ISLAMABAD: The Pakistan government has missed a couple of major milestones in the run-up to the ritual of the federal budget for next fiscal year, expected next month. Strong indications are now coming out of Ministry of Finance that the national budget would be presented before the National Assembly in the second week of June - most probably on June 13.
Major features of the budgetary framework are understood to have been finalised in Dubai by Pakistan’s economic team led by Finance Minister Ishaq Dar and an IMF mission headed by adviser, Middle East and Central Asia, Jeffrey Franks, but the mechanical exercise has to be set into motion.
Background discussions with government officials based on feedback following IMF talks indicate that the government is poised to have a fiscal adjustment of over Rs550bn in the next year budget, which is to be managed by a combination of expenditure restructuring, subsidy control and revenue measures.
This is because the government has to limit itself within a fiscal deficit of 5.3-5.4 percent during the next year from over 6 percent this year. This may mean about 1 percent cut in fiscal deficit, not enough when the government has also to cope with a substantial increase in interest payments.
Against a budgetary estimate of about Rs1.15 trillion for this year, the debt servicing cost for next year is expected to be over Rs1.5 trillion, an increase of almost 35 percent, as a consequence of heavy reliance on short term borrowing from commercial banks.
Indications are that overall size of the federal budget would be around Rs3.9 trillion including a defence expenditure of about Rs720bn and debt servicing of Rs1.55 trillion. The federal development programme is estimated to be around Rs530bn. Provisions for a little over Rs300bn for running of the civil administration, about Rs180bn worth of pension bill and subsidies of about Rs350bn are also stipulated.
The tax target for Federal Board of Revenue was being pitched at about Rs2.8 trillion while non-tax revenue is proposed at about Rs700bn.
Internews
