2. Finance constitutes a vital part of govt. activities
Public budgeting & financial management
the allocation of limited resources
Tool for planning and control
To meet ever increasing demands of the citizenry
Financial administration refers to
Formulation of Fiscal Policy
Fiscal Operations Management
Accountability
2
3. Derived from French term ‘Bougette’
“ Budget is a financial plan of govt. for a
definite period” (Taylor)
“ A budget is a financial statement prepared in
advance of opening of a fiscal year based on
estimated revenues and proposed expenditures
of govt. departments & public entities for the
ensuing fiscal year” (H R Bruce)
3
4. A govt budget is a statement of social priorities
It provides a society’s dimension of socio-
economic change and development.
Budget also reflects political exigencies of the
govt.
Equally important is its role in reforming
public sector.
Budget has a revenue dimension.
4
6. Fiscal policy is concerned with the impact of govt.
taxation and spending on the economy
Before Great Depression govt. bothered least about
market mechanisms (Free Economy)
Keynesian Economics
The ways federal govt. can influence the economy
By varying its own spendings
By raising or lowering taxes
6
7. Favorite govt. programmes are funded
Budgetary priorities are set mostly under
political influences
Two concepts
Where the money comes from
Where the money goes
7
8. A- Govt. own sources
B- Transfers from other governments
C- Loans and aids
A-
Individual income tax
Corporate income tax
Payroll taxes
Sales tax
Excise taxes
Property taxes
Wealth tax
Withholding tax
Other revenue sources
8
9. B- transfers from other governments
Intergovernmental transfers
National Finance Commission Award
C- Loans, Grants & Aids
9
10. Debt repayments
Defense and law & order
Law & Order
Admin. Expenditure
Govt. priorities
New conditions arise
New programs are proposed
Old programs are expanded
10
12. The budget as Managerial tool
Authorization of public programs by members
of parliament
Appropriations
Accounting and auditing of budget
12
13. A six step process;
Setting budget policy and initiatives (Budget Call
Circular)
Preparation of estimates
(Agency, Ministerial, National Budget)
Authorization
Implementation
Reporting & Monitoring
Review & Audit
15. Allen Schick suggests that budget has at least three
different purposes;
Planning
Management
Control
Incremental Budget
The Line-Item Budget
The Performance Budget
Out-Put Budgeting
Planning-Programming-Budgeting System
Zero-Based Budgeting
17
16. A budget in which the individual financial
statement items are grouped by cost
centers or departments.
It shows the comparison between
the financial data for the
past budgeting periods and estimated figures
of the current or a future period.
the budget of a given fiscal year (FY) is largely
decided upon by the existing budget.
17.
18. It is a response to an incremental budgeting
In contrast to incrementalism, the
allocation/funding is determined from a zero-
sum accounting method.
In government, each function of a
department's section proposes certain
objectives that relate to some goal the section
could achieve if allocated x amounts.
21. What is Performance?
What is fiscal performance ? (Value for Money), (Fiscal
Gains)
Fiscal Performance may be judged by
a program's ability to meet certain objectives that contribute to
a goal
as calculated by that program's ability to use resources (or
inputs)
Efficiently—by linking inputs to outputs—and/or
Effectively—by linking inputs to outcomes.
Economically- cheaper operations with quality
Allocation of scarce resources/funding depends on
determining which project maximizes efficiency and
efficacy.
22. “Performance budgets use statements of missions,
goals and objectives to explain why the money is being
spent. It is a way to allocate resources to achieve
specific objectives based on program goals and
measured results.” Carter
According to Segal and Summers, performance
budgeting comprises three elements:
the result (final outcome)
the strategy (different ways to achieve the final outcome)
activity/outputs (what is actually done to achieve the final
outcome)
Harrison elaborates:
PBB sets a goal, or a set of goals,
monies are “connected” (i.e. allocated) to these goals,
specific objectives are derived,
funds are then subdivided among them.
23. it requires to list down Key Performance
Indicators (KPIs) at the outset
linking these performance indicators to
resources
This is “where strategy and planning meet
execution and measurement”
24. A leader in the promotion of PPBS was Robert
McNamara's use in the United States
Government's Department of Defense in the 1960s.
It is the link between the line-item and program
budgets and the more complex performance
budget.
as a long-term planning tool, it links the program
under consideration to the ways and means of
facilitating the program.
25. This is meant to serve so that decision makers are
made aware of the future implications of their
actions.
These are typically most useful in capital projects.
The planning portion of the approach seeks to link
goals to objects or expected outcomes, which are
then sorted into programs that convert inputs to
outputs;
finally, the budgeting of PPBS helps determine
how to fund the program.
26. Planning, Programming, and Budgeting System
(PPBS) is in effect an integration of a number of
techniques in a planning and budgeting process
It typically divides the process into plans,
programs and budgets.
Used for identifying, costing and assigning
resources for establishing priorities and strategies
in a major program
for forecasting expenditure and achievements
within one financial year or over a longer period.
27. The Auditor General of Pakistan
The Controller General of Accounts
29
31. The Accounting Side
The Auditor General of Pakistan & the CGA
The AGPR
The Provincial AGs
the District Accounts Offices/TOs
The Executive Side
The Principal Accounting Officer
The Drawing & Disturbing Officer
32. Spending ministries are responsible for their
own budget estimates (Acquisition of public
funds)
A number of other government entities also
support during the budget process;
Planning Commission
EAD
The Accountants General
34. Control by FD
Control by Administrative Ministries
Control by Accounting offices
Audit and Parliamentary Control
35. The GoP has launched structural reforms in fiscal
management, budgeting, financial reporting and
auditing
The NAM and APPM– standardization of forms and
formats
PIFRA reforms – establishing linkage among key
stakeholders in fiscal management.
MTBF & MTDF
Fiscal Responsibility & Debt Limitation Act
36. The annual budget of the Federal Government
is based on a medium term budgetary
framework (MTBF). The MTBF is an approach
to budgeting that integrates policy-making,
planning and budgeting within a medium-term
framework.
The MTBF has provided the framework for
budget preparation in all Ministries/Division
and Departments of the Federal Government
since 2009.
37. The MTBF has three main objectives:
To further strengthen fiscal discipline by creating
and orderly framework for management of the
annual budget over the medium term;
To strengthen the alignment of federal resources
by the government to the government’s policies
and strategies;
To build the capacity in federal ministries to
prepare and manage their budgets in a manner
which provides cost-effective service delivery
(outputs) and efficient use of public funds (value
for money).
38. The MTBF involves preparation by line
ministries of three-year expenditure estimates
and by the Planning Commission (for the
development budget).
Each year, the MTBF process involves the
rolling forward of the previous MTBF estimate
by one year and the addition of a new outer
year.
39. Traditional incremental approach towards budget
estimates
Lack of professionalism and technical competence
Overlapping of activities and excessive
bureaucratization in budget making process
Role of FD in adjusting Demands for Grants
Weak Parliamentary control over appropriations
40. Css-2015
Q. No. 8. Describe the system of auditing in Pakistan and examine
its role in combating corruption and financial miss-management
in government departments.
Css-14
Q. No. 8. Write short NOTES on any TWO of the following: (10
each) (a) Woodrow Wilson’s contribution to Public
Administration (b) Planning Process in Pakistan (c) Zero-based
Budgeting
Css-2013
Q.8. Write notes on any TWO of the following:-
(a) Role of public administration in modern welfare state
(b) Ecology of Bureaucracy (c) Problems of coordination in
public administration in Pakistan (d) Performance budgeting
41. CSS-2011
Q.7. The flow and management of funds is the lifeblood of our
system of public administration. Explain the government’s
budgetary system. Is it an inherently political process?
Css-2012
Q. 5. What is performance budgeting? Bring out its merits,
limitations and difficulties. (20)
