Pakistan’s Finance Minister Ishaq Dar declared the completed Federal government’s budget for 2013-14 in the National Assembly with a record expenditure of Rs3.5 trillion.
It reflected a difficult and ambitious fiscal adjustment of about Rs580 billion — 2.5 per cent of the GDP (gross domestic product) — by reducing subsidies and introducing additional revenue and administrative tax measures estimated to fetch Rs400 billion.
The overall size of the federal budget is estimated at about Rs3.5 trillion, while the tax revenue target has been pitched at Rs2.75 trillion, including the FBR’s revenue target of Rs2.475 trillion. To restrict power sector losses, subsides are targeted to be brought down to about Rs150 billion from the current year’s actual tariff differential subsidies of Rs380 billion, against a budgeted allocation of Rs120 billion.
For this, the federal government plans to gradually increase electricity tariff for all consumers to bridge a whopping Rs6 per unit difference between rates approved by the National Electric Power Regulatory Authority (NEPRA) and those notified. While providing direct subsides to consumers with monthly consumption of up to 300 units, the tariff for higher categories will be substantially increased with additional imposition of a tax on consumption of over 1000 units per month. Total subsidies for next year have been put at Rs300 billion.
It has been estimated that Rs1.15 trillion will be spent on interest payments. A Federal Public Sector Development Programme of Rs540 billion has already been approved by the National Economic Council, while the allocation for defence has been estimated at Rs627 billion. The expenditure on running the civil government has been estimated at Rs278 billion.
The government would try to restrict fiscal deficit to about Rs1.4 trillion, about 5.9 per cent of the GDP, in line with Dar’s desire to bring it down by 2.5 per cent of the GDP from the current year’s Rs2 trillion — almost 8.5 per cent of the GDP.
The salaries of government employees have been proposed to be increased by 10 per cent, slightly higher than the expected inflation rate of eight per cent, and pensions by 15 per cent.
Salient points of Pakistan Budget 2013-2014 :
- The average rate of inflation stood at 13 percent in last five years.
- The burden of national debt witnessed a whopping increase of 250 percent to reach Rs14284 billion.
- Dollar rose to Rs100 from 60.
- The average rate of inflation remained 13 percent in past five years
- Pakistan’s circular debt increased to 250 percent in past five years
- Growth rate remained 1 pc
- Dollar valued soared to Rs100 from Rs60
- Pension increased to 10 percent. The minimum pension will be Rs5000 from Rs3000
- Rs75 billion allocated from Income Support Programme
- Proposal for 75 bn allocation for Income Support Program
- Growth rate stood at 1 percent
- Plan to give 5 Rs 5 lac Qarze Hasna.
- Prime Minister House expenditures being brought down by 45 percent.
- Tax exemption of luxury cars to be abolished.
- Pakistan’s economy suffered a loss of 2 percent each year due to energy crisis.
- Sale tax being increased from 16 pc to 17.
- Circular debt amounting to more than Rs500 billion will be eliminated in 60 days.
- Ban on purchase of new vehicles for Prime Minister office.
- Prime Minister Laptop scheme to be initiated
- Five percent additional tax imposed on non-registered power consumers.
- Exemption of 25 percent on 1800 cc to 2500cc vehicles.
- Customs duty on water filtration equipment to be decreased.
- Pension being increased by 10 percent.
- People works program renamed as Tamir-e-Watan Pakistan program.
- Ministers discretionary funds abolished.
- Economy grew by around 3.
- Economy was on auto pilot.
- 1481 billion tariff subsidy paid.
- 1200 cc hybrid cars exempted form duty tax.
- Non registered power consumers 5 % sales tax.
- 1800-2500 cc cars 25 % concession.
- 1200-1800 cc cars 50% duty reduction.
- 3G license auction soon.
- SBP borrowing to de reduced.
- Targeted inflation rate for FY 2013-14 is 9.5.
- Pension up by 10% from 3000-5000
- GDP target for FY 2013-14 is 4.8 percent.
- Tax revenue target: 2.475 billion.
- Non-tax income: 800 billion
- Power subsidy: 185 billion.
- Small business loans up to Rs200,0000 with 8% markup.
- Investment ratio to be increased by 20 percent.
- Income Support Program: 75 billion.
- Qaraz-e-Hasna (Soft loan): Rs500,000.
- Fiscal deficit targeted at 8 percent of GDP.
- The entire subsidy policy to be reviewed.
- Rs340 billion earmarked for development projects.