Budget Analysis and Fiscal Marksmanship: Evidence from Pakistan

Abstract

The role of the government budget estimates and how these initial budget estimates diverts from actual spending or revenue has gain attention after the post reform era. However, in Pakistan there are very few studies that focus on the issue of fiscal marksmanship (analysis of budget errors). Especially, budget errors are not analyzed at the composition level. Hence, keeping in view the importance of fiscal marksmanship, the objective of this study is to fills the gap in literature by analyzing the errors in government budgeted expenditures at composition or disaggregated level. To measure these deviations Theil’ U Inequality coefficient, MPE and MAPE are used. The results show that out of aggregate expenditures, government is making large errors in the estimation of development expenditures. Out of aggregate capital expenditures, large errors are being made in agriculture sector. While for recurrent expenditures, larger share of government budget estimate errors goes to subsidies sector. Hence, to increase the credibility of the budget government should focus to decrease these errors through better estimation techniques and well-coordinated institutions.