ISLAMABAD: Finance Minister Ishaq Dar (today) will unveil the federal budget for the financial year 2023-24 on Friday, which is proposed to be Rs 14.7 trillion.
With a gross budget deficit of over 6% of GDP. It will also mobilize funds for various targeted schemes to woo voters in the next general elections.
Further, the government has set the Federal Board of Revenue (FBR) tax collection target at Rs 9.2 trillion and non-tax revenue target at Rs 2.7 trillion.
For the non-tax revenue target, the government plans to seek powers by amending the Finance Bill to increase the Petroleum Development Levy (PDL) from Rs 50 per liter to Rs 55-60 per liter to raise Rs 870 billion in the next budget. A collection of Rs. 550 billion revised estimates for the next financial year.
The lack of reliability of budget data will continue to trouble economic managers as they change over the course of a fiscal year.
If the new government comes to power after the next general election, it will have to present a mini-budget to reconcile economic realities with the International Monetary Fund (IMF) to secure a new bailout package.
It remains to be seen how Dar will make a last-ditch effort to convince the IMF to revive the stalled program. Dwindling foreign exchange reserves could be at risk from the ongoing impasse, as State Bank of Pakistan’s reserves fell below $3.9 billion.
It will be impossible to sign a staff-level agreement without signing a broader budget framework with the IMF, so all will depend on meeting three conditions, including $6 billion in external financing. achieving, unveiling the next budget as per IMF guidelines and ensuring a market-based exchange rate.
The IMF program will end on June 30, so there is no possibility of further extension as stated by the Finance Minister in his presser at the launch of the Economic Survey for 2022-23.
There is a difference in reliability of the budget figures as there are frequent changes during the year, hence the need to present a realistic budget for the upcoming financial year.
The term of the Pakistan Democratic Movement (PDM)-led government ends on August 12. However, the government has approved an allocation of Rs 90 billion for the implementation of the SDGs Achievement Program (SAP) for the next budget as compared to the revised budget. 116 billion rupees have been allocated for the current financial year.
The government’s first and foremost priority will be to ensure the provision of external debt, which requires $25 billion in the next budget. It remains to be seen how the government plans to generate such a large number when it has secured only $8.1 billion of the total budget of $22.8 billion in external debt in the first ten months of the current fiscal year. Grants
Fiscal constraints pose serious challenges as total net revenues of the federal government will remain insufficient to meet debt service requirements.
Total net receipts of the federal government after taking into account the transfer of resources to the provinces and non-tax revenue will be Rs 6.5 trillion.
7.5 trillion will be spent on total debt servicing. In this way, the federal government will have a loss of 1000 billion rupees. However, all other expenses including defence, salaries, pensions, running the civil government, subsidies, grants to public sector enterprises and other borrowings have to be met.
The Finance Minister announced during the launch of the survey that the government will do its best to increase the salaries, pensions and minimum wages of employees in the FY24 budget. Pakistan will have to raise domestic and foreign loans of Rs 7,000 to 7,500 billion to cover the budget deficit of the next financial year.
There are no easy solutions ahead, so deep-rooted structural reforms will be needed to pull the economy out of crisis mode.
