Page 40 - CMA Journal (May-Jun 2026)

F oc us S ec t ion

Debt Transparency and the Limits of attributed the elimination of preferential treatment to Senior Provincial Minister has reiterated that the NFC audits and reform of procurement processes; all of which
are integral parts of a modern PFM. But the evidence that
“should function as a partnership between the
Technical Reporting state-owned enterprises in procurements to the government and federating units, and all assessments we covered in this article reveals ve conditions that need
government
to
competition,
create
“distort
One of the recurring issues in the countries interaction opportunities for abuse and increase corruption risks” be done in a cooperative, fair and transparent manner” to be met for success to occur:
(Pakistan Observer, 2026). But this can only be realized
with IMF that it demands Pakistan to have more open (The Express Tribune, 2025). by using IMF-recommended e-enhanced means of scal So, rst, there needs to be genuine political ownership,
rather than implementation which is compliance-driven.
the debt. The total external debt of Pakistan was about But the e ectiveness of the audit conditionality greatly devices, as well as a commitment by all stakeholders to Political constraints cannot be ignored; the sequencing
USD 126 billion as of June 2025, of which USD 82.5 relies upon independence and capacity of the Auditor scal devolution, which unfortunately has been and domestic-prioritization and capacity of reforms
billion amount is external public debt, and USD 43.5 General of Pakistan (AGP). CG and auditing reports are dysfunctional since the expiration of the 7th NFC Award cannot be ignored as Allen (2026) wants them to do.
billion is government-guaranteed debt (Business not submitted to the Parliament on time, resulting in in 2015. A “performance-based reward and incentive Second, to implement digital reforms, such as the IFMIS,
The International Monetary Fund (IMF) has become a execution of the budget Recorder, 2025). The Ministry of Finance earlier has been inadequate audit coverage as well as lack of judicial model” is clearly vital for providing any incentive for the investments in change management, training and
central in uence in Pakistan’s economic policymaking. in the past. assuring that “Pakistan has implemented a strong and curiosity and follow-ups on audit paras, which are some provincial revenue generation and service delivery as infrastructure maintenance must be made in parallel (as
suggested by the Pakistan Institute of Development
Under the Extended Fund Facility (EFF) approved in internationally compliant debt-reporting framework of the major weaknesses of the AGP identi ed through Economics (2026), but this change requires political was abundantly shown in PIFRA). Third, debt
September 2024, Pakistan is required to implement 64 International experiences and that it has been recommended by IMF that the debt critical analysis of auditing practices in Pakistan (Ullah, commitment beyond the IMF programme cycles. transparency should not just be about reporting, but also
strategy be formulated for a medium-term period
reform measures, including complex and politically have been cited in favor ending 2025–28 and the reports be made half-yearly” 2023). Alternatively, the PIFRA evaluation by the World involve a veri able audit trail of IMF loan utilization and as
mentioned have an access to Parliament and the public.
sensitive Public Financial Management (PFM) reforms. of the possibility that (The News, 2025). But there have been glaring Bank identi ed the resistance of the civil service cadre to Civil Society, Media and Citizens’ Fourth, Audit and Parliamentary oversight need
While public attention often focuses on tax measures Integrated Financial de ciencies identi ed in parliamentary oversight. separating audit and accounting as well as the loss of Oversight: The Missing Link strengthening via independent capacity in AGP and with
and expenditure cuts, a less visible but equally Management Information During a Senate committee meeting in 2025, the project momentum when PIFRA champions went on empowered PACs having credible enforcement ability.
hindrances
the
project's
retirement
as
to
signi cant struggle concerns improving how the Systems (IFMIS) help to Economic A airs Division recognized that there was “no implementation (World Bank, 2005). Assessing the Less used of the tools to PFM accountability is civil society Fifth, robust civil society and media involvement should
government budgets, spends, and reports public funds. improve the scal transparent mechanism available to assure that loans institutional realities of governance, it is clear that these engagement. But as other countries have shown, a wide be made permanent to be a check on the discretion of the
Executive.
array of civic engagement, transparency platforms and
The IMF-backed PFM reform agenda includes measures discipline. When assessing availed from the IMF were being e ectively utilized for criteria would need to be accompanied by actions to media investigation can play a huge role in boosting scal It is a critical time for an ongoing journey of PFM reform in
budgetary support or for balance of payment needs”
such as digitalizing budget execution, establishing Zambia's IFMIS, Sikabanga (The Financial Daily, 2025), causing the chairman of the ensure independence for AGPs and that the PACs of accountability. It has been increasingly acknowledged by Pakistan. According to Daily Times 2025, the country has
Treasury Single Accounts, strengthening oversight of and Haabazoka (2025) Senate committee to state that he was “concerned on parliaments are e ective, as well as punitive measures the IMF which has published a Fiscal Transparency Code deep systemic aws in its legal and administrative
supplementary grants, and enhancing governance of indicated that the system the absence of a clear audit trail or transparent for non-compliance, if any changes are to be made. and an Open Contracting Data Standard that calls for framework, based on the country's Governance and
state-owned enterprises. Although ambitious on paper, has improved “accuracy accounting”. As Maxmudova (2025) reports, a successful reform public access to the information about the budget and Corruption Diagnostic Assessment conducted by the IMF.
procurement processes (ICMA, 2025). However, access to
implementation has been uneven due to weak of nancial reporting and This hindrance of sight is intentional. The overall design implementation with the support from IFIs has common PFM data by civil society is still quite limited in Pakistan. How much political economy constraints are recognized

institutional ownership and political economy compliance with the budgetary process” but faced a few of IMF governed surveillance is “a framework of ‘ nancial features of local ownership and locally adapted The Financial Accounting and Budgeting System (FABS) and addressed, and how much the current reform wave is
successful at doing so, will determine whether this is yet
constraints. Recent studies suggest that the success of challenges such as the downtimes, weak training discipline’ that holds executives of scal ministries, strategies in some countries, e.g. Ghana, Jamaica, system is used to prepare budgets and nancial reports another layer of unimplemented action plans or a
these reforms depends on political commitment, proper regulatory institutions and monetary policy authorities Rwanda. In contrast, if conditionality is put in without for the federal, provincial and district levels, but there are successful reform. Technical checklists and procedural
sequencing, digital readiness, debt transparency, and intensity, and reluctance to adopt the system. In the accountable to a surveillance mechanism through the investing in institutional capacity and political still access restrictions and the asset management milestones can be negotiated, and can be changed much
sustained civil society oversight. Without these same vein, Okpanachi et al. (2026) in their study on the leverage of global nancial capital” (The News, 2026). consensus, then the reforms that are carried out tend modules are underutilized (Shah, 2023). more easily. No external lender can be solely responsible
elements, reforms risk becoming exercises in technical impact of digitization on transparency in the public IMF conditionality turns into “a mechanism through not to be on the ground. The functions of the legislature are also limited. A World for recon guring incentives and accountability
compliance rather than genuine institutional sector of Nigeria found that the application of digital which global nance gains over domestic governance Fiscal Federalism and the NFC Bank case study (2005) concluded that the lack of a mechanisms to drive real reform, though political will is
essential to making this happen.
transformation. tools like IFMIS and e-accounting systems in uence on how budgets are designed, how institutions work Perspective sound scal reporting system is one of the reasons why References
and how public authority is exercised.” This leads to debt
the Government cannot manage its scal resources and
Research increasingly highlights that PFM reform is transparency and e ciency positively but warned that transparency reforms for Pakistan to improve the donors and international nancial institutions cannot • Business Recorder. (2025, November 1). Ascertainment of IMF lending utilisation.
https://epaper.brecorder.com/2025/11/01/1-page/1072955-news.html
fundamentally a political challenge rather than merely a while it can be done without an additional system, economy (both necessary but su cient) being at the Pakistan's scal federalism arrangement is a key evaluate the impact of their assistance. As a result, • Daily Times. (2025, December 14). IMF ‘conditionalities’ not new, just execution of passed
technical one. Pakistan’s experience re ects this reality, transparency cannot be guaranteed with e-payment same time instruments of foreign control – presenting enabler to understanding PFM reforms in the country. reliable scal data is also essential for parliamentary legislation: nmin. https://dailytimes.com.pk/1417425/imf-conditionalities-not-new-just-
execution-of-passed-legislation- nmin/
as governments have often complied with IMF alone. constant tension with national sovereignty and the The federally determined vertical and horizontal scrutiny, which is otherwise a ected by the lack of such • Daily Times. (2025, November 22). Pakistan agrees to IMF audit of supplementary grants.
data. The Public Accounts Committee (PAC) has had a
https://dailytimes.com.pk/1405054/pakistan-agrees-to-imf-audit-of-supplementary-grants/
programme reviews without achieving lasting changes Pakistan's story on digital PFM transformation, however, global nancial system. distribution of funds is taken care of by the National hard time in insuring that audit recommendations are • ICMA. (2025). Challenges in public nancial management. CMA Journal, July–August 2025, 32.
http://icmap.com.pk/ ipbooks/ManagementAccountant/maj/ les/basic-html/page32.html
in bureaucratic practices. The persistent does sound as a cautionary tale in this context, when it The political economy literature is clear in its treatment Finance Commission (NFC) Award, which is xed every followed and successive governments have giving scal • Maxmudova, S. (2025). The role of international nancial institutions in public debt management
in developing countries. Conference paper, Renaissance University of Education.
https://zenodo.org/records/14741471
“conditionality-ownership gap” remains a major of external conditionality in the management of debt. 5 years in terms of the Constitution. The Higher reports in a tardy and inaccurate manner. A • Okpanachi, G. E., Agobie, G. O., Atuluku, A. A., Odobi, D. O., Negedu, E. B., & Akor, C. A. (2026).
obstacle, as IMF conditionalities cannot substitute for comes to the Project to Improve Financial Reporting and As reported by Maxmudova (2025), the IFI-led debt Provincial Fiscal Transfer of 57.5 percent (increased by comprehensive study on PFM in Pakistan concluded Impact of digital tools on transparency and e ciency in public sector accounting practices in
Nigeria. Kashere Journal of Management Sciences, 9(1).http://www.journals.fukashere.edu.ng
/index.php/kjms/article/view/1183
genuine domestic ownership of reforms. The growing Auditing (PIFRA) that was supported by the World Bank initiatives have a number of issues to contend with the 7th NFC Award, in 2010) marked the rst milestone that “After 3 decades of e ort and billions of dollars of • Pakistan Institute of Development Economics. (2026). A critical path to scal federalism: Policy
number of structural benchmarks and reform conditions and launched in 1997. A World Bank (2005) case study including conditionality, dependence on debt, and a for devolution, yet led to what a recent study calls “a investments made across a number of programmes, the imperatives for the NFC Award remake(WorkingPaper2026:03).https://pide.org.pk/
research/a-critical-path-to- scal-federalism-policy-imperatives-for-the-nfc-award-remake/
lack of reform ownership by the local partner.
governments don't prepare and report reliable nancial
may also create compliance fatigue, prioritizing noted that the o cers of the Pakistan Audit & Accounts Governments might see reform as just the cost of structural trap of provincial reliance on Federal statements, which show accurate results of its policies • Pakistan Observer. (2026, February 28). Marriyum Aurangzeb terms NFC constitutional backbone
scal
of
Pakistan’s
https://pakobserver.net/marriyum-aurangzeb-terms-
federalism.
nfc-constitutional-backbone-of-pakistans- scal-federalism/
short-term scal consolidation over long-term Service resisted the splitting of the audit and account’s continued lending and lack an interest in reform as a transfers, discouraging receipts from own sources and and actions measured in terms of scal de cits, assets • Shah, S. A. A. (2023, August 24). PFM Act: A missed opportunity. The News.
https://www.thenews.com.pk/print/1103104-pfm-act-a-missed-opportunity
institutional capacity building. function, seeing it as a career risk, and original design self-interested policy decision (IMF, 2001). In Pakistan, e cient service provision” (Pakistan Institute of and liabilities” (Shah, 2023). • Sikabanga, N., & Haabazoka, L. (2025). Evaluating the usage of Integrated Financial Management
Information Systems (IFMIS) in enhancing public nancial management in Zambia. East African
Finance Journal, 4(2). https://econpapers.repec.org/article/cwkea ke/2025-12.htm
Advances in Digital PFM Systems: aws related to interactions with other functions in the formal compliance and substantive transparency have Development Economics, 2026). Therefore, to try to break this cycle, IMF conditionality • The Express Tribune. (2025, November 23). Budget implementation shake up imminent as govt
almost no correlation; formal compliance has improved,
engagesIMF.https://tribune.com.pk/story/2578752/ nance-ministry-prepares-reform-package-f
bureaucracy, which they control, caused the
should demand open budget data portals to be created,
or-imf
Promise vs. Practice implementation process to take over ve years. It has but an audit trail of utilization of the IMF loans is still not IMF experience attaches conditionality to federal PFM audit reports to be made available in a set time period, • The Financial Daily. (2025, November 1). EAD admits lack of transparent mechanism for tracking
systems, however with the proviso that the proposed
IMF
loan
utilisation.https://the nancialdaily.com/ead-admits-lack-of-transparency-in-imf-
available.
and legal access to real-time scal information. Civil
loan-utilisation/
Full digitalization is the centerpiece to the recently been observed that even though up to one reforms are adhered to by the provinces. There is not society organizations such as ICMA and Transparency • The News. (2025, December 18). This is patchwork economics.https://www.thenews.pk/
print/1387371-this-is-patchwork-economics
currently-sweeping PFM reform wave. The Ministry of billion dollars have been invested in PFM digitalization Audit and Parliamentary Oversight as a one single PFM system at the federal and provincial International, play an important part in promoting these • The News. (2025, December 14). Govt commits to bring public funds into TSA under IMF pressure.
https://www.thenews.pk/print/1412005-govt-commits-to-bring-public-funds-into
-tsa-under-imf-pressure
Finance has pledged to develop a digitized public programmes, the degree of automation remains Key Role level which has resulted in “disconnected systems” standards and keeping a close eye on the • The News. (2026, March 13). Circuits of indebtedness. https://www.thenews.pk/print/1404152
-circuits-of-indebtedness
which have been continuously pointed out by the
nance management plan, establish a special oversight con ned to a few modules and there is no evidence of Auditing and Parliamentary supervision are one of the World Bank and IMF as a PFM ine ciency and data implementation thereof. • Ullah, S. (2023). Critical analysis of auditing practices for ensuring nancial prudence in AGPR:
Challenges and way forward. Khyber Journal of Public Policy, 2(2).
committee, implement complete e-o ce and e-PADs big funding, and PFM systems with a simple ongoing “structural” benchmarks on the part of the IMF. inconsistency (ICMA, 2025). Conclusion • World Bank. (2005). Designing change in public nancial management: Lessons from Pakistan
(FinancialManagementNote).http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/
for the preparation of budgets, and do away with the old double-entry accrual accounting have been ignored by The current EFF has laid out the changes in Pakistan's Fiscal transparency and accountability in Pakistan need 223546-1192413140459/4281804-1209417227555/4945415-1213388329075/
FMNotePIFRAaug05.pdf
practice of data inconsistencies, under the guidance of all governments (Shah, 2023). Experience has shown Public Finance Management Act (PFM) to cap The latest push to accomplish 100% digitalization of certain environment, which is necessary but not
PFM systems will need to be taken to the provincial
the IMF (The Express Tribune, 2025). The intent is that even the best IFMIS will fail if they are not matched discretionary spending, and a special audit for the levels as well, where there is a technical and political su cient, provided by IMF-prescribed PFM reforms in
obvious: use technology to eliminate discretion, by change management, training of users and a supplementary grants given in the last ten years, challenge. Pakistan. The existing EFF has spurred the government
directed by the IMF (Daily Times, 2025). The IMF has also
improve transparency and plug loopholes in the commitment from leadership and user groups. towards digitalization, the reporting of debt, oversight on
38 ICMA’s Chartered Management Accountant, May-Jun 2026