Page 50 - CMA Journal (May-Jun 2026)

F oc us S ec t ion

For AI-driven nancial management, this means the
Table 2: Authoritative De nitions of Fiscal Transparency foundational data is still fragm ented, and audit
Institution Documented De nition Key Dimensions / Pillars processes would need to operate in a weak oversight
environment.
Fiscal transparency refers to the comprehensiveness, clarity,
International reliability, timeliness, and relevance of public scal 1. Fiscal Reporting Regional comparison also shows divergent trends,
Monetary Fund reporting, and to the openness of governments in their 2. Fiscal Forecasting & Budgeting
(IMF) scal policymaking process. (IMF Fiscal Transparency Code, 3. Fiscal Risk Analysis & Management with countries like Pakistan and Sri Lanka having
4. Resource Revenue Management
2019) successfully enhanced budget transparency (OBI)
while simultaneously experiencing signi cant declines
There is no formal de nition by World Bank/IBRD; however, 1. Complete in institutional and audit oversight mechanisms. While
For decades Public Financial Management operated record data but do not generate insight. The next World it describes it as "the disclosure of complete, reliable 2. Reliable (accurate and robust) nations like Bangladesh and China exhibit relative
(accurate and robust), timely, relevant, and good quality
with a reactive logic. Auditors reviewed spreadsheets frontier is intelligence. Systems must move beyond Bank/IBRD information (in accordance with International Public Sector 3. Timely stagnation across all governance metrics, others are
4. Relevant
months after transactions, inspectors agged issues recording to anticipating risks, agging anomalies in Accounting Standards (IPSAS)) about a country's public 5. Good quality information grappling with the trade-o s between increased
long after funds were spent, and fraud detection real time, and transforming oversight from reactive nances which contributes to government policy public information and weakening internal
became a post-mortem exercise that assigned blame review to proactive scal governance. decisions." accountability structures.
but did not prevent leakage. In 2024, global public OECD Budget transparency is de ned as the full disclosure of all 1. Clarity
2. Comprehensiveness
debt reached 102 trillion dollars, with developing Fiscal Transparency relevant scal information in a timely and systematic 3. Reliability
countries carrying 31 trillion. These nations paid a Fiscal transparency means openly publishing manner. (OECD, 2019) 4. Timeliness
5. Accessibility
record 921 billion dollars in interest, draining scal complete, reliable, and timely information on 6. Usability of public reporting
space and threatening essential public services. When government revenues, expenditures, and nancial 1. PI-4. Budget classi cation
every misplaced dollar adds to borrowing costs, obligations to strengthen accountability and support Public Expenditure Pillar two: Transparency of public nances. Transparency is 2. PI-5. Budget documentation
waiting for an annual audit is no longer an option. informed decisions. It is a cornerstone of sound public and Financial de ned as information on PFM that is comprehensive, 3. PI-6. Central government operations outside
nancial reports
consistent, and accessible to users, using six indicators.
Accountability
The International Monetary Fund has pointed to weak nancial management, emphasizing clarity, timeliness, Framework (PEFA) 4. PI-7. Transfers to subnational government
5. PI-8. Performance information for service
delivery
systems marked by poor data quality, outdated reliability, and accessibility of scal data. Transparency 6. PI-9. Public access to scal information
structures, and lack of real-time monitoring. Digital extends beyond nancial reporting to include 1. Pre-Budget Statement
transformation is reshaping GovTech into core public budgeting, scal risk management, and citizen access International Budget Transparency is considered "public access to 2. Executive's Budget Proposal
infrastructure that in uences resource allocation, to information. In developing economies such as Budget Partnership information on how the central government raises and 3. Enacted Budget
4. Citizens Budget
contract oversight, and audit targeting. Yet Pakistan, implementation remains uneven due to (IBP) spends public resources. It assesses the online availability, 5. In-Year Reports This shift from retrospective auditing to proactive pr
timeliness, and comprehensiveness."
digitalization alone does not ensure transparency. The institutional limitations, technical capacity gaps, and 6. Mid-Year Review On the other hand, Pakistan ranks 81st out of 195 prevention requires integrated scal data systems inte
7. Year-End Report
2025 GTMI report shows that while 193 countries have weak enforcement. 8. Audit Report countries in the 2025 Government AI Readiness Index, Quantifying the Cost of Fiscal Risk and capable of instant anomaly detection and predictive of
adopted Financial Management Information Systems, placing it in the lower tier globally. Pakistan is among Implementation Gap alerts, ensuring risks are addressed before they coord
only 30 percent publish reliable data on system use, Current Fiscal Transparency Measures It creates a critical disconnect where increased data FRMF have been established to monitor PPP liabilities, nations making progress, but it lacks the dedicated AI escalate into crises. decisiv
Treasury Single Account operations, or budget and Status disclosure is not yet translating into improved reliance on periodic, manual risk analyses limits the It is therefore unsurprising that cases of nancial Pakistan's Performance in AI Readiness funding, compute infrastructure, and cross-sector The Statement of Fiscal Risks FY2026-27 quanti es Global Standing and Practices by Conclus
major scal risks that could collectively widen
outcomes. Pakistan’s GovTech Maturity Index (GTMI) Pakistan's public nancial management (PFM) institutional accountability or real-time scal government's predictive capacity and necessitates the irregularities, embezzlement, and corruption, running and Fiscal Transparency coordination seen in top-ranked countries. Without Pakistan's scal de cit by up to 4.3% to 5.8% of GDP. Frontier Leaders Pakista
score of 0.679 is above the global average of 0.589, landscape is currently characterized by a fundamental oversight. urgent integration of AI-based early-warning systems. into trillions of rupees, continue to surface year after parallel improvements in data quality and institutional However, these risks are currently monitored through Global AI adoption rankings highlight the urgency of O
showing progress but also exposing gaps in tension between growing digital adoption and The current status of the Fiscal Transparency landscape Pakistan has made notable progress in scal year. Pakistan’s Open Budget Index (OBI) score rose from 30 oversight, AI will remain a technical add-on rather than periodic reporting and retrospective oversight rather Pakistan’s scal transformation. Leaders like the UAE
governance intelligence, as shown in Table 1. to 45 between 2023 and 2025, marking meaningful a transformative tool for nancial accountability. and Singapore achieved 63–70% adoption through The cen

persistent systemic fragmentation. Several initiatives shows transparency, publishing the Governance and Pakistan’s public nancial management failures are progress in scal transparency. However, this score than integrated real-time systems. This analysis

The challenge lies in integration. Many systems remain demonstrate a commitment to modernization, but the 1. Transparency vs. Accountability: While there is a Corruption Diagnostic and UNCAC review reports, systemic rather than isolated. The Rs. 376 trillion “typo” remains low in absolute terms, meaning most budget Furthermore, in terms of government readiness demonstrates how real-time AI-driven scal centralized strategies, interoperable data systems, and

fragmented, paper-based, or dependent on manual underlying governance architecture remains largely measurable strength in the increased publication of mandating digital asset declarations, and expanding e scandal exposed the absence of a uni ed scal data information is still not fully public or towards AI, South Asian peers India and China score far governance directly addresses each identi ed risk by direct integration of AI into nancial management.
Pakistan, ranked 92nd with only 11.4% adoption, must
workarounds, creating islands of digitalization that reactive and retrospective. procurement systems. In 2026, the Ministry of Finance higher, indicating stronger scal governance systems, enabling continuous monitoring, early warning, and AI-driv

scal reports and asset disclosures, the landscape architecture, while massive procurement irregularities machine-readable. whereas Pakistan, Bangladesh, and Sri Lanka cluster at proactive mitigation.
su ers from a weakness in prioritizing disclosure over introduced a Fiscal Risk Monitoring Framework for PPP and healthcare audit fraud revealed weak cost-control the bottom with scores between 45–48.

actual accountability, further hampered by limited projects, disclosing Rs. 472.3 billion in liabilities and systems. Audit enforcement remains ine ective, with The comparative scal risk statements for 2025-26 and

2026-27 show a worsening risk pro le, with tax
citizen-friendly reporting. guarantees, with plans for a national dashboard to 75 percent of recommendations unimplemented due Pakistan’s Performance Gap Indenti ed
strengthen oversight. However, gaps remain: no expenditures rising from 0.16% to 1.30% of GDP,

2. Digital Fragmentation: Although digital updated PEFA assessment since 2012, an Open Budget to the lack of real-time oversight. This gap contributes • Without synchronized improvements in legislative re nancing risk from 0.04% to 0.80%, and oil price
governance systems like e-PADS have expanded, the Index score stuck at 45/100 with missing citizen. to mounting losses in state-owned enterprises and the and audit oversight vulnerability doubling to 0.80%. Together, these risks
data remains trapped in "islands of digitalization" that unchecked growth of circular debt, now at Rs. 5.2 • Gains in transparency alone may be insu cient to represent potential losses of over 4–5% of GDP. While
lack integration, creating a signi cant gap for a Focused documents and audit reports published with trillion. Development spending is also chronically foster long-term institutional accountability. government strategies—tax base broadening,

centralized, AI-enabled, real-time scal data platform. long delays, limited accessibility, and weak follow up, underutilized, re ecting manual and fragmented expenditure e ciency, debt management, SOE
with only about 25 percent of recommendations monitoring. Collectively, these cases show that • Wide gap in Governance Readiness Index between reforms, and tighter guarantee oversight—are sound
3. Audit Inertia: Despite broad institutional coverage, implemented. Pakistan’s core scal challenge is the absence of Pakistan and leading Asian countries in principle, they remain periodic and reactive, relying

the audit function remains stuck in a cycle of delayed, In the IMF's November 2025 Governance and integrated, real-time intelligence, underscoring the on annual cycles and post-facto audits. Real-time
retrospective reporting and poor implementation of Corruption Diagnostic Report, several issues were need to shift from retrospective auditing toward • De ciencies in transparency, audit mechanisms, or AI-driven scal governance o ers a transformative

recommendations, highlighting the absence of identi ed, including that weak audit and oversight AI-driven continuous scal governance. governance frameworks alternative, embedding continuous intelligence into
continuous auditing and AI-based anomaly detection. structures place approximately Rs 40 trillion in federal • Need for structural reforms. revenue forecasting, debt monitoring, SOE oversight,

4. Predictive De ciency: While frameworks like the public funds at signi cant duciary risk. and risk modeling.

48 ICMA’s Chartered Management Accountant, May-Jun 2026