In a significant development, the National Assembly recently passed the revised budget for the upcoming fiscal year. The government, under the guidance of the International Monetary Fund (IMF), has implemented several fiscal tightening measures in order to secure critical funding. This article delves into the details of the revised budget, shedding light on the changes made and their implications for the economy.
Revised Budget Overview
The revised budget for the fiscal year 2023-24 now stands at an impressive Rs14.4 trillion. The government’s primary goals with this revised budget are to generate an additional Rs215 billion in tax revenue and reduce public spending by Rs85 billion. It is important to note that these measures do not impact the federal development budget, nor do they affect the salaries and pensions of government personnel.
Tax Revenue Targets and Expenditure Reduction
Under the revised budget, the government aims to achieve a significant increase in tax revenue by generating an additional Rs215 billion. At the same time, it plans to reduce public spending by Rs85 billion. It is worth mentioning that these measures are implemented without compromising the federal development budget and the remuneration of government employees.
The revised revenue collection target has been set at Rs9.415 trillion, while the total spending is projected to be Rs14.48 trillion. As part of the revised budget, the share of the provinces will be increased to Rs5.39 trillion from Rs5.28 trillion, ensuring a balanced allocation for regional development.
Amendments and Program Allocations
Several changes have been introduced in the budget to address various aspects of the economy. Notably, the allocation for the Benazir Income Support Programme has been revised from Rs450 billion to Rs466 billion for the fiscal year 2023-24. Additionally, the petroleum development levy will witness an increase from Rs50 to Rs60 per litre.
Prime Minister’s Meeting with IMF Managing Director
The changes in the budget were implemented following a meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva during the Global Financing Summit held in Paris. The meeting assumed significance as Pakistan’s ongoing loan programme, established in 2019, is set to expire on June 30. To secure the much-needed funding stalled since November, the country has been striving to obtain $1.1 billion under the $6.5 billion facility’s ninth review.
Enhanced Revenue Measures
The revised budget introduces several revenue measures to bolster the economy. Finance Minister Dar, during the budget presentation on June 9, announced new revenue measures worth Rs223 billion. These additions, coupled with the previously introduced taxes amounting to Rs500 billion in a mini-budget back in mid-February, bring the total sum of new tax measures for the fiscal year 2023-24 to Rs938 billion.
The government remains optimistic about achieving a 28% increase in revenue target for the upcoming fiscal year, primarily driven by projected economic growth of 3.5% and an average inflation rate of 21%. Moreover, the autonomous growth in revenue, stemming from Gross Domestic Product growth and inflation, is expected to reach Rs1.76 trillion.
The revised budget for the fiscal year 2023-24 demonstrates the government’s commitment to implementing necessary fiscal measures to strengthen the economy. With an emphasis on increasing tax revenue and reducing public spending, the government aims to ensure sustainable economic growth and secure critical funding. The amendments made, combined with the projected economic indicators, provide a roadmap for the country’s financial stability and prosperity in the coming year.