The federal budget of Rs7294 billion for the financial year 2020-21 is being presented today (Friday). Federal Minister for Industries and Production Hammad Azhar is presenting the budget in the National Assembly.
According to the details, the budget for the next financial year will have a volume of Rs7294 billion, while the target for tax revenue will be set at Rs4950 billion.
Sources claim that budget deficit is likely to be more than Rs3427 billion.
Interest and debt repayment are estimated at Rs3235 billion while 1402 billion could be spent on defense. Government employees are likely to see a 10% raise in their salaries as well.
Sources say that the federal budget is likely to set Rs475 billion for pensions, while Rs495 billion could be set aside for federal ministries and departments.
The Centre can also spend Rs260 billion on subsidies and Rs820 billion in grants. The volume of development budget for fiscal year 2020-21 will presumably be kept at Rs1324 billion with federal budget of Rs650 billion and provincial budget of Rs674 billion.
It has been suggested to allot Rs70 billion to counter COVID-19, Rs364 billion for infrastructure, Rs80 and Rs70 billion for energy and water sectors respectively, Rs179 billion for transport and communication, Rs 249 billion for social sectors, Rs20 billion for health and population welfare, Rs 35 billion for higher education, Rs40 billion for Azad Kashmir and Gilgi-Baltistan, Rs48 billion for tribal areas merged into Khyber Pakhtunkhwa and Rs14 billion for agriculture.
Sources claimed that the International Monetary Fund (IMF) has called for ending sales tax exemption for all sectors.
On the other hand, income tax, FED and GST rates for non-filers are also likely to increase. Withholding tax is likely to be levied on foreign currency transactions.
On the other hand, Federal Excise Duty (FED) may be levied on e-cigarettes and it has also been proposed to extend the scope of advance income tax to dealers, distributors and retailers.
Sources further said that withholding tax on electricity bills of up to Rs33,000 is proposed to be increased from 5% to 7.5%, on bills of Rs33,000 to Rs66,000 to 10% and 15% on bills of over Rs66,000.
Moreover, the federal cabinet has decided not to raise salaries and pensions this time. According to sources, the decision was taken in a special meeting of federal cabinet chaired by Prime Minister Imran Khan to discuss and approve the budgetary proposals for the next fiscal year.
Economic Survey 2019-20: Hafeez Sheikh says GDP down to negative 0.38% due to COVID-19
Adviser to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh said that country’s economy was stabilizing before the outbreak of coronavirus pandemic (COVID-19), which inflicted huge losses and derailed it towards negative growth of 0.38 percent.
Addressing at the launching ceremony of Pakistan Economic Survey for the outgoing fiscal year 2019-20, the advisor said that the fiscal year 2020, before coronavirus spread, showed dedicated efforts of the government for addressing structural issues that had caused macroeconomic imbalances back in FY 2018.
He said that the economic reforms programme and the implementation was also acknowledged by the international financial institutions while International Monetary Fund (IMF) had declared that Pakistan’s programme was on track and bearing fruits for the economy.
He said that the pre-COVID-19 economic recovery was also supported by macroeconomic indicators as on external side, the decline in current account deficit, buildup of foreign reserves and stable exchange rate.
On the fiscal side, there were significant improvements in all major indicators and the trend continued till March 2020, implying that the fiscal consolidation was on track.
The primary balance had witnessed a remarkable turnaround as it had posted a surplus of Rs193.5 billion during July-March FY2020 against a deficit of Rs463.3 billion last year.
He said that the government had repaid around Rs5,000 billion loans and was successful in reducing its expenditures, while no ministry or division was provided supplementary grant.
GDP target for next financial year 2020-21 set at 2.3%
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 proposed to be 2.3% while the current year’s GDP growth was negative 0.4% against the target of 3%.
The proposed targets of various sectors have been set at:
a) Agriculture 2.9%
b) Industries 0.1%
c) Services Sector 2.8%
d) Trade Deficit 7.1%
e) Current Account Deficit 1.6%
According to the document, inflation is projected to fall from 11% to 6.5% during the next financial year, and there are proposals to reduce government’s non-developmental expenditures.
The document also proposed to further target subsidies in the next financial year.
Agriculture sector grew by 2.67% in 2019-20
The outbreak of deadly Corona virus, which had badly affected the global economies also negatively impacted the national economy and performance of all major sectors remained dismal during the outgoing fiscal year (2019-20).
However, during period under review, the agriculture sector performed well as it recorded strong growth of 2.67 percent considerably higher 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, whereas cotton production declined by 6.9 percent and it was recorded at 9.178 million bales.
sugarcane production witnessed nominal reduction of 0.4 percent as it was recorded at 66.880 million tones. Wheat is the most important crop of Rabi season, which showed growth of 2.5 percent and reached to 24.946 million tons during the year to be ended on June 30.
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.
