The Federal budget 2020–21 Pakistan presented on 12th of June on Friday. The budget is particularly important since the country faced economic losses due to the Covid-19 outbreak and lockdowns. The budget 2020 Pakistan is expected to have a volume of Rs. 7600 billion and it would be presented by the Federal Minister for Industries and Production HammadAzhar in the national assembly.
Pakistan Budget 2020-21
Let’s get into the facts and figures of Pakistan’s 2020 budget. Interest and debt repayment are estimated at Rs. 3235 billion. Meanwhile, the budget deficit is likely to be more than Rs3427 billion.
Almost 1402 billion could be spent on defense. Federal ministries and departments would have their fair share of Rs. 495 billion.Rs. 260 billion would be spent on subsidies and Rs. 820 billion in grants.
The volume of the 2020 budget dedicated for developments would be kept at Rs. 1324 billion for federal andRs. 674 billion for provinces.Rs. 40 billion is for Azad Kashmir and Gilgi-Baltistan, Rs. 48 billion is reserved for tribal areas merged into Khyber Pakhtunkhwa.
The 2020-21 Federal Budget suggests that inflation is projected to fall from 11% to 6.5% during the next financial year, and there are proposals to cut down non-developmental expenditures of the government.
Let’s take a look at the amounts dedicated for various departments in the Federal budget 2020–21 Pakistan. Rs. 364 billion is for infrastructure, Rs. 249 billion for social sectors and Rs. 80 billion and Rs. 70 billion for energy and water sectors respectively. Rs. 179 billion is likely to be allotted for transport and communication department.
The Education Budget of Pakistan 2020-2021 is likely to reserve Rs. 35 billion for higher education. Rs. 20 billion is for health and population welfare, and this average amount could be criticized heavily in the light of health crisis faced by Pakistan.
Budget 2020-21 Pakistan Salary Increase
Bad news!The federal cabinet has decided not to raise salaries and pensions this time. According to sources, a special meeting of the cabinet presided over by the Prime Minister Imran for the discussion of budgetary proposals, took this decision. Meanwhile, Government employees are likely to see a 10% rise in their salaries. The budget is likely to set Rs. 475 billion for pensions.
Budget 2020 taxes
The target for tax revenue will be set at Rs. 4950 billion. Our sources suggest that International Monetary Fund (IMF) has called to end sales tax exemption for all sectors. Meanwhile, income tax, FED and GST rates for non-filers are also likely to increase. Withholding tax can be imposed on foreign Currency transactions.
On the other hand, Federal Excise Duty (FED) may be imposed on e-cigarettes. It has also been suggested to extend the scope of advance income tax to dealers, distributors and retailers.
The withholding tax on electricity bills of up to Rs. 33,000 is likely to be increased from 5% to 7.5%. The bills ranging fromRs. 33,000 to Rs. 66,000 will have 10% withholding tax and 15% on bills greater than Rs. 66,000.
Pakistan Budget for Covid-19
Since the country is in the middle of fighting a pandemic, roughly Rs70 billion would be allotted for the relief efforts to counter COVID-19.
Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh revealed that Pakistan’s economy was on its way to stabilize before the outbreak of corona virus pandemic. There were significant improvements till March 2020. The government had repaid almostRs. 5,000 billion loans and was successful in reducing its expenditures.
But the pandemic caused huge losses and derailed it towards negative growth of 0.38 percent.All the major departments faced negative performance.
Federal Budget 2020–21 Pakistan GDP
Finance Advisor Abdul Hafeez Sheikh, while addressing a press conference in Islamabad, said that the GDP target for the next financial year 2020-21 has been suggested to be 2.3%. Meanwhile the current year’s GDP growth was 0.4% which was way behind against the set target of 3%. All of this is attributed towards the economic losses due to the pandemic-incited lockdowns.
The proposed targets of various sectors have been set at:
- Agriculture 2.9%
- Industries 0.1%
- Services Sector 2.8%
- Trade Deficit 7.1%
- Current Account Deficit 1.6%
The document also proposed to further target subsidies in the next financial year.
Agriculture Budget 2020-21
Agriculture was the only department that did not go down the road with the ongoing pandemic. It recorded a strong growth of 2.67 percent, which is significantly greater than 0.58 percent growth achieved during same period of last year.
The maize production in the country grew by 6.0 percent to 7.236 million tons.Sugarcane production witnessed nominal reduction of 0.4 percent as it was recorded at 66.880 million tones.
Wheat which is the staple of the Pakistani population showed growth of 2.5 percent and reached to 24.946 million tons during the year that will end June 2020. Whereas, cotton production declined by 6.9 percent and it was recorded at 9.178 million bales.
Livestock having share of 60.56 percent in agriculture and 11.69 percent in GDP achieved the growth at 2.58 percent.The Fishing sector having share of 2.06 percent in agriculture value addition (and 0.40 percent in GDP), grew by 0.60 percent, while Forestry sector having share of 2.13 percent in agriculture (and 0.41 percent in GDP) grew by 2.29 percent.
The Pakistan’s Federal Budget for the year 2020-21 is likely to dedicate Rs. 14 billion for the agriculture department.
