KARACHI: Assuming a record high markup cost due to high interest rates, the coalition government is likely to present a budget of Rs 13-15 trillion for the fiscal year 2023-24, JEE News reported Sunday citing a budget preview report by Topline Securities.
The government is expected to set a target of Rs 9-9.2 trillion for the fiscal year 2023-24, which is 21 percent higher than the target of Rs 7.5 trillion set for the current fiscal year, the report said.
It is to be noted that if set, the tax target for FY 2023-24 will be 29% higher than the expected tax collection in the outgoing FY23.
The brokerage house said it is a challenging time for the government to come up with next year’s budget and uncertainty surrounding the upcoming elections and how Pakistan will fill its external account funding gap.
“This uncertainty over financing the US dollar funding gap is causing anxiety in currency, bond and stock markets,” the report said.
Historically, revenue targets have also deviated by an average of 8 percent from actual targets over the past five years. “We expect the same to happen in FY24 amid economic slowdown,” it added.
The non-tax revenue target for FY24 was estimated at Rs 2.5 trillion (2.4% of GDP) while the estimate for FY23 was Rs 1.6 trillion (2% of GDP). The report envisages some taxation initiatives by the government, including tax on undistributed reserves, continuation of super tax, shift from final tax system to minimum tax system, asset/wealth tax, non Includes higher taxes on filers, taxes on rental income, and taxes. On banks, tobacco and beverages.
It expects the Federal Public Sector Development Program (PSDP), development expenditure to be Rs 0.9 trillion for FY24.
“We may see major cuts due to fiscal constraints. The combined PSDP (federal and provincial) is expected to reach Rs 2.6 trillion (2.5% of GDP) in FY24.
“On the political front, with Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) sidelined, it is possible that a weak coalition government will come to power in the elections. It will be interesting to see how aggressive and capable the new setup will be to deal with this economic crisis.
“To create good optics, it is possible for the government to set unrealistic revenue targets to create room for spending in the budget.”
According to the report, it seems that the government will not be able to complete the current International Monetary Fund (IMF) program in time.
He emphasized that regardless of the status of the current IMF program, Pakistan would have to enter another and larger IMF program.
“Government is under intense political pressure due to economic slowdown and high inflation and may take steps to appease the public through some kind of expansionary policies in the upcoming budget, including direct cash subsidies for the disadvantaged. And that includes raising the minimum wage.”
The brokerage warned that any excessive spending without adequate tax recovery measures would be ill-advised.
The upcoming budget could be neutral to positive for the stock market, and neutral for sectors like oil and gas exploration, chemicals, pharmaceuticals, consumer goods, tobacco, technology and communications, textiles, cement, fertilizers and oil marketing companies. Is. research
On the other hand, the budget could be neutral to negative for banks and autos, while neutral to positive for steel and independent power producers, the report said.
