Budgets under the Shehbaz Sharif Government

[MenInG]

The federal government is expected to present a budget of Rs12.994 trillion for the next fiscal year 2022-23 on June 10 in the National Assembly.

There is a proposal to impose additional taxes worth Rs1.155 trillion in next budget while the revenue target is likely to be set at Rs7.25 trillion, which includes the collection of Rs843 billion in terms of customs duty.

The volume of the federal development budget is likely to be set at Rs700 billion and a sum of Rs1.58 trillion is expected to be allocated for defence.

A meeting of the Annual Plan Coordination Committee (APC) has been convened on June 4 to set important targets, including economic growth.

According to sources in the finance ministry, the meeting is likely to approve the GDP growth target for the next financial year.

The targets for inflation, exports, imports, remittances will also be set in the same meeting.

In addition, targets for agriculture, industry and services sector, investment and national savings will also be set in APC meeting.

The sources added that after that, the National Economic Council (NEC) would meet to discuss the annual uplift schemes and approve the Public Sector Development Programme (PSDP).

During the next financial year, it is estimated to pay Rs3.52 trillion in terms of loans and interest payments on them.

The sources said the preparations for the next budget have entered their final stage. They added that the budget formulation proposals were being finalised.

In February this year, the PTI-led government had confirmed that the federal budget deficit in the first half of current fiscal year shot up to Rs1.85 trillion, up by 33% in comparison with the same period of the previous year.

The deficit mainly widened because of higher expenditures as the revenue remained better than the budgetary estimates, showed the fiscal operations summary for July-December of current fiscal year.

During the first half of previous fiscal year, the federal budget deficit had been slightly lower than Rs1.4 trillion.

The annual federal budget deficit target was Rs4 trillion for the current fiscal year.

The PTI-led government had taken a net Rs1.02 trillion in foreign loans to finance the federal deficit.

External financing for bridging the deficit was 126% more than the previous year, underscoring the country’s increasing reliance on foreign players to meet its expenditure needs.

Another Rs826 billion was borrowed from domestic sources to bridge the budget gap.

A major reason behind the surge in deficit was the uptick in current expenditures, as the government spent a lower amount under the PSDP to meet a condition of the International Monetary Fund (IMF).

Current expenditures were equal to 92% of the total federal government expenditures and over 38% of them were spent only on paying interest on loans.

https://tribune.com.pk/story/2358928/rs13tr-budget-for-next-fy-set-to-be-proposed

 

[Extra_Cover]

This budget will be the final nail in the coffin of PMLN. It is bound to be a difficult budget and PMLN would ideally need a year if not more after the budget to soften its impact. So if by any chance after the budget PMLN loses NA then game over.

 

[MenInG]

Prime Minister Shehbaz Sharif on Monday said that there will be no slash in the budget of Higher Education Commission (HEC) for the fiscal year 2022-23 ARY News reported.

In a statement, the prime minister Shehbaz Sharif said ruled out any cut HEC budget for the year 2022-23 and vowed that Higher Education Commission will be made functional as it was in the previous tenure of the PML-N government.

Issuing directives to the Ministries of Planning and Finance regarding the HEC, the prime minister regretted that budget cuts in the last four years had a negative impact on education sector, saying that this process should be reversed.

PM Shehbaz Sharif directed the authorities concerned to focus on the revival of education projects in universities across the country and increase the number of programs to bring the education sector at par with international standards

Resources of Higher Education Commission should be increased significantly and all possible facilities must be provided to teachers and students, PM Shehbaz Sharif further directed authorities.

Earlier, Minister for Planning and Development Ahsan Iqbal clarified that the government would not reduce the budget of the Higher Education Commission (HEC) in the upcoming fiscal year.

Chairing a meeting here to review the HEC matters, the minister said the government was allocating more funds than what the HEC demanded.

The clarification comes after it emerged that the federal government was mulling over slashing half of the budget of the High Education Commission (HEC).

The newly established federal government had proposed cutting the budget of HEC by more than half to Rs30 billion for the fiscal year 2022–23, compared to the previous allocation of Rs65 billion.

https://arynews.tv/no-slash-in-hec-budget-for-fy23-pm-shehbaz-sharif/

 

[MenInG]

The government on Friday increased the defence budget for the outgoing fiscal year by nearly 6% to over Rs1.45 trillion in a bid to meet the needs of the armed forces, including their enhanced salary requirements.

The decision to increase the defence budget by another Rs80 billion was taken by the Economic Coordination Committee (ECC) of the Cabinet that in total approved Rs182 billion in supplementary grants.

The ECC also approved slapping a 10% regulatory duty on the import of petrol from China to curb the misuse of bilateral free trade agreement. Some oil marketing firms rerouted their imports through China to evade 10% customs duties.

The Ministry of Defence had demanded an additional Rs80 billion defence budget for “critical shortfalls” in addition to making adjustments in the budget for spending on the Jinnah Naval base, the Naval Base Turbat and multi-functional office building in the headquarters.

Federal Minister for Finance Miftah Ismail presided over the ECC meeting that approved Rs80 billion supplementary budget for the armed forces or to the extent of the actual additional expenditures being incurred. The finance ministry was of the view that the additional spending in fiscal year 2021-22 ending on June 30 will be less than Rs80 billion.

For the outgoing fiscal year, the National Assembly had last year approved a Rs1.373 trillion defence budget. With the raise in the spending ceiling, the next fiscal year’s defence budget may also now be higher than the earlier estimated figure of over Rs1.55 trillion.

In total, the Ministry of Defence got Rs153 billion or 11.8% additional money in this fiscal year over the revised budget of the previous year, which is equal to the average inflation rate in Pakistan. The defence spending will be equal to 2.2% of the Gross Domestic Product, excluding expenditures on the armed forces development programme.

In July last year, the previous government had given 15% special allowance of the running basic pay to all the ranks of the armed forces, which jacked up the army budget requirements by another Rs38 billion per annum.

The ECC also approved Rs621 million for gas supply to the Pakistan Steel Mills (PSM). It was submitted that due to closure of the production activity in Pakistan Steel Mills (PSM), low flame gas of two MMCFD was being supplied to PSM primarily to preserve the Coke Oven Batteries and refractories kilns with an average monthly bill of Rs80 million.

The ECC revised the cess rates on all types and varieties of tobacco notified by the federal government on July 14.

The Ministry of Communication submitted a summary on funds required for clearing liabilities of the utility companies and agency partners of the Pakistan Post Office Department (PPOD). The collection of utility bills is one of the agency’s functions performed by the PPOD and the amount thus collected was deposited in SBP’s Central Account-1. Liabilities to the tune of Rs62.3 billion have been accumulated till March 31, 2022. The Rs25 billion had already been approved in April for payment to utility companies.

The ECC after detailed discussion granted permission to release funds amounting to Rs37.33 billion for clearing the remaining outstanding liabilities of the utility companies and agency partners by the PPOD after verification of claimed amount by the SBP.

The Ministry of Commerce submitted a summary on levy of regulatory duty on import of Motor Spirit (MS). It was informed that the import of MS was subject to 10% customs duty under the 5th Schedule of the Customs Act, 1969, but it was subject to 0% under China-Pakistan Free Trade Agreement (CPFTA). Those availing the FTA exemption paid zero customs duty while others paid 10% customs duty. The ECC after discussion, in order to address this anomaly, allowed levy of 10% regulatory duty on import of MS. However, where 10% customs duty was paid on import of MS, it would be exempted from levy of regulatory duty.

The ECC also deliberated and approved a summary submitted by the Finance Division on policy for grant of honorarium with direction that the proposal may be redefined as the ECC chairman in his discretion could award additional honorarium to the employees of the federal government.

The ECC approved Rs40.5 billion for the Ministry of Commerce for payment claims cleared by the SBP, under previous government’s duty drawbacks schemes (DLTL/LTLD) of textiles and non-textiles sectors. It allowed Rs2.2 billion payment to the Federal Directorate of Education. About Rs4 billion was given to the Higher Education Commission under the World Bank project – Higher Education Development in Pakistan.

The ECC also approved Rs15 billion to meet the requirements of the Ministry of Interior.

Express Tribune

 

[Vatta]

After their wildly successful performances, I hear that Billy Smart's Circus is wanting its clowns back from the Cherry Blossom Government.

 

[MenInG]

Amid serious fiscal constraints, the government on Saturday approved allocations to the tune of Rs2.184 trillion under the national development spending plans for next fiscal year -- higher by Rs347 billion or one-fifth over the outgoing year’s revised uplift budgets of the Centre and the provinces.

Totally disregarding the country’s thin fiscal position, the PML-N-led federal government has proposed Rs60 billion for parliamentarians’ schemes. It is 30% higher than the outgoing fiscal year’s revised spending under this head.

The Annual Plan Coordination Committee (APCC) approved a national development outlay of Rs2.184 trillion, which is higher by Rs347 billion or 19% over this year’s downward revised budget, according to a statement.

The four provinces will spend Rs1.384 trillion from their own resources while the federal government has allocated Rs800 billion for the federal Public Sector Development Programme (PSDP).

Of the Rs2.184 trillion, an amount of Rs346 billion or 16% will be borrowed from abroad to fund these schemes. The federal government will take Rs70 billion and the four provincial governments have a plan to take Rs276 billion in foreign loans in the next fiscal year.

The proposed federal PSDP is higher by Rs250 billion or 45% over this year’s revised budget of Rs550 billion. This is despite the fact that the finance ministry is struggling to spare even Rs700 billion for the next fiscal year’s PSDP, indicating that all resources will not be provided.

The four provincial governments have indicated Rs1.384 trillion spending plans -- higher by Rs97 billion or 7.5%.

The Punjab government has proposed spending Rs585 billion on development in the next fiscal year, down by Rs45 billion or 7%. However, the Sindh government has proposed Rs355 billion under the annual development plan, up by 64% or Rs138 billion over this year’s revised allocation.

The Khyber-Pakhtunkhwa government too has indicated Rs300 billion spending plan -- up by Rs54 billion or 22%, but the Balochistan government has shown a 21% reduction in spending for next year, down from Rs180 billion to Rs143 billion.

Pakistan and the International Monetary Fund (IMF) have not yet agreed on next year’s macroeconomic framework and one of the outstanding issues is the lack of consensus on provincial cash surpluses.

The budgetary plans that the four federating units have shared with the APCC suggested that the provincial governments will open their purses before the next general elections.

The APCC has approved 54% of total PSDP or Rs433 billion for the infrastructure sector. The transport and communication sector will receive Rs227 billion with some major allocations made for road projects passing through Balochistan.

The energy sector has been given Rs84 billion. The water resources will receive Rs83 billion, including Rs18 billion for Diamer-Bhasha dam and Rs55.4 billion for the Dasu hydropower project.

Read Defence budget hiked by 6% to ‘offset inflation impact’

The social sector bagged Rs144 billion or 18% of the federal budget. The High Education Commission received nearly Rs42 billion after it managed to put pressure on the government that initially wanted to allocate Rs30 billion. The health ministry has been given Rs12 billion.

The agriculture sector has been given Rs13 billion or 1.6% of the budget.

The Rs800 billion federal PSDP was equal to 46% of what the ministries had demanded from the government for the next fiscal year. The major chunk of demands was received from the water resources ministry that sought Rs279 billion but was allocated Rs97 billion.

The National Highway Authority demanded Rs317 billion but would receive Rs121.5 billion or 38% of its demand.

The Pakistan Atomic Energy Commission (PAEC) placed a demand of Rs175 billion but the government has allocated Rs25.6 billion or less than 15% of the demand. Out of Rs25.6 billion, a major chunk -- Rs15.8 billion -- has been allocated only for Karachi’s nuclear power plants.

The Power Division demanded Rs98 billion and received Rs50 billion or half of its demand.

The Aviation Division had asked for Rs30 billion but was given Rs2.4 billion, including a mere Rs2 billion for the Gwadar International Airport project.

For K-P’s merged districts, the government has approved an allocation of Rs50 billion for the next financial year. The up-scaling green Pakistan programme has been given Rs9.5 billion.

The provinces and special areas have been allocated Rs96.5 billion aimed at accommodating allied parties' development projects and finishing a few ongoing schemes. Out of this, Punjab will get Rs16.7 billion, Sindh Rs1.4 billion and K-P Rs3.6 billion.

Balochistan will receive Rs20.4 billion, as some schemes of the coalition government’s ally in Dera Bugti, which began this year and will be finished next year - have been given full allocations.

The two road projects of Dera Bugti will get the full remaining sum of Rs624 million.

Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan have been given Rs29.4 billion and Rs25 billion for development respectively.

The Pakistan Railways has been given Rs33 billion for the next fiscal year. However, the Mainline-I project of the China-Pakistan Economic Corridor (CPEC) has been given mere Rs5 billion for the next fiscal year, indicating that the PML-N government does not have a plan to start work on the strategically important project. The total cost of the project is Rs1.1 trillion.

The government has allocated Rs90 billion for “Viability Gap Funding” to encourage private sector’s investment in infrastructure

Expres Tribune

 

[MenInG]

ISLAMABAD: Three options to jack up salaries from 5-15% in the budget for the incoming fiscal year are under the government's consideration, amid the Pay and Pension Commission's failure in submission of a report ahead of the next budget which resulted into the prime minister's decision to grant another extension, The News reported Monday.

The Finance Division issued a notification to announce the grant of another extension to the Pay and Pension Commission, according to which the timelines for the submission of the Commission's recommendation have been extended till June 30, 2022.

Top official sources said that the former PTI-led government had granted a disparity reduction allowance of 15% for the officials posted from grade 1 to 19, with effect from March 1, 2022. However, the new PM Shehbaz Sharif-led government announced another 10% raise in the pension and increased the minimum pay to 25,000 per month.

With this background, the Finance Ministry official said that the government was working on three different options for jacking up salaries up to 5%, 10%, and 15%. The salaries of grade 1 to 19 might be increased as another 5-10% adhoc allowance in the upcoming budget. The salaries of grade 20 to 22 employees might be increased 10-15%.

Besides, the government may increase pensions by 5-10% in the wake of rising inflationary pressures. The Ministry of Finance’s Regulation Wing has completed its internal work and decided to hire an actuary to do the spadework. It was also decided to constitute a Pay and Pension Commission to get its recommendations as well.

The commission was constituted by the PTI led government in April 2020 and former Secretary Finance Abdul Wajid Rana was made its chairman. However, he had resigned and then former bureaucrat Nargis Sethi was appointed as Chairperson Pay and Pension Commission. Later, she also resigned.

Then, the government appointed Zafar Ahmed Khan as Chairman of the Pay and Pension Commission. The commission had sought two extensions so far but failed to come up with its recommendations.

The terms of reference of Pay and Pension Commission included the text box, which is to study the adequacy of existing basic pay scale system and to evaluate the current salaries of government employees throughout the Federation — including the provincial government — and to recommend measures for its improvement and uniformity.

It also includes to make recommendations for the streamlining of existing classification from BPS 1-22, study the separation of existing basic pay scales for specialised departments/occupations/cadres, review of special scales such as management grades, management position scales (MP Scales), special professional pay scales (SPPS); project pay scales, and propose measures for uniformity and improvement, review of admissible regular allowances, special incentives and all other allowances with a view to highlight prevalent distortions and recommend corrective measures, review of existing perks and facilities and make recommendations, including possibility of their monetisation.

On pension, the commission was assigned to highlight existing distortions and anomalies in the Pension Scheme and recommend remedial measures. It was also tasked to verify the sustainability of the current model after critically evaluating future liabilities through an actuarial study, evaluating alternate systems of pension like defined contribution and setting up of pension funds in light of international best practices and recommending a system with clear timelines that is more efficient and sustainable as per the available resources.

It was given the mandate to review the existing incentive regime (honorarium and special rewards) and recommend improvement in it, to evaluate and recommend legislative measures to protect and streamline the Pay, Pension, and Allowances regime for government employees, the commission may, if so desired by the government, make interim recommendations to provide interim relief, pending the submission of its final report. The commission shall have power to co-opt any person or agency to assist it in its deliberations.

GEO

 

[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I will address pre-budget seminar tomorrow that brings various stakeholders together to discuss challenges & opportunities our economy presents. We aim to refine ideas for integrated national strategy that encompasses business, IT, agriculture with focus on enhancing exports.</p>— Shehbaz Sharif (@CMShehbaz) <a href="https://twitter.com/CMShehbaz/status/1533862506095312896?ref_src=twsrc%5Etfw">June 6, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[Kianig89]

Tax on cellular networks to be increased in budget Rs. 100 consumer will get 53 another robbery on the way

 

[MenInG]

ISLAMABAD: To discuss ways to reach a consensus on economic policies, Prime Minister Shehbaz Sharif will speak at a one-day pre-budget business conference today (Tuesday) taking all stakeholders on board, The News reported.

The conference will bring together leaders from a wide range of industries on a single platform for a vibrant and interactive debate, in line with the prime minister's vision of the Charter of Economy and an inclusive economic policy-making approach. The PM will consider the participants' ideas for a flourishing economy with a strong foundation for development.

The conference will centre on the PM's vision of a Pakistan where people's social, political, and economic rights are protected. The conference will try to develop measures to tackle people's economic struggle and assist the country get back on track to a better future through mutual consultation.

Industry executives from agriculture, information technology, textiles, manufacturing, and other sectors will speak at the one-day conference. Participants will evaluate Pakistan's current economic difficulties and come up with short, medium, and long-term remedies.

The event will evaluate options and opportunities for employment and business for all, thereby eliminating poverty and providing a decent standard of living for all. This initiative will also welcome recommendations from the participants for the budget 2022–23.

Through an engagement process among stakeholders from the business community, it will also formulate proposals for the budget for 2022–23.

During a separate meeting with a group of Japanese companies, Prime Minister Shehbaz Sharif had said that his government was working to improve trade and investment ties with Japan.

He said hurdles would be removed in the way of the smooth functioning of the investment infrastructure. The prime minister, in this regard, set up a committee to resolve the issues faced by the Japanese companies in Pakistan on a priority basis and sought a report within a week.

PM Sharif termed Japan a close friend of Pakistan and lauded the fact that the country was one of the largest donors to Pakistan in public sector development. He said the generous Japanese donations amounted to $13 billion in seven decades and contributed immensely to the development of Pakistan.

He mentioned that Japan's International Cooperation Agency (JICA) played a positive role in providing Pakistan with the technical support to grant aid and bilateral loans through the conduct of technical feasibility studies.

He recalled that in the 90s, several Japanese companies were operating in Pakistan and mentioned that in 2016, the agreement with automobile manufacturing company Suzuki resulted in providing employment to thousands of people. The prime minister appreciated the manner in which Japan focused on improving the public development sector, adding that he was personally inspired by the principles of Japanese business.

He stressed immediate steps to exempt the Export Processing Zones from taxes. He invited the Japanese companies to invest in Pakistan’s diverse sectors, including coal in Thar, iron ore in Chiniot, renewable energy, infrastructure, and public transport.

PM Sharif said Pakistan and Japan were celebrating the 70th anniversary of the establishment of diplomatic relations in 2022, and added that by promoting cooperation, Pakistan could benefit from Japan’s experience.

He said Pakistan attached great importance to its bilateral ties with Japan and wanted to further expand cooperation in various fields. The Japanese companies expressed full confidence in the business-friendly policies of the current government under the leadership of Sharif.

They were also very interested in putting more money into making electric cars, processing food, Special Economic Zones, textiles, telecommunications, and making auto parts.

The delegation included the representatives from Japanese countries; Japan’s ambassador, Mitsuhiro Wada; and the Commercial Attache of Japan. Federal ministers, including Khurram Dastagir, Miftah Ismael, Makhdoom Murtaza Mehmood, and the officials concerned, attended the meeting.

GEO

 

[Major]

Tax on cellular networks to be increased in budget Rs. 100 consumer will get 53 another robbery on the way

How is a robbery? Is the awaam filing taxes?

 

[MenInG]

Addressing the pre-budget seminar on Tuesday, finance minister Miftah Ismail said on Tuesday that he was "very confident" about the deal with the International Monetary Fund (IMF).

A day earlier, the minister said that the government did not have any plans to impose a financial emergency in the country or freezing the foreign currency accounts or the Roshan Digital Accounts (RDA).

Miftah quashed rumours about financial emergency being spread on “social media by bigoted” elements. He stressed that after the increase in the petroleum products price, the country was emerging out of financial crisis.

“The Prime Minister will at some point announce austerity measures to save government expenditures. But there is not going to be any declaration of financial emergency. Nor is there any financial emergency,” the minister wrote in his tweet.

 

[MenInG]

Finance Minister Miftah Ismail predicted on Tuesday that country's GDP will grow by 5%-6% and the government would control the high rate of inflation.

The minister's remarks came as he addressed the pre-budget seminar, in which he also revealed that the government has prepared a progressive fiscal budget, with the deficit reduced to below 5%.

The minister further stated that he was "very confident" about the deal with the International Monetary Fund (IMF).

“We have taken tough decisions; it is not easy for any prime minister to allow such an increase in fuel prices but we were taking losses. We incurred more than 120 billion rupees in losses per month,” the minister stated.

The IMF agreement was signed by the PTI government and stipulated the removal of fuel subsidies, he said.

'Successful negotiations'

Speaking of the current government's 'successful' negotiations, Miftah said that the government had re-engaged with China, Saudi Arabia and the United Arab Emirates (UAE) among other countries.

"China agreed to re-roll their programme of $2.4 billion after Foreign Minister Bilawal Bhutto met with Chinese prime minister [Li Keqiang]. China has reduced the interest rate from 2.5% to 1.5% which will save the country $23 million," Miftah added.

He further stated that the KSA had also agreed to increase the “line of oil” provided to Pakistan and provide the country revolving credit of 100 million dollars.

Miftah stated that the incumbent government inherited a country that had the third highest inflation in the world, with 20 million people who fell below the poverty line, and mass unemployment.

He added that the country's debt servicing had increased exponentially due to the volume of loans the PTI government took on.

The finance minister also discussed the targeted subsides announced - a one-time Rs2,000 per family subsidy for 14 million households. The Rs2,000 will be given in June and it will cost the government Rs28 billion. Besides 7.3 million BISP beneficiaries, the package covers 6.7 million households with poverty scores below 37.

'Inherently flawed economy'

The minister stated that the model of Pakistan’s economy was “inherently flawed”. “We make the rich richer,” he said.

Miftah stated that the country’s industry and consumers rely heavily on imports, which push the current account into a deficit. He added that Pakistan’s economy emphasizes on import substitution and not export promotion, a model that that has persevered in various developing countries.

The minister also commented that the country has no major export other than textile, as the agricultural sector fails to remain productive.

Express Tribune

 

[MenInG]

Prime Minister Shehbaz Sharif on Tuesday stressed the need for creating a charter of economy, saying that all stakeholders should collaborate on formulating a framework for achieving economic growth.

He made the remarks while addressing the day-long Pre-Budget Business Conference organised by the government to explore avenues of consensus-based economic measures, which was attended by top economists, industrialists and businessmen.

During his speech, the premier said that in order to enhance exports and agricultural yield, financial management was imperative.

“All of us will have to move collectively. The government will need guidance from stakeholders and experts. The government will form a taskforce on agriculture and exports for formulating comprehensive plans,” he said.

PM Shehbaz said his government had around 15 months to undertake short and medium-term measures for the economy.

He regretted that Pakistan lagged behind other nations, while the rest had excelled by following their development plans.

He said Pakistan was blessed with talented people who were capable of replicating India's success in the IT industry. PM Shehbaz said he had tasked Minister for Information Technology Aminul Haque with taking IT exports to $15bn over the next two years.

"We cannot progress until we set ambitious targets," he stressed.

He went on to say that development plans could not be realised until there was political stability. The premier also highlighted the need for focusing on exports and improving the agriculture sector.

He went on to say that he was trying to "repair" ties with friendly countries, which had soured during the previous government's tenure. "I have spoken to China, Japan, Turkey and other countries and invited them to invest in Pakistan."

He urged the business community to extend their support to him in this endeavour.

DAWN

 

[MenInG]

ISLAMABAD: The National Economic Council (NEC) on Wednesday set next year’s economic growth rate target at five per cent with a Rs2.184 trillion worth of consolidated public sector investment — almost unchanged from Rs2.135tr development allocation in the current year.

The meeting of the NEC — the country’s highest economic decision-making body — was presided over by Prime Minister Shehbaz Sharif. Chief ministers of three provinces other than Khyber Pakhtunkhwa and other members of the council attended.

The participants unanimously decided that every effort would be made to reach 6pc growth rate next year.

Officials said the consolidated size of the national development budget was set at Rs2.184tr, which included the federal allocation of Rs800 billion against the current year’s allocation of Rs900bn, although the meeting was informed that total federal expenditure would stand restricted at Rs550bn.

The provinces would separately formulate their annual development plans worth Rs1.384tr in aggregate against Rs1.235tr for the current year, showing an increase of over 12pc.

The council also unanimously decided that 60pc of the federal public sector development programme (PSDP) would be spent on ongoing development projects and the remaining 40pc on new projects. This would help accommodate maximum projects of the coalition partners ahead of general elections next year, an official said.

An official statement quoted the prime minister as telling the NEC members that the top priority for next year’s development agenda would be to improve the lives of the people by utilising the full capacity of the federal and provincial administrations.

The government would focus on developing infrastructure, improving governance and ensuring uninterrupted and affordable energy, quality education and basic health facilities for all without discrimination.

The NEC was a representative forum of national unity and cohesion, he said, adding that its key theme of coordinated efforts by the centre and the provinces for national harmony should be guiding principles.

He said “unwise” policy measures taken by the previous government had created a situation where the country was now facing both internal and external economic challenges like poverty, inflation, unemployment and instability.

The NEC also approved the Macroeconomic Framework for Annual Plan 2022-23, which envisaged 5pc growth rate on the back of agriculture (3.9pc), manufacturing (7.1pc) and services (5.1pc) sectors.

The investment will also be moderated because of fiscal and current account compression, whereas inflation will stay in double digits (11.5pc) as global inflationary pressures will not taper off very quickly.

The projected growth of 3.9pc in the agricultural sector mainly depended on the revival of cotton and wheat production, consistent availability of water, certified seeds, fertilisers, pesticides and agriculture credit facilities.

Revival of both these crops will not only support growth momentum but will also ease out balance-of-payments pressures through fewer import requirements.

Under the annual plan, elevated industrial performance over the past two years is expected to consolidate, whereas augmented production capacity during these years will anchor the growth momentum. However, the growth momentum will be moderated owing to fiscal consolidation efforts.

The broad-based revival of large-scale manufacturing is projected to sustain growth at 7.4pc during 2022-23. There are downside risks of a high cost and low supplies of energy inputs, exchange rate-related uncertainties and Russia-Ukraine war-related supply shocks, which have the potential to impact the manufacturing sector. The overall manufacturing sector is projected to grow 7.1pc during the next fiscal year.

The service sector will also be subject to moderation in growth and is targeted to grow by 5.1pc in 2022-23. Expected performance in both agriculture and industrial sectors will complement the targeted growth in the service sector.

The investment level for the year 2022-23 is expected to decrease slightly to 14.7pc of GDP due to stabilisation and an uncertain economic environment.

Besides, fixed investment is expected to grow by 13pc on a nominal basis. However, as percentage of GDP, it will marginally fall to 13pc of GDP, while the national savings rate is targeted at 12.5pc of GDP.

Published in Dawn, June 9th, 2022

 

[MenInG]

Former finance minister Shaukat Tarin said Thursday that the upcoming budget for the fiscal year 2022-23 will not be people-friendly, ARY News reported.

While talking to the ARY News programme ‘Power Play’, Shaukat Tarin warned of a new wave of inflation that will hit the Pakistanis after the budget 2022-23. He said that Miftah Ismail had already hinted at another rise in the inflation rate.

He detailed that unemployment will increase after a hike in the interest rate and it will lead to the closure of factories. He predicted that the interest rate would fly high up to 25 per cent and inflation up to 30 per cent.

Tarin added that it would be a big achievement of the coalition government to register 2 to 3 per cent economic growth.

The former finance minister said that the coalition government will only impose new taxes including property tax which will not support the economy. He added that the coalition government will seemingly accept the conditions of the International Monetary Fund (IMF).

“PTI government had not violated the IMF agreement. We were going to sign an agreement with Russia for cheap oil. Miftah Ismail is not pursuing the agreement with Russia due to being afraid of the United States (US). Russian oil will reduce the price of petrol up to Rs50 per litre.”

He recommended the federal government increase salaries by up to 35 per cent besides reducing the state expenditures.

ARY

 

[Sher Khan]

10 billion Rupees pledged to tackle Climate change. Free Laptops for high achieving students. 15 percent increase in salaries of Govt employees. Fairly people-centric budget.

 

[MenInG]

The coalition government headed by the Pakistan Muslim League-Nawaz (PML-N) has started presenting its “growth and investment-oriented” budget for Financial Year 2022-23 in the National Assembly.

Miftah Ismail, while presenting the budget proposals, said that out of total Rs9.502 trillion budget, an amount of Rs3,950 billion had been allocated for debt servicing and Rs800 billion earmarked for the Public Sector Development Programme (PSDP 2022-23).

He said an amount of Rs1,523 billion had been earmarked for defence expenditures, Rs550 billion for civil administration and Rs530 billion for pensions. Similarly, Rs699 billion had been proposed for providing targeted subsidies to the poor segments of society.

Read more: Country’s defence budget allocation mere pennies compared to India

Miftah said that owing to the high petroleum prices, people earning less than Rs40,000 will be given relief of Rs2,000 per month, which will continue in FY23 budget as well.

Total budget outlay Rs9.5 trillion
Govt employees’ salaries increased by 15%
Subsidies on sugar and wheat flour proposed
Taxes on over 1,600CC cars will be increased
Taxes on cigarettes increased

He said that taxes will be imposed on goods that are mainly consumed by the rich to provide relief to the common man.

The finance minister said that the federal government has established pension fund and released Rs10 billion for it.

Miftah Ismail said that Prime Minister Shehbaz Sharif wanted to extend maximum relief to the people, especially the poor during these difficult times.

“For this purpose, the government has taken several steps to provide subsidy and assistance. However, the continuation of this (relief) will require more resources,” he added.

He emphasised on the need to impose special tax on higher income earnings in order to divert the resources to the poor people.

“Our budget philosophy is to enhance agriculture production, especially the edible oil in order to reduce agricultural imports. We need to promote industries to bolster exports and earn valuable foreign exchange,” he added. This, he said, will help address the issue of balance of payments on permanent basis.

15pc increase in salaries of govt employees

The finance minister announced that owing to the high inflation in the country, the government has increased salaries for its employees by 15 per cent, adding that the pensions have also been raised by 5 per cent.

Also read: With Rs9.5tr outlay, govt to rely on loans

The minister said that FBR revenue has been estimated at Rs7,004 billion for the next fiscal year. “This includes Rs4,100 billion share of provinces. The net revenue with the federal government will be Rs4,904 billion. The non-tax revenue will be Rs2,000 billion.”

The finance minister said that austerity is the top priority of the present government. “Reducing government's expenditure is part of this budget and we are taking concrete steps in this regard.”

He said that the petrol quota of cabinet members and government officials will be reduced by 40 percent. “There will also be ban on foreign tours under government expense, except the important ones.”

Tax exemption slab for salaried class increased from 0.6m to Rs1.2m

Miftah said that the tax exemption slab for salaried class has also been increased from Rs600,000 to Rs1.2 million. “This step will benefit the salaried people and enhance business activities,” he added.

He said that tax on profit of Saving Certificates, Pensioners Benefit Accounts and martyrs family welfare accounts has been slashed from 10 to 5 per cent.

According to the vision of the premier, the finance minister said that a medium term macro economic framework has been prepared to put the economy on the path of development.

He expressed the confidence that the government will be able to put the economy in the right direction through the framework. “Our biggest challenge is to achieve growth without Current Account Deficit. Therefore, at least five percent will be achieved without disturbing the balance,” he added.

The minister said that a new fixed income and sales tax system is being introduced for small retailers. “Under this system, tax ranging from Rs3,000 to Rs10,000 will be collected through electricity bills. This will be a final settlement and FBR will not be entitled to ask any questions about this tax,” he added.

Miftah said that there is a proposal to increase initial depreciation charges for industries and other businesses from 50 per cent to 100 per cent in the first year.

Besides, he said all the taxes from industrial units during import of raw material will be considered as adjustable to protect working capital of the business community.

The finance minister said that taxes on cigarettes have been increased. ”Targeting Rs200 billion from cigarettes in FY23 compared to Rs150 billion in FY22,” he added.

Govt to form National Youth Commission

The finance minister announced formation of National Youth Commission in order to exploit the potential of the youth, adding that various schemes have been proposed for the youth.

He said that a coordinated system is being introduced to enhance the role of educated youth in the country's development. “More than two million job opportunities will be provided to the youth through youth employment policy.”

Read more: IT exports surge to $1.9 billion, have potential to grow further

Miftah said that a scheme will also be started to promote youth entrepreneurship under which interest free loans of up to Rs500,000 to Rs25 million will be provided on easy installments.

He said that 25 per cent quota has been fixed for women in the scheme, adding that women will be given training on priority basis in hi-tech in order to ensure the economic empowerment.

He further said that youth development centres will be established across the country.

According to the government, this budget would lay “the foundation for future growth budgets” with its focus on exports and agriculture.

Express Tribune

 

[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Congratulations to Federal Minister for Finance <a href="https://twitter.com/MiftahIsmail?ref_src=twsrc%5Etfw">@MiftahIsmail</a> & his entire team on the presentation of a balanced, progressive and pro-people budget. Making a budget in financially challenging times with so many constraints is no less than a herculean task.</p>— Shehbaz Sharif (@CMShehbaz) <a href="https://twitter.com/CMShehbaz/status/1535266662001278977?ref_src=twsrc%5Etfw">June 10, 2022</a></blockquote>
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[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Congratulations to Federal Minister for Finance <a href="https://twitter.com/MiftahIsmail?ref_src=twsrc%5Etfw">@MiftahIsmail</a> & his entire team on the presentation of a balanced, progressive and pro-people budget. Making a budget in financially challenging times with so many constraints is no less than a herculean task.</p>— Shehbaz Sharif (@CMShehbaz) <a href="https://twitter.com/CMShehbaz/status/1535266662001278977?ref_src=twsrc%5Etfw">June 10, 2022</a></blockquote>
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[MenInG]

The coalition government unveiled the “toughest” federal budget for the next fiscal year 2022-23 with an outlay of Rs9.5 trillion as it seeks to fulfil the International Monetary Fund’s (IMF) conditions, but the Opposition rejected the budget, criticising it for having “no direction” which would lead to “more unemployment”.

The federal government unveiled the budget amid strict conditions laid forth by the IMF for the revival of the $6 billion loan programme stalled for months over policy breaches.

In a video statement, PTI leader Hammad Azhar said the inflation will increase by 2%-3% in the country and the gross domestic product (GDP) will be halved — dropping from 6% to 2%-3%.

Azhar, a former finance and energy minister, said there was “a lot of instability” in Pakistan’s economy and the country was on the brink of default — a notion that Finance Minister Miftah Ismail rejected a few days back.

“In the budget, we did not see the direction that we needed to take the country out of the economic crisis and clear the uncertainty that the incumbent government has created,” Azhar said, adding that Pakistan would face “more employment”.

Azhar said the budget was passed “in a haste” and does not hold “any importance”.

‘People’s enemy’
PTI Senator Ejaz Chaudhry said the government unveiled a “people’s enemy” budget and the nation would deal with the rulers themselves.

PTI Secretay-General Asad Umar wondered at what rate would the inflation rise when it witnessed an increase of 24% as compared to the last year.

PTI leader and ex-science minister Shibli Faraz said a “handicapped” Parliament did not have legal or moral grounds to present the country’s budget as they have “deteriorated” the economy within two months after coming into power.

“We reject this budget. Each day this government remains in power, it will be a burden on the masses. There is only one solution to this: hold early elections,” the ex-science and technology minister said.

Talking to journalists outside the Parliament, Senator Shahzad Waseem said since the incumbent government came into power, the price of petrol and all other essential commodities have increased.

“This budget does not have anything but sorrows for the people. A voice matters more than numbers in the Opposition. We will expose this government every day,” the PTI senator added.

PML-Q Senator Kamil Ali Agha, in a press conference, said today’s budget was just a “formality” as the coalition government has already increased the prices of all commodities.

“The [finance minister], in his speech, repeatedly mentioned that a common man will pay tax through their bills,” Agha added.

GEO

 

[MenInG]

Amid ongoing negotiations to convince the International Monetary Fund (IMF) to release bailout payments, the PML-N-led coalition government on Friday presented a federal budget with a mix of real stabilisation measures sugar-coated with feel-good sentiment — the revival of petroleum levy with a bang, withdrawal of incentives for construction coupled with taxation on real estate and candies for government employees, income tax payers, industries and solar energy — and additional taxes of Rs355 billion to be collected by the Federal Board of Revenue (FBR).

“Economic stability is our foremost priority … we have to set strong foundations of economic development that is based on sustainable growth,” said Finance Minister Miftah Ismail while presenting the next year’s budget in the National Assembly, adding that economic development would be derived through from exports, particularly of agriculture, information technology and industrial products.

The most critical moves coming out of the IMF programme in the budget relate to an almost negligible change in subsidies (Rs699bn next year against Rs682bn in the current year) and a reduction in power sector subsidies.

That would mean the national average electricity tariffs would go up by more than 20pc with a cumulative financial impact of almost Rs1.5 trillion. The allocation for power sector subsidies for the next year is kept at Rs570bn against Rs596bn during the current year, a decrease of 4.4pc.

On top of that, a non-tax revenue target of Rs750bn has been set for the petroleum development levy (PDL), up almost 455pc from an estimated collection of about Rs135bn during the current year.

In the previous year’s budget, the PTI government set a Rs610bn target for PDL but later gradually scaled it down as global oil prices surged.

This means the current government would not only end the ongoing Rs10-23 per-litre subsidy on petroleum products but also start collecting PDL over the next year — a requirement to revive the IMF programme.

A key objective required under the Fund’s loan programme was to provide for Rs152bn (0.2pc of GDP) primary budget surplus (i.e. financial gap other than interest payments) next year from a deficit of Rs360bn (0.7pc of GDP) during the current fiscal year.

In his budget speech, Mr Ismail said the government preferred national interest over political capital and started taking tough decisions to bring the country back on track.

Tough times ahead

“The series of difficult decisions is not complete yet,” the minister said extempore while reading out of written speech, adding that “the primary deficit will be converted into primary surplus”.

The minister conceded that an increase in energy and fuel prices would stoke up inflation but said the government had no other option to reverse the “devastation caused by mismanagement of last four years”.

Another key step in the budget appeared to be a reversal of tax and subsidy-related incentives to the construction and real estate sector — pet programmes of the PTI government.

The budget 2022-23 earmarks only Rs500 million each for Naya Pakistan Housing Authority and mark-up subsidy on Naya Pakistan against Rs30bn and Rs3bn, respectively, in the current fiscal year.

The finance minister said it was one of the five top tax policy principles to impose a tax on non-productive assets and wealthy people to encourage entrepreneurship and investments.

He said Pakistan’s tax system had resulted in an artificial price hike in real estate, taking housing facilities out of the reach of the middle class.

The money generated from this dead investment was a major source of inflation and social disharmony, he said: “We don’t want to discourage the real estate sector, but we want to steer this sector in a direction where it can become the engine of growth for cities. Our proposals aim at encouraging construction and vertical growth and discouraging speculative investment in open plots.”

Therefore, people who have more than one immovable property priced above Rs25m and situated in Pakistan shall be deemed to have received a rent equal to 5pc of the fair market value of the immovable property and shall pay tax at the rate of 1pc of the fair market value of the said property.

Likewise, the tax on transactions of immovable properties has been changed. As such, capital gain on all classes of assets is now proposed to be taxed at 15pc in case the holding period of such property is one year or less.

The capital gain payable on such assets will reduce to zero after a holding period of six years, reducing tax liability by 2.5pc with each subsequent year.

Furthermore, the advance tax rate on buying and selling property for filers has been raised to 2pc from the current 1pc. Moreover, the advance tax rate for buyers of immovable property who are non-filers has also been increased to 5pc.

While providing partial relief to hard-pressed salaried people facing higher fuel and electricity prices, the finance minister doubled the basic threshold of taxable salary to Rs1.2m a year.

In the same direction, the basic threshold of exemption for business individuals and the Association of Persons (AOPs) was also enhanced from Rs400,000 to Rs600,000.

The government has also reduced the tax rate on profit from investment in Behbood savings certificates, pensioners’ benefit accounts and Shuhada family welfare accounts to a maximum of 5pc instead of 10pc at present.

For small retailers, the budget also provided a fixed income and sales tax regime that ranges from Rs3000 to Rs10,000 as the final settlement.

The finance bill facilitated the industrial sector by allowing 100pc depreciation for tax adjustment besides also allowing advance income tax adjustment on the import stage on goods into plant and machinery, raw materials, and finished goods.

Further relief has also been provided to the textile, pharmaceutical and film industries.

On the other hand, the finance minister also doubled advance tax to 200pc for non-filers on vehicles above 1600cc and increased windfall gain tax for banks from 39pc to 42pc that were earning secure profits because of huge investments in government securities.

Also, non-resident Pakistanis would also be required to become a taxpayer in Pakistan unless they were tax-resident elsewhere.

The budget also removed a 17pc general sales tax on the import of solar panels and their local supply and promised to provide easy banking facility to households for installing solar panels.

Likewise, the budget also withdraws GST on the supply of tractors, agricultural implements and various seeds, including wheat, rice, maize, sunflowers, canola, and rice.

The overall size of the next year’s budget is estimated at Rs9.5tr, up from Rs8.487tr for the current year, showing an increase of about 12pc.

The minister said the biggest challenge for the government was to achieve a 5pc economic growth rate without an unmanageable current account deficit. The current expenditure for the next year is estimated at about Rs8.7tr, including the largest chunk of Rs3.95tr for interest payments.

A sour point of the expenditure was the combination of the expenditure of running the civil government (Rs550bn) and pensions (Rs530bn) at about Rs1.08tr for a few million compared to just Rs800bn development budget.

The defence budget, on the other hand, increased by almost 11pc to Rs1.523tr against Rs1.37tr.

The revenue target for the next year has been set at Rs7tr against Rs5.829tr of the current year, showing an increase of 20pc. About Rs973bn would automatically accrue because of the almost 17pc impact of inflation (11pc) and GDP growth (5pc), while the remaining Rs355bn would be generated through additional tax measures.

At the same time, the budget projects next year’s consolidated fiscal deficit at 4.9pc of GDP or Rs3.798tr against Rs3.42tr (or 6.3pc of GDP).

However, the deficit at 4.9pc would be achieved with provincial governments together providing a cash surplus of Rs800bn. Otherwise, the federal budget deficit is projected at almost 4.6tr when compared to Rs4tr this year.

Non-tax revenue for the next year is targeted at Rs2tr, slightly lower than the current year and for the first time, after a long gap, about Rs96bn proceeds are targeted to be generated through privatisation.

Out of Rs7tr FBR taxes, a major chunk of Rs4.43tr is targeted to flow from indirect taxes, led by a sales tax of Rs3.08tr. Only Rs2.57tr is expected to come from direct taxes, led by Rs2.558tr through income tax.

Published in Dawn, June 11th, 2022

 

[MenInG]

The federal cabinet has approved in principle to give an executive allowance equal to 150% of the basic salary to the government officials of grade 17 to 22 in on the pattern of the provinces.

It has also been proposed to increase the orderly allowance but the final decision would be made after the modalities were decided.

The executive allowance is already being given to government employees in Punjab, Khyber-Pakhtunkhwa and Sindh.

The federal budget proposes to give disparity allowance to grade 22 officers. It also proposes to increase the orderly allowance for grade 20 to 22 officers from Rs14,000 to Rs25,000.

A 15% increase in the salaries of government employees will be applied to the basic salary of 2017. After that, the ad hoc allowances will be merged with that amount.

As a result, employees retiring from July 1 will benefit in the form of pensions.

A day earlier, the federal government, while unveiling the budget for 2022-23, had announced a 15% increase in the salary of the government employees, as well as a 5% increase in the pensions for the retired ones.

“The prime minister has rejected the Finance Ministry’s proposal of a 10% increase and has approved an increase in government employees’ salaries of 15% with the consent of the cabinet,” Federal Information Minister Marriyum Aurangzeb had tweeted.

“The merging of adhoc allowances into the basic pay is approved,” she had added.

Hours before the budget was presented, government employees protested and blocked the road outside the parliament building, despite heavy contingents of police, and demanded a bump in their salaries, pensions, and medical allowance.

The government had acceded to their demands and subsequently announced the raise.

However, its single measure – the proposal to slap Rs50 per litre petroleum levy for additional Rs300 billion income – has not only overshadowed some good measures but may also make it challenging for the coalition partners to defend the budget.

The government had proposed Rs740 billion new taxes, including Rs440 billion tax measures proposed by the Federal Board of Revenue. Some of the major relief measures would be offset by the increase in petroleum prices rates due to a Rs50 per litre levy along with 17% sales tax.

 

[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Given the special needs of tribal districts my govt had increased their funding by 3x to Rs 131 bn.Imported <br>Govt has budgeted only Rs 110bn, reduced dev funding, 0 allocation for displaced persons & 0 increase in current budget.Shows incompetence & ill intent of govt of crooks.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1535895394873487360?ref_src=twsrc%5Etfw">June 12, 2022</a></blockquote>
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[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Budget represents a significant improvement in several ways. It has provided more educational opportunities for our youth, particularly from Balochistan & targeted subsidies for financially weaker people. More importantly, it has taxed non-productive assets of the rich.</p>— Shehbaz Sharif (@CMShehbaz) <a href="https://twitter.com/CMShehbaz/status/1535905157451763712?ref_src=twsrc%5Etfw">June 12, 2022</a></blockquote>
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[MenInG]

The National Assembly (NA) on Wednesday approved the passage of the Finance Bill, 2022, commonly known as the federal budget, with a majority vote after taking it up clause by clause.

There was virtually no opposition to the passage of the bill — similar to last year.

The passage of the budget for the fiscal year 2022-2023 brings the government one step closer to the revival of the stalled International Monetary Fund (IMF) programme.

On June 10, Finance Minister Miftah Ismail had presented the budget with an outlay of Rs9.5 trillion, the government had avoided taking unpopular tax measures for fear of political backlash. However, the government slowly had to roll back several relief measures after the IMF asked Islamabad to take practical measures to stabilise the economy.

Minister of State for Finance and Revenue Dr Aisha Ghous Pasha presented the Finance Bill, 2022 during today's session which was chaired by NA Speaker Raja Pervez Ashraf.

The session, which commenced after more than a two-hour delay, began with Pasha asserting that the budget for the new fiscal year was not changed at the request of the International Monetary Fund (IMF).

She maintained that 80 per cent of the amendments were directly related to taxes. "Our aim is to tax the rich and to give relief to the poor," she said.

She went on to say that the coalition government was implementing the agreements the former PTI government had inked with the Fund.

After the state minister's remarks, the NA began the clause by clause approval of the finance bill.

During the process, the lower house of parliament approved the amendment to impose a Rs50 levy on petroleum products.

Commenting on this, Finance Minister Miftah Ismail said that currently no levy had been imposed on petroleum products.

“The government has received permission from the house to impose a petroleum levy of Rs50/litre on petroleum products. At the moment, there is no consideration and hope of immediately going up to this figure," he said.

The NA also approved amendments for collecting sales tax from traders through electricity bills and imposing a 5pc tax on the services of IT and software consultants.

An amendment to take back the relief provided to the salaried class was also approved. Under the new rates, no tax will be imposed on those earning less than Rs0.6m per year. Meanwhile, those earning between Rs0.6m to Rs1.2m will have to pay a fixed tax of 2.5pc of the amount exceeding Rs0.6m.

Those earning Rs1.2m to Rs2.4m will have to pay a fixed tax of Rs15,000 plus 12.5pc of the amount exceeding Rs1.2m. Where taxable income exceeds Rs2.4m but does not exceed Rs3.6m the tax rate is Rs136,000 plus 20pc of the amount exceeding Rs2.4m.

Those earning between Rs3.6m to Rs6m will have to pay Rs405,000 plus 25pc of the amount exceeding Rs3.6m. For income between Rs6m to 12m, the tax will be Rs1m plus 32.5pc of the amount exceeding Rs6m. Where taxable income exceeds Rs12m, the tax is Rs2.9m plus 35pc of the amount exceeding Rs12m.

Further, the NA approved an amendment for imposing a super tax between 1-4pc on the income of those earning between Rs150m to Rs300m. It also approved imposing a 10pc "super tax" on large-scale industries.

Under the bill, a levy between Rs100-Rs16,000 was imposed on the import of mobile phones depending on its value. For mobile phones having a cost-and-freight (C&F) up to $30, it will be Rs100. For phones more than $30 and less than $100, it will be Rs200.

In the same way, for phones costing up to $200, it will be Rs600. For phones up to $350, it will be Rs1,800. For phones costing up to $500, the rate of levy will be Rs4,000. Meanwhile, for phones worth up to $700 it will be Rs8,000, while for phones more than $701 it will be Rs16,000.

Duty on the import of equipment for the film industry, including projectors, loud speakers and 3D glasses, was also abolished.

MQM criticises govt

The start of the session saw lawmakers from the Muttahida Qaumi Movement-Pakistan (MQM-P) — which is part of the PML-N-led coalition government — lambasting their allies.

Without naming anyone, MQM-P MNA Engineer Sabir Hussain Kaimkhani said he was in the assembly after being elected by his constituency, not to plead for something.

"We get these ministries, these seats so as to earn respect and serve. If we don't even get respect after getting these seats, then we [reject this]," he said.

Kaimkhani, who was elected from Hyderabad's NA-226 constituency, said there was "one person present here because of whom we don't have the necessities in our city".

"Our airport is shut, our PIA (Pakistan International Airline) office is closed, there are accidents on our railway tracks every day and blasts occur on our railway tracks. But no one is here to answer for the railway and PIA's downgrade," he complained.

The MNA pointed out that the relevant minister was present in the assembly to address his complaints.

"I am walking out against their behaviour and I am leaving after saying this: With them [being a part of the government], neither the government nor the assembly can run," Kaimkhani said.

He was joined by MQM-P MNA Salahuddin, who said his party had paid a political price and was bearing its consequences today.

In a response to a rebuttal that was inaudible, Salahuddin threatened that "we will not take a minute before moving from here to there" — an apparent reference to shifting from treasury to opposition benches.

131 demands for grants approved
A day earlier, the government had completed the process of approving all 131 demands for grants of various ministries and divisions worth over Rs5.53 trillion.

The NA also rejected 266 cut motions submitted by opposition members, demanding a symbolic cut on allocations of eight ministries, including communications, energy, foreign affairs, interior, narcotics control and railways.

The lower house of the parliament had already approved on Monday 83 demands for grants worth Rs4.57 trillion of those 30 ministries and divisions on which the opposition parties had not moved any cut motions.

In parliamentary democracy all over the world, voting on demands for grants and cut motions is considered a crucial phase of the budget session as opposition members get an opportunity to give a tough time to the government by moving cut motions on ministries and divisions.

But the present coalition government did not face any difficulty at this crucial stage of the budget session as there is no meaningful opposition in the house after the en masse resignation of PTI members following the ouster of the Imran Khan government.

Budget at a glance
Finance Minister Miftah Ismail had unveiled the budget for the coming fiscal year on June 10. In this initial version of the budget, having an outlay of Rs9.5 trillion, the government had avoided taking unpopular tax measures for fear of political backlash.

The government has budgeted the total current expenditure at Rs8,694bn for FY23, which is 15.5pc higher than last year's budgeted figure.

Interest payments, or debt servicing, account for 45.4 per cent of the total current expenditure, having been increased by a whopping 29.1pc from last year to Rs3,950bn. Meanwhile, defence expenditure has been budgeted at Rs1,523bn, which makes up 17.5pc of total current expenditure and is 11.16 per cent higher than last year.

In the initial version of the budget, the total revenue stood at Rs9,004bn. After subtracting provincial transfer of Rs4,100bn as part of the National Finance Commission (NFC) Award, net revenue came out at Rs4,904bn.

However, after the government announced new revenue measures and new taxes last week, the
net revenue measures announced in the 2022-23 budget now amount to Rs905bn.

Moreover, the government had initially set the tax collection target for the Federal Board of Revenue (FBR) at Rs7,004bn for FY23. Under last week's measures, it increased the FBR's tax collection target to Rs7.47tr. The target for non-tax revenues, on the other hand, has been revised down to Rs1.94tr from Rs2tr.

Total allocations for the Public Sector Development Programme (PDSP) have been budgeted at Rs2,158bn for FY23, up just one per cent from Rs2,135bn last year. The government has set a growth target of five per cent.

New tax measures
Last week, Prime Minister Shehbaz Sharif had also announced a 10 per cent “super tax” on 13 large industries to raise an additional Rs465 billion in revenue, in an attempt to trim the budget deficit.

The 13 industries to be taxed include cement, steel, sugar, oil and gas, fertilisers, LNG terminals, textile, banking, automobile, cigarettes, beverages, chemicals and airlines. High net worth individuals and companies will also be subject to a “poverty alleviation tax”.

Those whose annual income exceeds Rs150 million will be taxed at 1pc; for Rs200m at 2pc; Rs250m at 3pc; and Rs300m at 4pc of their income.

Finance Minister Miftah Ismail also announced these measures during his address to the NA the same day in a session convened to wind up the budget debate and elaborated that both these taxes were a "one-time tax" for the fiscal year 2022-23.

He further told the NA that a new fixed tax scheme on shops outside of the tax net to reduce the budget deficit.

There were around nine million retail shops in Pakistan and the government wanted to bring 2.5m to 3m of them into the tax net, he said, adding that for this, a new fixed scheme had been introduced under which a small shop owner will pay a fixed tax of Rs3,000 and big retailers Rs10,000 per month.

“After that, they will not be questioned on anything else,” the minister added.

The retailers dealing in gold and had shops of 300 square feet or less would have to pay a fixed income and sales tax of Rs40,000, which was reduced from Rs50,000. For bigger shops, the sales tax had been reduced from 17pc to 3pc, he added.

The withholding tax on gold sold by individuals to goldsmiths has been reduced from 4pc to 1pc. A similar scheme of fixed tax will be announced for realtors, builders and car dealers.

Moreover, the government also intends to apply a maximum petroleum levy of Rs50 per litre on all petroleum products, including petrol and diesel, besides a levy of Rs30,000 per tonne on liquefied petroleum gas.

At the same time, the Rs47bn tax relief announced by the government in the next year’s budget for salaried citizens was also reversed. The tax exemption limit has been reversed to Rs600,000 from Rs1.2 million, whereas the fixed tax of Rs100 has been replaced with a 2.5pc tax for individuals earning between Rs600,000 and Rs1.2m.

Likewise, those earning Rs1.2m to Rs2.4m will pay a 12.5pc tax instead of 7.5pc last year, and individuals earning Rs2.4m to Rs3.6m a year will be charged at Rs165,000 plus 20pc of the amount exceeding Rs2.4m.

Those earning Rs3.6m to Rs6m a year will be charged at Rs405,000 plus 25pc of the amount exceeding Rs3.6m.

People with an annual income of Rs6m to Rs12m will be charged at Rs1.005m plus 32.5pc of the amount exceeding Rs6m.

In the last slab, individuals earning more than Rs12m a year will be charged at Rs2.955m plus 35pc of the amount exceeding Rs12m.

DAWN

 

[MenInG]

The National Assembly on Wednesday approved the Rs9.6 trillion federal budget for fiscal year 2022-23 and also passed the Finance Act to give effect to over Rs1 trillion new tax measures, as the government backed away from its promise to levy super tax for only one year.

With the approval of the new budget, the income tax rate for the highest salaried person is now 39% and for the companies, except 13 sectors, it is 33%. The budget has this time put burden on almost all segments of the society, except the stock market players who went away with Rs8 billion in tax relief despite challenging economic times.

Over Rs1 trillion tax measures have been taken to satisfy the International Monetary Fund (IMF) that demanded primary budget surplus in the next fiscal year. But some measures like increase in petroleum levy rates would stoke inflation that the finance ministry on Wednesday projected to skyrocket to 15.5% in June.


The government slapped 1% to 4% super tax on companies for an unlimited period. Prime Minister Shehbaz Sharif had promised that the super tax would be imposed for only one year but he had now backtracked from the promise. But 10% super tax remains, for the time being, for one year.

The National Assembly also amended the Chairman and Speaker (Salaries, Allowances and Privileges) Act 1975 to empower the finance committee of the Senate or National Assembly to grant the chairman or the speaker including past custodians of parliament the “additional privileges as it may deem fit from time to time”.

Under the existing law, such additional privileges are granted by the federal government to the Senate chairman and the National Assembly speaker. The new budget will come into effect from Friday.

Read ‘Broad agreement’ reached with IMF to end uncertainty

The passage of the budget for the fiscal year 2022-2023 is expected to pave the way for striking a staff-level agreement with the IMF for revival of the stalled programme. However, the IMF has set new conditions that the government will have to implement from now till December to remain in the programme.

Finance Minister Miftah Ismail on Wednesday said that the government would give its response to the IMF on the draft MEFP document in a couple of days and some of the proposed conditions might not be accepted.

The IMF asked Pakistan to end the government’s role in setting the fuel prices by December 2022. The global lender asked that the fuel prices be deregulated and automatically adjusted to recover the actual cost of buying from the consumers. The IMF also set the condition that Pakistan should review its anti-corruption laws.

The IMF set prior action of notifying over Rs3.50 per unit increase in electricity prices from July. Pakistan committed to the IMF to impose Rs10 per litre petroleum levy on petrol and diesel from July 1. The IMF asked Pakistan to seek and communicate the cabinet’s nod to further increase the petroleum levy by Rs10 per litre on petrol and Rs5 on diesel from August 1.

The National Assembly approved an increase in the per litre petroleum levy on all products to Rs50 –up from Rs30 per litre. This will give an additional revenue of over Rs400 billion to the government. Based on the new rate, the petroleum levy target has now been set at a record Rs855 billion –up from Rs750 billion proposed on June 10.

The government also made adjustments in expenditures and the total size of the budget is now Rs9.6 trillion –higher than proposed on June 10. The defence budget has been further increased to Rs1.567 trillion –an increase of 4.1% or Rs154 billion over the last year’s original allocation. Compared with June 10, the defence budget has been increased by another Rs40 billion.

The cost of pensions has been increased to Rs609 billion –up from Rs530 billion three weeks ago.


Interest payments now account for 41% of the total budget and Rs3.950 trillion has been earmarked for the next fiscal year – the single largest expense in the budget. After paying Rs4.37 trillion to the provinces as part of the National Finance Commission (NFC) Award, net revenue of the federal government would be Rs5.03 trillion.

The primary budget surplus target has been set at Rs152 billion on back of Rs750 billion provincial cash surpluses.
The government has also rectified mistakes in the budget documents and included loans from the IMF and China in the external receipts that the country will get in the next fiscal year.

The approval of the Finance Act 2022, presented by the Minister of State for Finance Dr Aisha Ghous Pasha in the house, will give effect to another Rs608 billion new tax measures.

Dr Pasha said that 80% of the FBR’s new taxes were direct in nature. The FBR’s tax target has been approved at Rs7.470 trillion and 41% of it or Rs3.04 trillion is targeted to be collected through direct measures.

While deviating from the commitment to impose the super tax only for one year, the government has imposed the tax for tax year “2022 and onwards”.

On annual individual income ranging from Rs150 million to Rs300 million, there will be an additional 1% to 4% poverty alleviation tax. For companies having income in this bracket, there will be up to 4% super tax.

Read more Traders fear economy will crash due to super tax

The sectors that have been targeted with 10% super tax are airlines, automobiles, beverages, cement, chemicals, cigarette and tobacco, fertiliser, iron and steel, LNG terminal, oil marketing, oil refining, petroleum and gas exploration and production, pharmaceuticals, sugar and textiles. The prime minister on Tuesday said that the corporate sector largely accepted the super tax. The effective tax rate for these sectors will be 39% for the fiscal year 2021-22, ending today.
Duty on the import of equipment for the film industry, including projectors, loud speakers and 3D glasses, was also abolished in the final budget.

An amendment to take back the relief provided to the salaried class was also approved. The government has passed on Rs80 billion burden on the salaried class compared with the June 10 proposed budget.

Under the new rates, no tax will be imposed on those earning less than Rs600,000 per year.

The government set a 2.5% income tax rate on up to Rs100,000 monthly income as against nil tax proposed on June 10. This is still half of the rate the salaried class paid in the outgoing fiscal year.

It introduced a 12.5% income tax rate for people earning up to Rs200,000 a month –which is 78% higher than that proposed on June 10. For the fourth slab carrying people of up to Rs300,000 monthly income, the government now set 20% income tax rate as against 12.5% proposed on June 10 -- an additional burden of 60% in comparison with the three-week old rate. The existing tax rate for this income group was 17.5%.

On a monthly income of Rs500,000 -- the fifth slab -- the government proposed 25% income tax as against the three-week old rate of 17.5%. For people earning over Rs1 million a month, the government introduced a 32.5% rate – up from 22.5% three weeks ago.

For those who earn over Rs1 million a month, the government now slapped a 35% income tax rate -- up from the three-week old rate of 32.5%. At present, the people earning over Rs1 million a month to Rs2.5 million were paying 27.5% income tax rate.




Through the Finance Act 2022, the government is allowed to carry forward the losses against turnover tax for three years, accepting a major demand of the business community. In the budget, the government had withdrawn this facility to collect Rs40 billion additional taxes a year.

The government has given income tax exemption to Burhani Qarzan Hasnan Trust, Saifee Hospital Karachi and Saifiyah Girls Taalim Trust.

The government relaxed the disclosure condition about the ultimate owners of Pakistani companies to ward off pressure from the wealthiest people, who were reluctant to fully reveal their assets and want the continuation of secrecy. Against the proposed requirement that companies would have to disclose the names of their ultimate owners who directly or indirectly control at least 10% shares or voting rights, the government lowered the requirement to 25% of the shareholding.

The government changed the definition of resident Pakistani to include all those people in the tax net who did not stay in any foreign country for more than six months. “Being a citizen of Pakistan is not present in any other country for more than 182 days during the tax year or who is not a resident taxpayer of any other country,” according to the bill.

The government also reduced the proposed 2% capital value tax (CVT) on vehicles besides omitting the taxable limit of Rs5 million value of the car. It proposed 1% CVT on all cars of 1,300cc and above.

The government further amended the clause introduced on June 10 to collect tax on the deemed income from properties. The government would treat the immovable assets as capital assets to avoid legal complications.

The government restored the income tax exemption on contribution to the pension funds for both companies and individuals. The government extended the tax credit to the charitable organisations for one year, as against the earlier proposal of two years, covered under Section 100C.

The government also imposed 1% GST on manufacture or import of substances registered as drugs under the Drugs Act, 1976 and also 1% on active pharmaceutical ingredients, excluding excipients, for manufacture of drugs registered under the Drugs Act, 1976 or raw materials for the basic manufacture of pharmaceutical active ingredients. Earlier, these sectors had been brought in zero-rating regime, which resulted in the blockage of Rs40 billion refunds.

The government excluded jewellers doing business in less than 300 square feet shop from standard sales tax and they will now be charged at Rs40,000 fixed tax to cover their all tax-related liabilities.

It introduced 3% tax on sale of jewellery, 12.5% on sale of electric vehicles in CBU condition of 50kv battery or below and 1% on electric vehicle transport buses of 25 seats or more in CBU form.

It fixed sales tax rates of Rs3,000 to Rs10,000 for those retailers who file their returns and the rates will be doubled for those who are non-filers.

The government restored income tax exemption for fertiliser and on oil cake and solid residue has also been restored.

Express Tribune

 

[MenInG]

Contrary to Prime Minister Shehbaz Sharif’s instructions and the main coalition partner’s lobbying for increase in taxes on smoking, the government has quietly given billions of rupees in tax relief by increasing the taxable price threshold for the expensive cigarette brands.

The change was made on the eve of approval of the budget by the National Assembly, which also eroded the benefits that the government wanted to earn by slightly increasing the federal excise duty on cigarettes.

A government that could not stand before the International Monetary Fund (IMF) to protect the salaried class from the additional tax burden changed the taxable price slabs to keep smoking affordable. The change was not made on June 10 aimed at avoiding public debate on the issue.

The government has increased the threshold for higher duties on the expensive cigarette brands, according to the Finance Act 2022 that was enforced from July 1.

Before the budget, the government was charging excise duty of Rs5,200 per 1,000 cigarettes, if the printed retail price was over Rs5,960 per 1,000 sticks.

In the budget, the government increased the excise duty by Rs700 or 13.5% to Rs5,900 per 1,000 cigarettes for the expensive brands. The per cigarette additional tax impact is only 70 paisa.

However, in order to offset the impact and also bring a few expensive brands in the lower tax slab, the government also increased the taxable threshold for the upper brand cigarettes from the printed price of Rs5,960 per 1,000 sticks to Rs6,660 – a benefit of Rs700 on every 1,000 cigarettes.

Had the government not increased the upper brands’ taxable price limit, many brands that now fall in the low tax tier would have been shifted to the upper tier. This might have discouraged smoking in the country.

Before the budget, the FED on the locally produced cigarettes with a retail price of less than Rs5,960 per 1,000 cigarettes was Rs1,650 that in the budget was increased to Rs1,850.

This amounts to additional tax of a mere 20 paisa per cigarette. The threshold to determine the low tax rate was up to Rs5,960, which has also now gone up to Rs6,660.

After the change in the taxable price slab, a few brands that were earlier taxed at a reduced rate of Rs5,200 would now be charged a tax of Rs1,850 per 1,000 sticks.

“The government has tricked with the people who advocated increasing the tax burden to discourage smoking,” said Dr Ziauddin, Country Lead on Tobacco Control, Vital Strategies.

He argued that after the increase in the taxable slab limit, the smoking prevalence would increase, which would also significantly push up the cost of illness.

As many as 31 million adults (age 15 +) or about one-fifth of the total adults currently use tobacco, according to Social Policy and Development Centre (SPDC). It added tobacco use is the leading cause of death due to non- communicable diseases (NCDs), such as cancer, chronic respiratory diseases, and cardiovascular disease.

Due to unchanged and low tobacco taxes, Pakistan ranks among the worst-performing countries in the Tobacconomics Cigarette Tax Scorecard that evaluates the strength of tax systems, with an overall tax system score of less than one on a five-point scale.

According to SPDC estimates, more than 260,000 people will start smoking in Pakistan, if tobacco taxes are not raised in 2022-23, while around 150,000 die every year due to smoking related diseases. While chairing a cabinet meeting on new budget proposals on June 10th, Prime Minister Shehbaz Sharif had showed his dissatisfaction with the proposed increase in FED rates and sought that the taxation burden should be further increased by Rs25 billion in the new fiscal year.

However, the changes in the taxable price slabs would not help achieving this objective.

Finance Minister Miftah Ismail had also assured the Pakistan Peoples Party - the main coalition partner - that he would make sure that the tobacco sector will pay Rs225 billion in taxes as against Rs150 billion in the just ended fiscal year. This promise may also remain unfulfilled.

Federal Water Resources Minister Khursheed Shah had said on the floor of the House that Pakistan was among the countries having lowest tax on cigarettes, which was not only reducing revenue but also putting people’s health at stake.

The SPDC research showed that poor households in Pakistan spend a larger proportion of their budget on tobacco than rich households, resulting in less spending on basic needs.

According to SPDC estimates based on IMF projections, approximately 4% of per capita income was required to purchase 2,000 cigarettes in 2020–21, which would decrease to 3.6% in 2021–22 and further decrease to 3.2% in 2022-23 if cigarette prices do not rise.

The low-taxed cigarettes represent the majority of the market, about 88%, the average excise tax share is nearly 45% of the retail price, which is significantly lower than the widely accepted benchmark of 70% of the retail price.

Tobacco is not the only sector that has been given billions of rupees tax benefits. The government has also doled out Rs8 billion income tax relief to the stock market.

According to Pakistan Tobacco Company -one of the two leading manufactures, as per historic practice by the FBR, the threshold between Tier I and Tier II of cigarettes moves in line with increase in Tier I FED rate. This allows for increasing the minimum price of cigarettes sold in the country complementing the public health agenda and increasing the government revenues, according to the company.

Published in The Express Tribune, July 5th, 2022.

 

[MenInG]

ISLAMABAD: The federal government has proposed increasing taxes on cell phones, cars and other imported luxury items in the FY2023-24 budget, ARY News reported, quoting sources.

The sources said the government is considering increasing duty on mobile, worth more than 100 dollars.

They further added that imported energy saver bulbs, chandeliers, and LEDs will be more expensive in the upcoming budget FY23-24.

 

[MenInG]

ISLAMABAD: The federal government is set to announce the federal budget for the next fiscal year tomorrow with total volume exceeding Rs 13,800 billion, ARY News reported on Thursday.

Sources indicated that the budget size will exceed Rs 13,800 billion, while the budget deficit is expected to be more than Rs 6,000 billion, with expenses of Rs 7,300 billion allocated to pay debt.

Sources regarding the budget’s framework revealed that an estimated Rs 9,200 billion may be generated from tax revenue, while non-tax revenue may reach Rs 2,800 billion, while the Rs 1,300 billion could be allocated for subsidies.

 

[jaspa888]

Budget has been prepared using a USD exchange rate of 294 for the entire next fiscal year... what could possibly go wrong?

 

[MenInG]

Finance Minister Ishaq Dar is presenting the budget for fiscal year 2023-24 (FY24) on the floor of the National Assembly.

The finance minister said for the next year, GDP growth had been budgeted at 3.5 per cent, terming it a “modest target”. He said that this budget is “not an election budget” and is focusing on the “elements of the real economy”.

Dar said agriculture is the backbone of the economy and this budget is placing special attention on this sector. He then went on to list some of the special measures taken for the agri sector, primary among which was increasing agri loans from Rs1.8 trillion to Rs2.25 trillion.

Budget outlay

The total outlay of the FY24 budget is Rs14.46 trillion, according to the minister.

Current expenditure

The government has budgeted total current expenditure at Rs13,320bn for FY24, which is 53pc higher than last year’s budgeted figure.

Defence expenditure is budgeted at Rs1,804bn, 15.4 per cent higher than last year, making up 1.7pc of GDP.

Interest payments, or debt servicing, budgeted for FY24 have risen a whopping 85pc from last year to Rs7,303bn — making up the single largest expenditure of the government, accounting for 55pc of total current expenditure.

Session starts

The NA session began with recitation of the Holy Quran followed by the national anthem. Prime Minister Shehbaz Sharif is also in attendance in a house without an opposition. The budget is expected to sail through in the absence of opposing voices.

Dar began his speech recounting the achievements of the PML-N’s previous government under Nawaz Sharif. He said back then the country was doing well on all accounts, with inflation in single digits and GDP growth of 6 per cent.

He then went on to blame Pakistan’s current economic crisis on the PTI government, which took over the reigns in 2018. Dar said that when the coalition government took over from the PTI in 2022, the country’s economy was in dire straits, with forex reserves depleting and the IMF programme in doldrums.

Balancing IMF conditions and election year

The government is expected to walk a tight rope in this budget as it looks to meet the requirements of the International Monetary Fund (IMF) as well as provide some relief to the public in what is an election year.

Getting the IMF on board is critical as the risk of default on sovereign debt is rising, with the economy creaking under twin deficits and record high inflation, which has further dented the popularity of Prime Minister Shehbaz Sharif’s coalition.

The coalition government is hoping to persuade the IMF to unlock at least some of the $2.5bn left in a $6.5bn programme that Pakistan entered in 2019 and which expires at the end of this month.

The country missed almost all of its economic targets set in the last budget, most notably its growth target, which was initially set at 5pc, revised down to 2pc earlier this year. Growth is now projected to be just 0.29pc for the fiscal year ending June 30.

Foreign exchange reserves have dipped below $4bn, according to data released by the State Bank of Pakistan (SBP) on Thursday, enough to cover barely a month of imports.

The government has no fiscal space to introduce popular measures that will win it votes or a stimulus to spur flagging economic activity, with limited avenues for raising revenue in the short term and domestic and international debt obligations continuing to mount.

DAWN

 

[MenInG]

Finance Minister Ishaq Dar presented the budget for fiscal year 2023-24 (FY24) on the floor of the National Assembly. During the speech, the minister said that the government was imposing no new taxes for the upcoming year.

Dar said for the next year, GDP growth had been budgeted at 3.5 per cent, terming it a “modest target”. He said that this budget is “not an election budget” and is focusing on the “elements of the real economy”.


Dar said agriculture is the backbone of the economy and this budget is placing special attention on this sector. He then went on to list some of the special measures taken for the agri sector, primary among which was increasing agri loans from Rs1.8 trillion to Rs2.25 trillion.


Key proposals in Budget 2023-24

No increase in duties on import of essential items
No new taxes for the upcoming year
Exemption of customs duties on import of seeds for sowing to promote growth in the agricultural sector
Withdrawal of capping of the fixed duties and taxes on the import of old and used vehicles of Asian Makes above 1300CC
Services provided by restaurants including cafes, food (including ice cream), parlours, coffee houses, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets etc are proposed to be taxed at 5pc if payment is made through debit or credit cards, mobile wallets or QR scanning
Grant of exemption of sales tax on contraceptives and accessories
Minimum wage proposed at Rs32,000; wages of government employees from Grades 1-16 and Grades 17-22 to be increased by 35pc and 30pc, respectively
Increase in withholding tax rate from 1pc to 5pc on payment to non-residents through debit/credit or prepaid cards
Exemption of customs duties on import of shrimps/prawns/juvenile for breeding in commercial fish farms and hatcheries
Rs1 billion allocated for health insurance of working journalists
Budget outlay
The total outlay of the FY24 budget is Rs14.46 trillion, according to the minister.


Current expenditure
The government has budgeted total current expenditure at Rs13,320bn for FY24, which is 53pc higher than last year’s budgeted figure.

Defence expenditure is budgeted at Rs1,804bn, 15.4 per cent higher than last year, making up 1.7pc of GDP.

Interest payments, or debt servicing, budgeted for FY24 have risen a whopping 85pc from last year to Rs7,303bn — accounting for 55pc of total current expenditure — making it the single largest expenditure of the government.


Federal revenue
Total revenue budgeted for FY23 stands at Rs12,163bn.

After subtracting provincial transfer of Rs5,276bn, net revenue comes out at Rs6,887bn, which is 36.9pc higher than last year.


FBR tax target
The tax collection target for the Federal Board of Revenue (FBR) has been set at Rs9,200bn, which is 23pc higher than last year’s target.


Fiscal deficit
Fiscal deficit, or overall budget deficit, which is the difference between the government’s total expenditure and revenue is calculated as:

Gross Revenue at Rs12,163bn (minus) Transfer to Provin*ces Rs5,276bn (plus) Provincial Surplus Rs650bn (minus) Total Expenditure Rs14,460bn.

For FY23, overall deficit is budgeted at Rs6,923bn, which is 82pc higher than last year’s Rs3,797bn. This year, fiscal deficit is 6.54pc of the GDP. Last year, the deficit was 4.9pc of the GDP.


Inflation
Following last year’s actual high inflation at 28.2pc, the government set a target of 21pc for the next fiscal year.

The finance minister said the government had realised it would have to take “extremely painful steps” for economic rehabilitation, adding that doing so would cause poverty and inflation to increase.


PSDP
Total allocations for the Public Sector Development Programme (PSDP) have been budgeted at Rs2,709bn for FY24, up 25pc from Rs2,158.8bn last year.

Under this, federal PSDP makes up Rs1,150bn, which has gone up 58.2pc from last year’s budgeted amount of Rs727bn.

Provincial PSDP for FY24 has been allocated at Rs1,559bn, an increase of 8.9pc from last year’s budget of Rs1,431.8bn.


Session starts
The NA session began with recitation of the Holy Quran followed by the national anthem. Prime Minister Shehbaz Sharif was also in attendance in a house without an opposition. The budget is expected to sail through in the absence of opposing voices.

Dar began his speech recounting the achievements of the PML-N’s previous government under Nawaz Sharif. He said back then the country was doing well on all accounts, with inflation in single digits and GDP growth of 6 per cent.

He then went on to blame Pakistan’s current economic crisis on the PTI government, which took over the reigns in 2018. Dar said that when the coalition government took over from the PTI in 2022, the country’s economy was in dire straits, with forex reserves depleting and the IMF programme in doldrums.

Balancing IMF conditions and election year
The government is walking a tight rope in this budget as it looks to meet the requirements of the International Monetary Fund (IMF) as well as provide some relief to the public in what is an election year.

Getting the IMF on board is critical as the risk of default on sovereign debt is rising, with the economy creaking under twin deficits and record high inflation, which has further dented the popularity of Prime Minister Shehbaz Sharif’s coalition.

The coalition government is hoping to persuade the IMF to unlock at least some of the $2.5bn left in a $6.5bn programme that Pakistan entered in 2019 and which expires at the end of this month.

The country missed almost all of its economic targets set in the last budget, most notably its growth target, which was initially set at 5pc, revised down to 2pc earlier this year. Growth is now projected to be just 0.29pc for the fiscal year ending June 30.

Foreign exchange reserves have dipped below $4bn, according to data released by the State Bank of Pakistan (SBP) on Thursday, enough to cover barely a month of imports.

The government has no fiscal space to introduce popular measures that will win it votes or a stimulus to spur flagging economic activity, with limited avenues for raising revenue in the short term and domestic and international debt obligations continuing to mount.

 

[SportsWarrior]

Just saw this. ***, federal net revenue is less than interest payment? its not even debt repayment, just interest payment is consuming all of federal net revenue? you guys have dug yourselves into a very big hole here.

 

[SportsWarrior]

No increase in duties on import of essential items
No new taxes for the upcoming year
Exemption of customs duties on import of seeds for sowing to promote growth in the agricultural sector
Withdrawal of capping of the fixed duties and taxes on the import of old and used vehicles of Asian Makes above 1300CC
Minimum wage proposed at Rs32,000; wages of government employees from Grades 1-16 and Grades 17-22 to be increased by 35pc and 30pc, respectively
Increase in withholding tax rate from 1pc to 5pc on payment to non-residents through debit/credit or prepaid cards
Exemption of customs duties on import of shrimps/prawns/juvenile for breeding in commercial fish farms and hatcheries

30 to 35% barely covers inflation, but good for the government officials.

Rs1 billion allocated for health insurance of working journalists.

nice way to bribe yourselves to some good press ..

Overall, it's an election budget. People can relax, there will most likely be an election in few months.

 

[saeedhk]

Just having read the budget documents, this budget is the worst in Pakistan’s history.

-Rs 2,000 tax on every fan
-Sales tax of 18% on packaged milk, fish, chicken and other items
- 5% on online transactions
-0.6% tax on ATM withdrawals
- Defence budget increased by 14%, military pension by 26%

 

[MenInG]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">The making of Budget (FY2023-24) was particularly a difficult task in view of the persistent challenges arising out of the floods-related relief & rehabilitation, global supply chain disruptions & geostrategic upheavals. Never-ending headwinds of political instability created by…</p>— Shehbaz Sharif (@CMShehbaz) <a href="https://twitter.com/CMShehbaz/status/1667405521274404865?ref_src=twsrc%5Etfw">June 10, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[MenInG]

Finance Minister Ishaq Dar on Saturday said the federal government has introduced a number of changes to its fiscal year 2024 budget in a last-ditch effort to clinch a stalled rescue package with the International Monetary Fund (IMF).

“Pakistan and IMF had detailed negotiations as a last effort to complete the pending review,” he said while addressing the National Assembly.

For the fiscal year starting next month, the federal government will raise a further Rs215 billion in new tax and cut Rs85bn in spending, as well as a number of other measures to shrink the fiscal deficit, he said.

Dar said that for the past few months, the nation was questioning whether the IMF’s ninth review would be successful or not, adding that he wanted to take the people into confidence on the matter.

 

[MenInG]

The budget for the new fiscal year sailed through the National Assembly (NA) on Sunday, a day after the government made several changes, including fiscal tightening measures, dictated by the Internat*ional Monetary Fund (IMF) in a last-ditch effort to secure critical funding.

The revised budget aims for an additional Rs215 billion in tax revenue alongside a cutback of Rs85 billion in public spending for the upcoming fiscal year. However, this does not affect the federal development budget or the salaries and pensions of government personnel.

The Rs14.48 trillion budget was passed during a session that lacked quorum, with only 70 lawmakers on the treasury benches and two on the opposition benches. Foreign Minister Bilawal Bhutto-Zardari, his father Asif Ali Zardari and the leader of the opposition, Raja Riaz, were also absent.

 

[Major]

Just having read the budget documents, this budget is the worst in Pakistan’s history.

-Rs 2,000 tax on every fan
-Sales tax of 18% on packaged milk, fish, chicken and other items
- 5% on online transactions
-0.6% tax on ATM withdrawals
- Defence budget increased by 14%, military pension by 26%

While i do critisize the army, but millitary pension is justified.

 

[MenInG]

Just having read the budget documents, this budget is the worst in Pakistan’s history.

-Rs 2,000 tax on every fan
-Sales tax of 18% on packaged milk, fish, chicken and other items
- 5% on online transactions
-0.6% tax on ATM withdrawals
- Defence budget increased by 14%, military pension by 26%

Why is that a shock to you?

 

[wasim-fan]

Just having read the budget documents, this budget is the worst in Pakistan’s history.

-Rs 2,000 tax on every fan
-Sales tax of 18% on packaged milk, fish, chicken and other items
- 5% on online transactions
-0.6% tax on ATM withdrawals
- Defence budget increased by 14%, military pension by 26%

How would you meet the IMF demand for higher tax base in a fledgling economy with no growth and no growth potential ?

 

[wasim-fan]

While i do critisize the army, but millitary pension is justified.

What's % of budget spend on education and whats % spend on military ? Whatever be the justification for this number, it's irrelevant. It tells you where the future is headed.

 

[Major]

What's % of budget spend on education and whats % spend on military ? Whatever be the justification for this number, it's irrelevant. It tells you where the future is headed.

i agree that is despicable. But pensions cant be criticized as

The defence budget for weapons and ammunition is just ridiculous

 

[MenInG]

i agree that is despicable. But pensions cant be criticized as

The defence budget for weapons and ammunition is just ridiculous

Pensions are a right and part of the contract.

 

[Major]

Pensions are a right and part of the contract.

true, plus amout of it is substracted from the salaries of the army and govt officials. After which interest is generated on the pool they collect and pay it out form that.

One of the reasons why people join the govt or army on low salaries is due to that pension

 

[Kianig89]

So budget presented on 9th June already binned, with new paper as per thr instruction of lender IMf