ISLAMABAD: Pakistan’s newly-elected government led by Pakistan Muslim League-Nawaz (PML-N) on Wednesday will present its first federal budget, which is expected to have a total outlay of Rs3.5 trillion.
Federal Minister Senator Ishaq Dar will present the budget for the next 2013-14 fiscal year in the National Assembly during a special budget session scheduled to begin at 4.30 pm.
According to budget documents, the total size of the budget will be Rs3.5 trillion, showing a deficit of over Rs1.535 trillion including circular debt of Rs500 billion.
In the budget revenue collection during the next fiscal year is estimated at Rs2.470 trillion while development expenditure will be to the tune of Rs1.155 trillion.
For defense expenditures, a sum of Rs627 billion have been earmarked for the next fiscal year.
With regard to macroeconomic targets, the next budget is likely to set overall GDP growth target of 4.4 percent while for the agriculture sector growth target is likely to be 3.8 percent, industrial growth at 4.8 percent and services sector is expected to grow by 4.6 percent in next fiscal year.
On taxation side, annual income of Rs400,000 is proposed to be exempted from income tax while 5 percent income tax will be charged on income between Rs400,000 to Rs500,000. Minimum tax rate on individual businesses is proposed to be 10 percent while maximum rate is proposed to be 35 percent.
Budget is also likely to propose increase in tax on bond prizes to 15 percent from 10 percent while withholding tax is also proposed to be increased by one percentage point on withdrawal of Rs50,000 or more from banks.
A sum of Rs50 billion have been earmarked for Benazir Income Support Programme while a 15 percent rise is proposed in the salaries of federal government employees while pension is also likely to be increased by 15 percent.
It may be mentioned that the PML-N government plans to narrow the fiscal deficit to 4.5 percent of gross domestic product in three years by curbing tax evasion, while the gap may be about 8.5 percent in the year ending June 30. The nation’s tax to GDP ratio is 8.9 percent, he said.
Finance Minister Ishaq Dar said yesterday that the government also plans to tackle the power crisis that is reducing GDP growth by 2 percentage points a year and end energy dues in 60 days. The economy may expand 3.6 percent in the year ending June 30, according to the Economic Survey released yesterday.
Pakistan’s rupee has declined about 4.5 percent against the dollar in the past year as concern that the economy may struggle weighs on the currency.
Foreign reserves declined 43 percent to $6.4 billion in June from a year earlier, enough to cover about two months of imports, central bank data shows.
The $232 billion economy has expanded an average of about 3 percent since the start of 2008, less than half the annual pace of the previous five years, IMF data shows. The Washington-based lender estimates the fiscal deficit may be as wide as 7.5 percent of GDP this fiscal year.
The PML-N leader Nawaz Sharif returned to power more than 13 years after his second period as premier was cut short by a 1999 army coup. Having won almost half of the seats contested in the May 11 general election, his party can govern without a major coalition partner.
