ISLAMABAD: Finance Minister Ishaq Dar will present a Rs14.7 trillion federal budget for 2023-24 today.
With over 6% GDP consolidated budget deficit. It will also support specific voter-attraction campaigns for the next general election.
The FBR’s tax collection aim is Rs9.2 trillion, and its non-tax revenue target is Rs2.7 trillion.
The government plans to amend the finance bill to increase the petroleum development levy (PDL) from Rs50 per litre to Rs55-60 per litre to collect Rs870 billion in the next budget, compared to revised estimates of Rs550 billion for the outgoing fiscal year.
Because budgetary data change throughout the year, economic managers will be haunted by their unreliability.
After the next general election, the new government will have to propose a mini-budget to align economic reality with the IMF for a new bailout package.
Dar’s last-ditch efforts to convince the IMF to revive the delayed initiative may jeopardize Pakistan’s foreign exchange reserves, which dropped below $3.9 billion.
The staff-level agreement cannot signed without a broader budgetary framework with the IMF, so three conditions must met: $6 billion in external financing, a market-based exchange rate, and an IMF-compliant budget.
IMF Program
In his presser to introduce the Economic Survey for 2022-23, the finance minister stated that the IMF program will finish on June 30 and cannot be extended.
Due to numerous budgetary changes throughout the year, a realistic budget for the next fiscal year is needed.
The PDM-led government’s term ends on August 12. The government has approved Rs90 billion for the SDGs Achievement Programme (SAP) in the upcoming budget. Down from Rs116 billion in the current financial year.
The administration will prioritize external debt servicing, which requires $25 billion in the upcoming budget. How the government hopes to earn such a huge sum when it had secured just under $8.1 billion in foreign loans and grants in the first ten months of the current fiscal year out of the budgeted $22.8 billion is unclear.
The federal government’s net revenue won’t be enough to service debt due to fiscal limitations.
After province transfers and nontax revenue, the federal government’s net collections will be Rs6.5 trillion.
Debt servicing will cost Rs7.5 trillion. The federal deficit will be Rs1,000 billion. Defence, salaries, pensions, civil government, subsidies, grants to public sector firms, and others must be financed through borrowing.
At the survey’s introduction, the finance minister promised to raise worker pay, pensions, and minimum wages in FY24’s budget. Pakistan’s budget deficit for the next fiscal year will require Rs7,000 to Rs7,500 billion in domestic and foreign borrowing.
To get the economy out of crisis, substantial structural adjustments are needed.
