ISLAMABAD: (Parliament Times) The Pakistan Muslim League â€“ Nawaz (PML-N) government on Friday presented its fifth and possibly last budget before general elections in 2018, earmarking a total of Rs 4,757 billion in expenditures for the next fiscal year.
“For the first time in Pakistan’s history, an elected prime minister and finance minister are presenting their fifth budget. This shows the strengthening of democracy in the country,” the minister said as he began presenting budget on the floor of the National Assembly.
Pakistan was on the verge of defaulting in 2013 and the economy was declared unstable on the basis of macroeconomic indicators, recalled Dar.
“Today, the country’s foreign exchange reserves are adequate enough for four months of imports. The supply of gas has improved, and load shedding has been completely halted for the industries. Inshallah, load shedding will end for good come next year,” he added.
The finance minister claimed the PML-N government had turned the economy around since it came to power in 2013.
“Today, reputable organisations like PricewaterhouseCoopers are saying that Pakistan will enter the G-20 group of nations in the near future,” claimed Dar.
The GDP growth rate was 5.3% in the outgoing fiscal year â€” the highest in ten years, he stated, adding that it was for the first time that Pakistan’s economy had grown to over $300 billion. “This shows the strengthening of the economy,” said Dar.
The industrial sector grew by 5.02%, the services sector grew by 5.98%, which includes transport, housing, etc. while the per capita income increased by 22%.
The minister set the tax collection target for the upcoming fiscal year at Rs3,521 billion, while the tax to GDP ratio is expected to be 13.2%.
The long-term loan facility for the overall industries sector is at 6%, while for the textile sector it is 5%, in a bit to help the industry, the minister informed.
The foreign exchange reserves stand today at $16 billion, which come up to $21 billion after adding the bank reserves, he stated.
According to budget documents received by Geo News, the government aims to achieve an investment to GDP ratio of 17 percent, and an inflation rate of less than six percent.
It is also hoping to keep the fiscal deficit at under 4.1% of GDP, according to the budget documents.
The minimum wage for unskilled workers will be raised from Rs14,000 to Rs15,000.
The minister said that Rs121 billion will be allocated for the Benazir Income Support Programme, which is three times its allocation in the 2013 budget.
The minister said an investment of Rs97 billion is being undertaken in the Pakistan Stock Exchange.
He also said that women will be given representation in listed companies as well as representation in boards of governors.
The government is aiming to achieve a tax revenue target of Rs4,330 billion, with Rs4,013 billion in taxes collected by the Federal Bureau of Revenue (FBR), and Rs317 billion in other taxes. The non-tax revenue is targeted at Rs979.9 billion.
On the expenses side, the government allocated Rs3,477 billion for â€˜current expenditureâ€™, and Rs1,275 billion for development expenditure.
The budgeted current expenditure includes Rs1,363 billion in interest payments, Rs248 billion in pensions, Rs920 billion for defence affairs and services, Rs430 billion for grants and transfers, Rs138 billion in subsidies, and Rs378.8 billion for the running of the government.
Talking about the exports sector, which has showed a negative growth, the minister revealed that the customs duty on the export of raw hides has been suspended. He announced similar measures for stamping foil.
The minister also informed the House that the present housing shortage in the country is one million, and increasing annually by 0.3 million units. He thus announced a 40% government guarantee on loans up to Rs10,000 from banks and other financial institutions for housing purposes.
The sales tax on the commercial import of fabric will be set at 6%.
The minister also announced the setting up of an Information Technology Park in Islamabad in collaboration with South Korea.
Majority of population is under 20 years of age, thus our focus is on them, said the minister.
An allocation of Rs49 billion has been made for the health sector.
Highlighting the energy sector reforms, Dar said 10,000MW will be added to the national grid by 2018. “Load shedding will be history,” he claimed.
The minister added that 15000MW will be added to the grid in later years.
An amount of Rs180 billion has been earmarked for CPEC-related development projects in the country.
The Karachi Operation which began on the premier’s orders in 2013 has borne fruit, said the minister, adding that the nation is proud of the army for defeating the enemy after the government launched Operation Zarb-e-Azb in June 2014. “No army has sacrificed against terrorism as much as the Pakistan Army has,” he stated.
In recognition of these sacrifices, a special raise of 10% allowance apart from salaries will be provided for them, he declared. The minister also announced a special welfare package for the families of martyrs from the armed forces, police and other security agencies.
Moreover, an increase of 10% in the salaries of government employees and as much increase in pension of retired employees has been announced.
The minister also declared a decrease in the withholding tax for registration of vehicles for filers of tax returns. Registrations of 850cc vehicles will now cost Rs7,500, 1,000cc vehicles will now cost Rs15,000 and that of 1,300cc will cost Rs25,000. There has obviously been no decrease for non-filers, the minister commented.
Talking about the corporate tax, Dar said it has been brought down from 35% to 30% as promised by the government.
The minister also presented the proposal to raise the customs duty on electronic cigarettes from 3% to 20%.
A raise in the regulatory duty on betel nut from 10% to 25% has been proposed along with a Rs200/kilogramme regulatory duty on the import of paan.
The minister also presented a recommendation to end the 5% regulatory duty on the import of raw materials related to the poultry industry. He also informed of a reduction in customs duty in the poultry business from 11% to 3%.
Special persons will get a 2% job quota in listed companies as per the newly passed companies act, the minister announced.
The minister also proposed a uniform regulatory tax of 9% on the telecommunications sector and announced relief package on duty for electric cars.
The budget of the Pakistan Baitul Maal is to be raised from Rs4 billion to Rs6 billion.
The government is also set to launch a scheme for the payment of HBFC loans for widows. The scheme is valid for widows who have not remarried.
Session begins with ruckus
The assembly session formally started with prayers at the Parliament House around 4:45pm for the presentation of the federal budget.
Presenting the Economic Survey 2016-17 on Thursday, the finance minister had forecast a growth rate of 6% for the next fiscal year.
According to government sources, the PML-N’s fifth budget is expected to lend further focus towards improvement in economic growth, maintaining fiscal discipline, reducing on-development expenditures and boosting exports besides providing relief to the masses, promoting investment for job creation, treading the people’s friendly policies for overarching socio-economic prosperity.
The key focus in the budget would be on infrastructure and human resource development while the government is likely to enhance allocations for the social safety net for providing maximum relief to the vulnerable segment of the society, sources said.
It would also focus on social sector development and revenue enhancement measures, besides introducing reforms for improving governance and boosting private sector investment.
On the revenue side, the government would introduce measures for bringing improvement in the system of tax collection, broadening the tax base, and facilitation to taxpayers, they said and argued that strong revenue generation will play a crucial role in achieving the targets for economic growth.
From the growth perspective, the federal budget would focus on generating 6% gross domestic product growth (GDP), and for this purpose, the government would introduce some fiscal measures and policy initiatives.
The National Economic Council (NEC) chaired by Prime Minister Muhammad Nawaz Sharif on May 19, had already approved the GDP growth target at 6% for the financial year 2017-18 while the government achieved a GDP growth rate of 5.3% in the outgoing fiscal year.
The NEC also approved country’s consolidated development budget of Rs2.5 trillion for the upcoming financial year (2017-18), showing the highest-ever increase in the overall national outlay.
This included Rs1,001 billion Federal Public Sector Development Programme (PSDP), Rs1,112 billion provincial PSDP while Rs400 billion would be spent by various corporations from their own resources to carry out their development projects.
The development financing for Azad Jammu and Kashmir in the upcoming PSDP has been enhanced from Rs12 billion to Rs22 billion, for Gilgit-Baltistan it has been increased from Rs9 billion to Rs12 billion, while an additional package of Rs3 billion for GB, hence taking the total funding to Rs15 billion for the region.
Development funding for the Federally Administered Tribal Areas has also been increased from Rs21 billion to Rs24.5 billion.
The social sector was given importance in the development budget, financing for which has been increased from Rs90 billion to Rs153 billion.
In order to promote higher education and lead the country towards development, the budget for the Higher Education Commission(HEC) has been increased from Rs21 billion in 2016-17 to Rs35.5 billion in 2017-18. The government would announce growth targets for the upcoming fiscal year.
According to official sources, the agriculture growth target would be fixed at 3.5%, manufacturing at 6.4%, services sector at 6.4%, while inflation would be curtailed at 6%.
The investments are expected to go up from the current 15.8% to 17.2% percent, while exports are projected to reach $23.1 billion.
During the outgoing fiscal year, the agriculture sector posted a growth of 3.46%, large scale manufacturing grew by 5.06% compared to 4.64% last year, while the headline inflation consumer price index averaged at 4.1% during July-April 2017 against a target of 6%, showing that inflation will remain below the target.