Public Finance Management Act, 2019

(amended up to 30th June, 2020)

Government of Pakistan
Finance Division
Islamabad

www.finance.gov.pk
 (i)

Table of Contents

Sections Description Page No

CHAPTER I 1
PRELIMINARY
1. Short title, application and 1-2
commencement
2. Definitions 2-5
CHAPTER II
BUDGET MANAGEMENT 5
BUDGET PREPARATION AND
PRESENTATION
3. Budget strategy paper 5
4. Annual budget statement 6
5. Plan based Government’s expenditure 6
6. Grant-in-aid 6
7. Receipt of grants by the Government 6
8. Tax expenditure 7
9. Performance based budget 7
10. Changes in schedule of authorized 7
expenditure
11. Re-appropriation of funds 7-8
12. Surrender of Savings 8
CHAPTER III
DEVELOPMENT PROJECTS AND 8
MAINTENANCE AND USE OF
PUBLIC ASSETS
13. Classification of development projects 8-9
14. Preparation of development projects 9
15. Quality assurance 9
16. Technical approval 9
17. Inclusion of development projects in 9
demands for grants
18. Monitoring and evaluation of 9-10
development projects
19. Budgetary provision for maintenance of 10
assets
20. Utilization of public assets 10
CHAPTER IV
CONTROL OF PUBLIC FINANCE 11
CONSOLIDATED FUND AND
PUBLIC ACCOUNT
21. Federal Consolidated Fund 11
22. Custody of the Federal Consolidated Fund 11
and Public Account of the Federation
23. Expenditure from Federal Consolidated 11-12
Fund and Public Account
 (ii)

24. Withholding of authorized 12

appropriations
25. Excess expenditure 12-13
26. Commitment control system 13
27. Delegation of financial powers 13
28. Chief finance and accounts officer 13
29. Chief internal auditor 14
CHAPTER V 14
TREASURY MANAGEMENT
30. Cash management 14-15
31. Government banking arrangements 15-16
CHAPTER VI 16
SPECIAL PURPOSE FUNDS
32. Special purpose funds 16-17
CHAPTER VII 17
ACCOUNTING AND REPORTING
33. Controller General of Accounts 17
34. Mid-year reporting of budget 17
developments
35. Year-end government performance 17
monitoring report
CHAPTER VIII 17
PUBLIC ENTITIES
36. Public entities 17-18
37. Self-generated revenues 18
38. Preparation of accounts 18-19
39. Audit 19
40. Dissolution of public entity 19
CHAPTER VIIIA 19
NON TAX REVENUE
40A. Policy and administration 19
40B. Levy and collection 20
40C. Deposit in Federal Consolidated Fund 20-21
40D. Late payment surcharge 21
40E. Recovery of non tax revenue by 21
Commissioner (Inland Revenue)
CHAPTER IX
REMOVAL OF DIFFICULTY AND 21
POWER TO MAKE RULES
41. Removal of difficulty 21
42. Power to make rules 22
43. Budget manual 23
44. Implementation and improvement 23
45. Overriding effect 23
 1

PUBLIC FINANCE MANAGEMENT ACT, 2019

(Amended up to 30th June, 2020)

AN

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 there from, 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, 1[ ] 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.

1
The expression “,118 to 127” omitted by the Finance Act, 2020
 2

(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;

(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;
 3

(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

1
New clause (ma) inserted by the Finance Act, 2020
 4

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;
(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];
²[Provided that no re-appropriation shall be made
between funds authorized for expenditure charged
upon the Federal Consolidated Fund and other
expenditure];
31
[(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;
(w) "technical supplementary grant" means surrender of
funds from one budget grant and budget
authorization in another grant. Technical
supplementary grant shall not result in increase of
overall government expenditure;
(x) "tax expenditure" means the revenue which
Government foregoes through the provisions of tax
laws that allows deductions, exclusions or

1
Inserted by the Finance Act, 2020
² Proviso inserted by the Finance Act, 2020
³ New clause (ua) Inserted by the Finance Act, 2020
 5

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.

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
fifteenth of 1[April] 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 present and

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.

1
The word “March” substituted by the Finance Act, 2020
2
The words “discuss the budget strategy paper with Standing Committees responsible” substituted
by the Finance Act, 2020
 6

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 1[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
The words “detailed items” substituted by the Finance Act, 2020
2
Section 5 substituted by the Finance Act, 2020. The substituted section reads as follows;
“5. Plan based Government‟s expenditure estimates.- All government expenditures, whether from a
recurrent or development demand for grant, shall be based on well-defined plans”
 7

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 2[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, 3[by thirty-first day of May each] year, re-

1
Inserted by the Finance Act, 2020
2
Inserted by the Finance Act, 2020
3
The words “at any time before the close of the financial” substituted by the Finance Act, 2020
 8

appropriation of funds from one expenditure item to another within

a budget grant in the manner as may be prescribed 1[:]
2
[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
3
[by thirty-first day of May each year], all anticipated savings in the
grants or assignment accounts or grant-in-aid controlled by them
4
[:]
5
[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.

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

1
Full stop substituted by the Finance Act, 2020
2
Proviso added by the Finance Act, 2020
3
The words “at least twenty-five days before the presentation of the budget in the National
Assembly” substituted by the Finance Act, 2020
4
Full stop substituted by the Finance Act, 2020
5
Proviso added by the Finance Act, 2020
 9

(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:—
 10

(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.

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.
 11

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—

(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 2[11].

1
Inserted by the Finance Act, 2020
2
The figure “10” substituted by the Finance Act, 2020
 12

(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 2[:]
3
[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

1
Inserted by the Finance Act, 2020
2
Full stop substituted by the Finance Act, 2020
3
Proviso added by the Finance Act, 2020
 13

(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.

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.

28. Chief finance and accounts officer.— To assist

principal accounting officers in financial management, there shall be
chief finance and accounts officer positioned in Ministries and
Divisions and financial advisers' organization shall stand disbanded.
1
[(2) The Federal Government shall, within a period of six
months prescribe the procedures and role and functions of the office
of chief finance and accounts officer, in consultation with the
Finance Division, Auditor General of Pakistan and the office of
Controller General of Accounts.]

1
New sub-section (2) Inserted by the Finance Act, 2020
 14

29. Chief internal auditor.— (1) Within a period not

exceeding 1[eighteen] months from the date of commencement of
this Act, the position of chief internal auditor shall be created who
shall work under direct supervision of principal accounting officer.
Appointment, roles and responsibilities of chief internal auditors
shall be as may be prescribed under the Civil Servant Act, 1973
(LXXI of 1973) and in consultation with the Auditor-General.
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 Member
the Finance 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).]

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;

1
The word “twelve” substituted by the Finance Act, 2020
2
New sub-sections (2) and (3) added by the Finance Act, 2020
 15

(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 2[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.
31. Government banking arrangements.—(1) The
Federal Government shall maintain its Federal Consolidated Fund

1
The figure “35” substituted by the Finance Act, 2020
2
The figure “35” substituted by the Finance Act, 2020
 16

Account 1[and the Public Account of the Federation] in the State

Bank of 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 2[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—

1
Inserted by the Finance Act, 2020
2
The words “to establish a fund” substituted by the Finance Act, 2020
 17

(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.

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
 18

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.
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
 19

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.- 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.

1
Chapter VIII A inserted by the Finance Act, 2020
 20

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-
(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
 21

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.

(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.
 22

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[:]
2
[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
(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,
1
Full stop substituted by the Finance Act, 2020
2
Proviso added by the Finance Act, 2020
 23

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.