The nearly two-week-long mission will scrutinise Pakistan’s laws, rules and practices before finalising a report to fix loopholes, said government sources. The four-member technical mission on Monday began discussions with representatives of federal and provincial governments.
Nino Tchelishvili from the fiscal affairs department is leading the IMF delegation, which will stay in Islamabad till November 21. Pakistan requested the IMF to field the mission to support data-driven decision-making in budget management.
The mission’s findings will be shared with IMF executive directors and sponsor countries, mainly Belgium, Denmark, the European Union, France, Germany, Saudi Arabia and the United Kingdom, said the sources.
Technical missions are separate from IMF programme missions. However, advisory reports of these missions eventually become structural benchmarks of bailout packages. The mission has arrived at a time when Pakistani authorities and IMF headquarters are finalising the Governance and Corruption Diagnostic Assessment technical mission report.
Pakistan wants the IMF to delete certain parts of the draft governance report before it is made public. The IMF has set the condition that Pakistan must release the report before the IMF board meeting for approval of two loan tranches totalling $1.2 billion in the first week of December.
Sources said the objective of the budget mission is to strengthen fiscal data governance to support data-driven decision-making in budget management. The mission will focus on fiscal data governance aspects to enhance data interoperability. It will also support implementation of the Government Integrated Financial Management Information System.
The mission will utilise a Fiscal Data Governance framework to gauge the compatibility of Pakistan’s budget.
The IMF fiscal governance framework outlines nearly three dozen practices across six areas. These mainly include legal framework; fiscal data strategy; data architecture, storage and privacy; digital technologies; organisational set-up; and internal controls.
Pakistan has long been taking advice from the World Bank and IMF to improve its budget practices. This includes loans from the World Bank to develop better systems. However, despite these efforts, it has not been able to accurately book expenses and revenues.
The Ministry of Finance last week released the fiscal operations summary for the July-September quarter of this fiscal year. The summary showed a total Rs448 billion worth of statistical discrepancy in the accounts of federal and provincial governments.
Details showed the federal government did not have visibility of Rs93 billion in expenses. The provinces’ accounts also had Rs354 billion in revenue-related discrepancies.
The finance ministry said the federal government’s discrepancy was related to decrease in commercial bank deposits. It also stemmed from variations due to time lag in reporting and book adjustments amongst the State Bank of Pakistan (SBP), Federal Board of Revenue (FBR) and Economic Affairs Division.
The finance ministry said the statistical discrepancy for Punjab was recorded at Rs209 billion due to “non-clearance, delayed payments or late presentation of cheques relating to assignment accounts – increase in commercial bank deposits and below-the-line inflows”.
The finance ministry said Sindh’s statistical discrepancy was Rs47 billion, Khyber-Pakhtunkhwa Rs33 billion and Balochistan Rs66 billion. These were due to movement in their commercial bank deposits.
Sources said the IMF mission will cover all aspects of the budget from allocations to releases and reporting. The mission will also hold discussions on Public Finance Management laws, fiscal data strategy and internal controls.
The IMF will look into treasury and cash management, including collection and booking of non-tax and tax revenues. Sources said there are also serious issues about booking of tax revenues, which often vary from Rs10 billion to Rs15 billion per month.
The IMF will scrutinise data architecture and storage facilities to ensure privacy. The mission will review the process of determining budget ceilings and bottom-up budget submissions, including budget planning and implementation.
There will also be discussions on provincial budget planning and execution. The mission will conduct a deeper assessment of electronic public procurement systems.
The central bank’s payment systems will also come under IMF review, sources said.
Sources said the IMF will also give recommendations on debt management and report, which remains fragmented. There are significant delays and accuracy issues.
Former Director General of Debt Management Office of the Ministry of Finance, Abdul Rahman Warriach, said last week that Pakistan’s public debt definition was below international standards. Few critical and major debt figures were not reported, including circular debt and pension liabilities.
However, the incumbent DG Debt Office Mohsin Chandna claimed that the debt definition was reflective of international standards.
Sources said the mission will produce a report and its findings will be subsequently implemented.