Ishaq Dar Presents Rs14.4tr Budget In NA Today

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Ishaq Dar presents Rs14.4tr budget in NA today

In a bid to attract voters ahead of the upcoming general elections, the government intends to allocate funds to various targeted schemes, despite a higher consolidated budget deficit of over 6% of GDP.

ISLAMABAD: (UrduPoint/Pakistan Point News-June 9th, 2023) Finance Minister Ishaq Dar on Friday presented the federal budget for the fiscal year 2023-24, projected at approximately Rs14.4 trillion.

In a bid to attract voters ahead of the upcoming general elections, the government intends to allocate funds to various targeted schemes, despite a higher consolidated budget deficit of over 6% of GDP.

The Federal board of Revenue (FBR) has been assigned a tax collection target of Rs9.2 trillion, while the non-tax revenue target is set at Rs2.7 trillion. To meet the non-tax revenue goal, the government plans to raise the petroleum development levy (PDL) from Rs50 per litre to Rs55-60 per litre, aiming to generate Rs870 billion in the next budget.

The credibility of budgetary numbers remains a concern, given their anticipated fluctuations throughout the financial year. If a new government comes into power after the general elections, it may need to introduce a mini-budget to align with IMF guidelines and secure a fresh bailout package.

The finance minister's ability to satisfy the IMF and revive the stalled program is yet to be seen. The ongoing deadlock could endanger the depleting foreign exchange reserves, which currently stand below $3.9 billion.

The signing of a staff-level agreement with the IMF hinges on meeting three conditions: securing external financing of $6 billion, presenting a budget in accordance with IMF guidelines, and maintaining a market-based exchange rate.

The IMF program is scheduled to conclude on June 30, with no possibility of further extension, as highlighted by the finance minister during the launch of the Economic Survey for 2022-23.

The credibility gap surrounding the accuracy of budgetary numbers necessitates the presentation of a realistic budget for the upcoming fiscal year.

As the tenure of the Pakistan Democratic Movement (PDM)-led government comes to an end on August 12, an allocation of Rs90 billion has been approved for the SDGs Achievement Programme (SAP) in the forthcoming budget.

Addressing external debt servicing remains a top priority, demanding $25 billion in the next budget. It remains uncertain how the government plans to generate such a significant amount, considering that it has only secured less than $8.1 billion in the first ten months of the current fiscal year.

The fiscal constraints pose significant challenges, as the federal government's net revenue receipts are projected to be insufficient to meet debt servicing requirements. After transferring resources to provinces and accounting for non-tax revenue, the total net receipts are estimated at Rs6.5 trillion, while total debt servicing will amount to Rs7.5 trillion, resulting in a deficit of Rs1,000 billion.

The government aims to increase salaries, pensions, and minimum wages of workers in the FY24 budget. However, addressing the substantial budget deficit for the next fiscal year will necessitate acquiring domestic and foreign loans ranging from Rs7,000 to Rs7,500 billion.

Given the complexity of the situation, comprehensive structural reforms are indispensable to navigate the economy out of the ongoing crisis.

Abdullah Hussain

Abdullah Hussain is a staff member who writes on politics, human rights, social issues and climate change.