealth funds through an Act of Parliament. The objective of a sovereign wealth
fund is to act as a holding institution for public assets, which is capable of bringing to bear sound
management and exploitation of opportunities for the maximization of returns from the public assets.
CHAPTER IV
CONTROL OF PUBLIC FINANCE
CONSOLIDATED FUND AND PUBLIC ACCOUNT
21. Federal Consolidated Fund.—(1) All Ministries and Divisions, their attached
departments and subordinate offices and all public entities if so required by their statutes, shall arrange
remittance in the Federal Consolidated Fund, without delay, of all revenues including all grants
received by the Federal Government, all loans raised by the Government and all moneys received by
it in repayment of any loan and all other moneys into the Public Account of the Federation as required
under Article 78 of the Constitution.
(2) All loans or grants made to the Federal Government by a foreign government or otherwise
shall be remitted to the Federal Consolidated Fund and the Controller General of Accounts shall be
responsible for its proper accounting.
22. Custody of the Federal Consolidated Fund and Public Account of the Federation.—
The operation of the Federal Consolidated Fund and the Public Account of the Federation shall vest in
the Finance Division under the overall supervision of the Federal Government.
23. Expenditure from Federal Consolidated Fund 1[and Public Account].—(1) No
authority shall incur or commit any expenditure or enter into any liability involving expenditure from
the Federal Consolidated Fund and Public Account of the Federation until the same has been
sanctioned by a competent authority duly empowered and the expenditure has been provided for the
financial year through—
1
Ins. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 9 of 18
(a) schedule of authorized expenditure; or
(b) supplementary grant and technical supplementary grant as per Article 84 of the
Constitution; or
(c) re-appropriation as per section 1[11].
(2) No authority shall transfer public moneys for investment or deposit from government
account 1[including the assignment accounts] to other bank account without prior approval from the
Federal Government 1[:]
1
[Provided that the principal accounting officer in respect of all the spending units under his
control shall submit a certificate to the Finance Division on half yearly basis.]
(3) Every grant approved by the National Assembly for a financial year and every other
authority or sanction issued under this Act in respect of a financial year, shall lapse and cease to have
any effect at the close of that financial year.
24. Withholding of authorized appropriations.—The Finance Division may, with the prior
approval of the National Assembly, suspend, withdraw, limit or place conditions on any budget
appropriation or other authority issued by it if the Finance Division is satisfied that such action is
required by reason of a financial exigency or is in the public interest.
25. Excess expenditure.—(1) The expenditure in excess of the amount of budget grant as well
as the expenditure not falling within the scope or intention of any budget grant, unless regularized by
a supplementary grant, shall be treated as excess expenditure.
(2) Excess expenditure shall not become a charge against the Federal Consolidated Fund except
when—
(a) The National Assembly approves an additional amount equivalent to
overspending as a direct charge against the Federal Consolidated Fund as voted
or charged expenditure; or
(b) it decides—
(i) to recover the excess expenditure from the public servants who are found
to be involved to incur such an expenditure. In this case, the Finance
Division may take appropriate measures; or
(ii) to take disciplinary proceedings against the principal accounting officer.
(3) If the Public Accounts Committee recommends the excess expenditure to stand as a charge
to Federal Consolidated Fund, then it shall be included in the statement of excess expenditure required
under Article 84 of the Constitution.
1
Subs., ins. and added by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 10 of 18
26. Commitment control system.—The Finance Division in consultation with the Auditor
General shall approve and issue guidelines related to annual and multi-annual commitment control
systems.
27. Delegation of financial powers.—The Finance Division shall approve regulations for the
delegation of financial powers based on the following principles, namely:—
(a) financial powers accorded to the principal accounting officers balance financial
authority with responsibility for financial propriety as per the applicable
financial rules and regulations;
(b) financial powers are accorded with the view to enhance public service delivery;
and
(c) allowing the principal accounting officers to delegate financial powers to sub-
ordinate officials. The delegation shall not diminish the responsibility and
accountability of the principal accounting officers.
1
[28. Chief finance and accounts officer.— To assist principal accounting officers in financial
management, there shall be chief finance and accounts officer posted in Ministries and Divisions as
recommended by Finance Division to perform functions as notified and financial advisers’
organization shall stand disbanded.]
1
[29. Chief internal auditor.— (l) Within a period not exceeding eighteen months from the
date of commencement of this Act, the position of chief internal auditor shall be created who shall
work under the direct supervision of principal accounting officer. The appointment and functions of
chief internal auditor shall be as determined by the Finance Division, from time to time.]
2
[(2) There shall be an internal audit policy board for over all policy making and setting scope
and standards, approving internal audit manuals and charter of internal audit, monitoring the overall
effectiveness of internal audit function for the Government institutions, comprising—
(a) Secretary, Finance Division Chairman;
(b) Controller General of Accounts Member;
(c) Deputy Auditor General Member;
(d) Additional Secretary, Finance Division Member and Secretary);
(e) One representative duly appointed by the Member Finance Member”
Division from the Institute of Cost and Management Accountants
of Pakistan or the Institute of Chartered Accountants of Pakistan or
Institute of Internal Auditors
(3) Finance Division shall provide secretarial support to the board constituted under sub-section
(2).]
1
Subs. by the Finance Act, 2023 (Act No. XXXIV of 2023), s. 9.
2
Added by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 11 of 18
CHAPTER V
TREASURY MANAGEMENT
30. Cash management.—(l) The Finance Division, with the approval of the Federal
Government, shall notify policy and rules under this Act to prescribe an effective cash management
system for all public entities and special purpose funds leading to treasury single account. Fundamental
principles and objectives of such policy and rules shall be—
(a) to anticipate cash needs of Government;
(b) to ensure availability of cash when it is required;
(c) to manage cash balance in the Government bank accounts effectively; and
(d) to neutralize impact of the Government’s cash flows on the domestic banking
sector.
(2) The policy and rules under this section, inter alia, shall provide for—
(a) establishing institutional and administrative arrangements needed to manage an
effective cash management system;
(b) availability of funds in accordance with schedule of authorized expenditure or
supplementary grant;
(c) availability of foreign exchange, where required, from within the allocation of
foreign exchange sanctioned for the Ministry and Division concerned;
(d) placement of all public moneys into the treasury single account;
(e) quarterly revenue, expenditure, cash requirement and debt plan within
sanctioned budget;
(f) gradual expansion of budgetary and accounting framework to all autonomous
entities, declared as such under clause (b) of sub-section (1) of section 1[36];
(g) usage of idle cash of the autonomous entities, declared as such under clause (b)
of sub-section (1) of section 1[36]; and
(h) require all principal accounting officers to provide the information deemed
necessary for effective operation of the cash management and treasury single
account system.
[(3) The Finance Division shall exempt “Self Accounting Entities (SAEs)” from adoption of
2
New Accounting System of ASSAAN Assignment Account.]
31. Government banking arrangements.—(1) The Federal Government shall maintain its
Federal Consolidated Fund Account 1[and the Public Account of the Federation] in the State Bank of
1
Subs. and ins. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
2
Ins. by the Finance Act, 2021 (Act No. VIII of 2021), s. 9.
Page 12 of 18
Pakistan and it may open its such other bank accounts as may be required by the Finance Division,
from time to time, in accordance with the State Bank of Pakistan Act, 1956 (XXXIII of 1956).
(2) These accounts shall be operated by such authorized signatories as may be prescribed by
the Finance Division.
(3) For the purpose of effective financial management and taking corrective measures to ensure
financial discipline, all banks in Pakistan shall provide such information of all accounts maintained by
Ministries and Divisions, attached departments and subordinate offices and public entities as shall be
required by the Finance Division, from time to time, through State Bank of Pakistan.
CHAPTER VI
SPECIAL PURPOSE FUNDS
32. Special purpose funds.—(1) If monies have been appropriated by the National Assembly
1
[for a fund established under any law or with the approval of the Federal Government], the Finance
Division shall notify rules or regulations and issue directives for the management and control of such
a fund. Any statutory instrument shall—
(a) state the purposes for which the special fund has been established;
(b) identify the principal accounting officer responsible for its operations; and
(c) specify that the cash balances of such funds shall form part of Public Account
of the Federation.
(2) Such funds shall be subject to audit by the Auditor-General of Pakistan.
(3) Where the Federal Government is satisfied that either—
(a) the purposes for which any special fund was established have been fully served;
or
(b) it is in the public interest to wind up a special fund,
it shall notify dissolution of the said special fund and any credit balances in such fund shall be
transferred to the Federal Consolidated Fund. An evaluation report and regulation of such funds shall
be notified by the Finance Division.
2
[(4) The legal framework of pay, allowances and retirement benefits may be promulgated
through an Act of Parliament within a period not exceeding twenty-four months.
(5) The Finance Division, with the approval of the Government, shall establish pension fund
by the end of the financial year 2023-24 to help discharge liabilities of the existing defined benefits
pension scheme and new contributory pension scheme.
(6) The Finance Division, with the approval of the Government, may introduce a contributory
pension scheme for new employees entering the Government service from a date approved by the
Federal Government.]
1
Subs. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
2
Added. by the Finance Act, 2023 (Act No. XXXIV of 2023), s. 9.
Page 13 of 18
CHAPTER VII
ACCOUNTING AND REPORTING
33. Controller General of Accounts.—The Controller General of Accounts shall perform his
functions in accordance with the provisions of the Controller General of Accounts (Appointment,
Functions and Powers) Ordinance, 2001 (XXIV of 2001).
34. Mid-year reporting of budget developments.—(1) By twenty-eighth February each year,
the Federal Government shall place mid-year review report before the National Assembly. The report
shall provide budget and actual comparison of revenues, expenditure and financing.
(2) After placing the mid-year review report in the National Assembly, the Finance Division
shall publish the report on its official website.
35. Year-end government performance monitoring report.—Starting from the financial
year 2021-22, the Federal Government shall place, within six months of close of financial year, before
National Assembly, a government performance monitoring report detailing—
(a) budget and expenditure by outputs; and
(b) planned and delivered key performance targets.
CHAPTER VIII
PUBLIC ENTITIES
36. Public entities.—(1) Where—
(a) any board, commission, company, corporation, trust or other fund or account is
established by or under any law which is fully or substantially funded either
from the Federal Consolidated Fund or by way of taxes, levies, duties or other
public monies accruing to it in terms of any laws; or
(b) any entity other than a state enterprise is established by or under any law, the
activities of which may result in a financial commitment or other liability being
incurred by the Government,
the Federal Government may declare such entity to be a public entity for the purposes of this
Act.
(2) The Federal Government shall, by notification in the official Gazette, classify public entities
as—
(a) Government’s business enterprises, including public limited companies or
registered companies under the law regulating companies or banking; or
(b) autonomous entities, which include all public entities that are not Government’s
business enterprises, which have been established to provide regulatory,
research, development and training or are producing goods or services on non-
commercial basis.
(3) The Finance Division shall be responsible for notifying the policy framework and
guidelines for financial management of Government’s business enterprises and autonomous entities,
including those related to internal controls, borrowing, cash management, accounting, reporting and
external audit.
Page 14 of 18
37. Self-generated revenues.—(1) Revenues collected by an autonomous entity, which arise
from any Act or statutory instruments of the Federal Government shall be deposited into the treasury
single account.
(2) The Finance Division shall, with approval of the Federal Government, notify policy and
guidelines and may issue regulations on the utilization of revenues generated by autonomous entities.
38. Preparation of accounts.—(1) Accounts of Government’s business enterprises shall be
prepared in accordance with the provisions of the relevant law. Copy of the audited financial statements
shall be made available to the Finance Division within three months of their certification.
(2) The accounts of autonomous entities shall be prepared in accordance with instructions
issued by the Controller General of Accounts with approval of the Auditor General. Copy of annual
accounts shall be made available to the Finance Division within three months of their finalization.
(3) Audited financial statements and annual accounts referred to in sub-section (1) and sub-
section (2) shall be laid before Parliament by President of Pakistan along with other accounts of Federal
Government not later than one month after the same are submitted by Auditor-General, except that, if
Parliament is not in session, then the accounts shall be laid before it on the first day of the following
session.
(4) Any reports laid before Parliament under sub-section (3) shall be referred to the Public
Accounts Committee of Parliament.
39. Audit.—(1) The audit of all public business enterprises shall be in accordance with the
provisions of the relevant law.
(2) The audit of autonomous entities classified shall be in accordance with instructions issued
by the Auditor-General.
40. Dissolution of public entity.—Where the public entity established under any law or legal
instrument stands dissolved or has been wound up, any monies or other resources standing to the credit
of the public entity at the time of dissolution or winding up shall be paid into the Federal Consolidated
Fund.
1
[CHAPTER VIII A
NON TAX REVENUE
40A. Policy and administration.—(1) The administrative ministries and divisions shall be
responsible for policy formulation and administration of non tax revenue as per the distribution of
business approved by the Government.
(2) The Finance Division shall advise ministries and divisions in policy formulation as per the
strategic priorities of Government’s revenue policies.
40B. Levy and collection.—(1) Non tax revenue shall be levied and charged in accordance
with the provisions of relevant laws and such other applicable instruments.
(2) Notwithstanding anything to the contrary contained in any other law for the time being in
force, public entities as defined under section 36 shall pay non tax revenue representing—
1
Ins. by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 15 of 18
(a) mark up on loans lent by the Government, as per the amortization schedule
attached with the financing agreement;
(b) dividend against the Government’s equity investments as declared by the
respective board of directors out of accrued profits of the entity:
Provided that if public entity is wholly or substantially owned by the
Government, proposals with regard to declaration of dividend and allocation for
reserve fund, capital requirements etc shall be examined by the controlling
Division in consultation with the Finance Division before deliberations and
decision in the board of directors.
(c) surplus profits as per the provisions of relevant laws; and
(d) any other amount owed to the Government as accrued:
Provided that the public entities shall pay accrued amounts of non-tax revenue
as per clauses (a) to (d) being the first charge on their gross revenues or profits,
as the case may be.
(3) Non tax revenue representing foreign grants and payments, receipts from provision of
services, rents, recovery of overpayments, sale of property etc shall accrue on completion of the
prescribed process.
(4) The revenue collection offices shall be responsible for collection of all the accrued amounts
of non tax revenue from liable public entities, individuals, firms, companies etc as per the time
specified in the relevant laws and rules. Finance Division shall prescribe procedures for monitoring
and reporting of non tax revenue by the revenue collection offices.
40C. Deposit in Federal Consolidated Fund.—(1) Subject to section 40B, the revenue
collection offices shall deposit the collected amounts in Federal Consolidated Fund promptly without
delay in prescribed manner under the head of account specified by the Finance Division in consultation
with the Controller General of Accounts.
(2) The revenue collection offices shall not retain or appropriate the collected amounts to meet
departmental expenditures except through budgetary mechanism as provided under Articles 80 to 83
of the Constitution.
40D. Late payment surcharge.—(1) Notwithstanding anything to the contrary contained in
any other law for the time being in force, an amount equal to monthly weighted financing cost of
Government’s domestic borrowings shall be payable during the period of default, in addition to the
amount due under section 40B if not paid within the stipulated time.
(2) Finance Division may prescribe procedure for levy and collection of the surcharge under
sub-section (1).
40E. Recovery of non tax revenue by Commissioner (Inland Revenue).— (1) If the amounts
as per sections 40B and 40D are not paid within ninety days of having been due, the Finance Division,
in consultation with the concerned Division may refer any defaulter’s case to the Commissioner
(Inland Revenue) concerned for recovery as it were an arrear of income tax.
Page 16 of 18
(2) The Commissioner (Inland Revenue) shall recover the arrear in accordance with the
provisions of the Income Tax Ordinance, 2001(XLIX of 2001) and deposit the receipt in the Federal
Consolidated Fund as per section 40C.]
CHAPTER IX
REMOVAL OF DIFFICULTY AND POWER TO MAKE RULES
41. Removal of difficulty.—If any difficulty arises in giving effect to the provisions of this
Act, Government may make such order, not inconsistent with the provisions of this Act, as it may
consider necessary for removal of such difficulty.
42. Power to make rules.—(1) The Federal Government may, by notification in the official
Gazette, make rules for carrying out the purposes of this Act.
(2) All existing instruments shall continue in force until altered, amended or repealed by such
authority competent to alter, amend or repeal the same 1[:]
1
[Provided that existing instruments, contrary to the provisions of this Act and the rules made
thereunder, shall have no legal effect.]
(3) The existing instruments shall include—
(a) The General Financial Rules;
(b) Federal Treasury Rules;
(c) Fundamental Rules and Supplementary Rules;
(d) Civil Service Regulations;
(e) Provident Fund Rules;
(f) Civil Pension Rules;
(g) Methods and procedures prescribed by the Auditor-General of Pakistan with
reference to deposit and withdrawal of public money;
(h) Public Works Department Code;
(i) the New System of Financial Control and Budgeting, 2018;
(j) the Central Public Works Account Code;
(k) the Accounting Policies and Procedures Manual;
(l) other Financial Regulations consistent with the above rules; and
1
Subs. and added by the Finance Act, 2020 (Act No. XIX of 2020), s. 9.
Page 17 of 18
(m) all amendments, schedules, manuals, notifications, forms, appendixes, orders,
circulars, codes, instructions, directives, guidelines, clarifications and any other
supplementary legal instruments relating to any of those rules, in each case as
in force in the Federal Government before commencement of this Act.
(4) All the existing public finance management and administration including the rules,
regulations and all amendments, schedules, manuals, notifications, forms, appendixes, orders,
circulars, codes, instructions, directives, guidelines, clarifications and any other supplementary legal
instruments relating to any of those rules, in each case as in force in the Federal Government before
commencement of this Act shall be made consistent with this Act through appropriate amendments
where required.
43. Budget manual.—Within a period of six months from commencement of this Act, the
Finance Division shall approve a budget manual, to be published as well as placed on the Federal
Government’s website.
44. Implementation and improvement.—The Federal Government shall constitute a
committee to oversee implementation of this Act and its secondary legislation. The committee shall
also enlist global best practices of the public finance management and shall recommend improvements
in this Act and its secondary legislation from time to time.
45. Overriding effect.—This Act shall have overriding effect over all other laws and any law
inconsistent with this Act in contradiction with this Act shall be amended to the extent of the
inconsistency.
___________
RGN Date: 24-11-2025
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Source: Pakistan Code, Ministry of Law and Justice (pakistancode.gov.pk). Text on this page is reproduced verbatim from the official PDF and is provided for reference only. For the authoritative version, always consult the source document or a current reported edition.
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