PPP Chairman Bilawal Bhutto Zardari has resolved to bring the perpetrators of the May 9 events to justice, saying that ‘political terrorism’ would escalate if the people involved in the violent protests were forgiven.
“We are confronted with political terrorism. The issue will escalate further if we forgive the perpetrator of the May 9 riots,” he said at the party’s rally in Khawzakhela, Swat on Saturday. “All of the perpetrators of the May 9 riots will be brought to justice.”
While referring to the violent protests where state buildings and military installations were attacked, he said that former prime ministers Zulfikar Ali Bhutto and Benazir Bhutto were killed, however, the PPP never resorted to violence and believed that democracy was the “best revenge”.
Bilawal said that the threat of terrorism resurfaced in Swat after the PTI chief allegedly resettled the terrorists in Khyber Pakhtunkhwa during his stint in the government.
“The terrorists were defeated in the KP after the significant sacrifices of police, army, and the people of Swat. But the PTI government settled the terrorists in KP, who had fled to Afghanistan,” he added.
The people of Swat were witnesses of the PPP’s efforts to bring peace to the country, he claimed, alleging that all other parties remained silent when terrorists were imposed on the people of Swat.
“It was shaheed [martyred] Benazir Bhutto, who said that she will hoist Pakistan’s flag in Swat, which some people wanted to take down,” he said.
Bilawal claimed the PTI had abandoned its loyal and visionary workers and given tickets to abusers and non-serious candidates.
The PPP chairman also touched upon the subject of the budget for the fiscal year 2023-24, saying that the PPP has sent a high-level committee to the prime minister to inform him about the party’s nominal input in the budget.
“The federal government had pledged to match the provincial governments’ funds for the flood victims. Surprisingly, the center has not allocated those funds for the provinces in the budget,” he added.
If the PML-N wants the PPP’s vote for the budget, then it should allocate funds for the flood victims’ reconstruction
“If the PML-N wants the PPP’s vote for the budget, then it should allocate funds for the flood victims’ reconstruction,” he said.
He called for elections to be held on time, saying that PPP was all set for the polls. “We are calling all parties including our allies to go for elections.
“All political parties should be allowed to participate in the polls. Whoever gets elected, will hopefully work for the betterment of the masses.”
A shopkeeper counts money at his shop in Islamabad. AFP/File
The federal government has announced that the salary of government employees will be paid ahead of schedule as Eid approaches later this month.
“I have directed the finance secretary and discussion with the prime minister, who is in Baku, so on this Friday, June 23, we release the payments instead on month end or first date,” said Finance Minister Ishaq Dar on the floor of National Assembly on Thursday.
Dar said that multiple divisions within the government had requested and suggested that salaries would be paid before Eid.
He added that arrangements were being made despite the fact that the Eid date had not been officially set yet, but it was expected to be around June 29.
The next salaries that the government employees receive will include the latest increase.
Earlier this month, Finance Minister Ishaq Dar presented Rs14.46 trillion ($50.45 billion) worth of budget in the National Assembly. The government will target a budget deficit of 6.54% (Rs7.57 trillion) of economic output in the fiscal year starting on July 1, he said, slightly below the current year’s revised estimate of 7%.
Finance Minister Ishaq Dar presented Rs14.46 trillion ($50.45 billion) worth of budget in the National Assembly on Friday. The government will target a budget deficit of 6.54% (Rs7.57 trillion) of economic output in the fiscal year starting on July 1, he said, slightly below the current year’s revised estimate of 7%.
“The government has prepared a responsible budget, not an election budget,” he said on the floor of the house.
The ruling alliance has planned to meet its expenses through taxes, internal borrowings, and more than $2 billion from the IMF under the loan programme.
He started his speech by blaming the PTI, the Ukraine war, and the 2022 flash floods for the country’s financial woes. Prime Minister Shehbaz Sharif, Defence Minister Khawaja Asif, and other federal cabinet members were present in the august house.
The deficit target for the fiscal year ending this month had been revised higher, from a previous projection of 4.9%.
The budget needs to satisfy the IMF to secure the release of stuck bailout money for the crisis-struck country, which is due to hold a general election by November.
Around Rs1.8 trillion – out of the total Rs14.46 trillion – would go to defence. It would target debt servicing of Rs7.3 trillion.
Salient features of budget
Targets inflation at 21%
Total revenue budgeted for FY23 stands at Rs12,163 billion
Net revenue comes out at Rs6,887 billion after subtracting provincial transfer of Rs5,276 billion
Expense: Rs1,460 billion
PSDP: Rs1,150 billion
Subsidy on electricity, gas, and other sectors: Rs1,074 billion
Exports: $30 billion
International trade: Targets exports of $30 billion
Estimates debt servicing funds of Rs7.3 trillion
Services provided by restaurants including cafes, food (including ice cream), parlours, coffee houses, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets etc are proposed to be taxed at 5% if payment is made through debit or credit cards, mobile wallets or QR scanning
Monthly salary increased from Rs25,000 to Rs32,000
0.6% tax on bank transactions over Rs50,000 for non-filer; 10% tax on more than Rs500 million of the annual income of shareholders; and zero tax on less than Rs150 million of the annual income of shareholders
Defence budget: Rs1,809 billion. Pakistan Army will get Rs824 billion, an increase of Rs81 from the previous year. Rs128 billion for Bahria. Rs18 billion
Withdrawal of capping of the fixed duties and taxes on the import of old and used vehicles of Asian Makes above 1300CC
Agriculture
Increase agri loans from Rs1,800 billion to Rs2,250 billion
Rs30 billion for 50,000 shifting tube wells to solar panel
End taxes on import of saplings, seeds
Ending duty and taxes on rice seeder, planter, and dryer in order to increase production
Scheme for concessional loans, Rs5 billion allocated for it
All agro-based units that are industrial in rural areas that have an annual turnover of 800 million, will be exempted from taxes for 5 years
Business and agricultural loan scheme: Rs10 billion allocated for concessional loans
$6 billion for subsidy on imported urea
Loans to farmers at a small interest rate, Rs10 billion allocated for it
IT and freelancers
Income tax for freelancers will be 0.25% till 2026
If a freelancer brings $24,000 annually they will be exempt from tax returns
Companies will able to import hardware, software upto $50,000 without tax
Sales tax on IT services which stands at 15% is brought down to 5%
IT sector given small and medium enterprise (SME) status and concessional tax will be applicable to them
Banks will have 20% concessional taxes (exemption) on providing loans to IT
The government will form an Rs5 billion venture capital fund for the IT sector to encourage entrepreneurs
Rolling out a scheme to give professional training to 50,000 IT graduates
SMEs to be supported through special allocation and SBP loan scheme
Export Council of Pakistan will be formed under the PM to see matters of exports only
Banks will have a 20% concession on taxes that will provide loans to agri, IT, and SMEs. It will be available for two years. SMEs turnover threshold has been increased from Rs250 million to Rs800 million
Rs10 billion allocated for small businesses under the PM scheme
Government will bear tax payments up to 20% if SMEs fail to pay loans
Tax on young entrepreneurs decreased by 50%
Separate credit agency for SMEs
Energy projects: Rs86.4 billion
Infrastructure: Rs491.3 billion
Metal
Metal and mineral sales through online platforms made tax free
Tax on listed companies to come down from 1.5% to 1%
Custom duty on pet scrap material down to 11% from 20%
Capacitators, mining machinery, adhesive tapes, rice mill machinery, machine tools are cleared of customs duty
Filament yarn for the textile industry to be made tax free
Remittances are equal to 90 % of exports, that is how important overseas Pakistanis are
They have a tax worth 2% on something, that is being removed
Concessions for overseas Pakistanis
Abolishes 2% tax on buying immovable property in Pakistan
Diamond card category added in remittances card. It will be issued to those who will send more than $50,000 worth of remittance to Pakistan. They will have non-prohibited board licenses, greatest passport of Pakistan, preferential access to Pakistan’s embassies and consulates, fast track immigration facilities at airports. A scheme will be launched by SBP to award prizes via a lucky draw to diamond cardholders.
Construction
Construction company, for construction of new homes and buildings, to get tax relief of 10% or Rs5 million in their earning
It is proposed that 10% tax credit or Rs1 million to those who will construct homes for themselves. It is proposed that it should be applicable to projects after July 31, 2023.
More than 40 industries are associated with this sector
Tax benefits for Real Estate Industry Trust (REIT) will be extended for another year. So it will be applicable till June 30, 2024
Education
Rs65 billion for HEC
Rs70 for development expenditure
The total of this is Rs135 billion for higher education
Setting up Pakistan Endowment Fund, for which Rs5 billion is kept. Under this scholarship and stipend will be given to high school students
Rs10 billion for the laptop scheme. 100,000 laptops will be given.
Sports
Rs5 billion for the development of sports at schools, colleges, and professional sports
Women empowerment
Rs5 billion for women’s empowerment
Skill development, easy loans for business, training for business
Relief in tax for businesswomen
Youth
It is proposed that for the next three years, tax should be reduced by 50% for income earned by youth from businesses under AOP.
It will be 2 million for individual or group level and 5 million for company level
The age of the owner should be up to 30 years and this programme should start after July 31, 2023.
Rs10 billion for the PM youth programme
Rs5 billion for trainings under the PM youth programme
BISP
92,000 students to get undergrad salary under the BISP. For this, $6 billion has been allocated.
1.5 million children will be provided services under the BISP nutrition programme. Rs32 billion allocated for it
Second-hand clothes have a 10% duty which is not being removed
Rs450 billion allocated for low-income families
Rs8,750 quarterly will be available for 9.3 million families under the BISP Kafalat programme. The government has allocated Rs346 for it.
Stipend prorgamme will be expanded from 6 million to 8.3 million children. It will have 52% girls. Over Rs55 billion has been allocated for it.
USC
Rs35 billion allocated for basic items for deserving families
Targeted subsidies on flour, rice, sugar, pulses, and ghee
Pakistan Baitul Mal
Rs4 billion for treatment and assistance of deserving families
Solar panels
Solar panels and their raw materials are exempted from the customs duty
Laptop computers, notebooks whether or not incorporating multimedia kit
Personal computers
Other
Micro computer
Key boards
Mouse and other pointing devices
Scanner
Other
CD ROM drive
Multimedia kits for
Software Export Board
Hard disk drives
Servers
Routers
Imports exempted from duty
Specific papers and art cards and board for the printing of Holy Quran
Solar panels and import of related machinery
Diapers, Sanitary Napkins and Adhesive Tape
Mining machinery
Rice mill machinery
Machine tools
Imported seeds
Shrimp/prawns for breeding
Roasted peanuts
Any machinery imported into erstwhile Fata
Products exempted from Sales Tax
Contraceptives
Agricultural machinery including combine harvesters, dryers for agricultural products, no-till-direct seeders, planters, trans-planters
Sales tax in FATA’s newly merged districts
import of IT equipment (for exporters)
Reduced duty on imported items
Customs duty on Heavy Commercial Vehicles from 10% to 5%
Scrap for manufacturers of polyester filament yarn
Second-hand clothing, fish, tiles, sports goods
IT based system development consultants reduced to 15% from 16%
Dar reiterated that the government hoped to get an agreement with the IMF soon, echoing comments made earlier in the day by Prime Minister Shehbaz Sharif as he addressed his cabinet.
Shehbaz’s government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month as the country deals with a series of economic and political crises.
The budget would target total tax revenue of Rs9.2 trillion, said Dar, who added there would be no new tax on the industrial sector. The government has targeted total non-tax revenue of Rs3 trillion for 2023/24.
Inflation for the next fiscal year is expected to come in at 21%, the finance czar said.
The finance czar alleged that the PTI government laid “minefields” – a term also used by his predecessor Miftah Ismail for the petrol subsidies announced by ex-PM Khan before leaving office – by giving subsidies on electricity and petrol in violation of the IMF agreement.
The people should realise who damaged the country and saved the country, Dar said as he put all the blame on the PTI.
“Rs5 trillion debt was taken before PTI took over and Rs49 trillion was by the time PTI left,” he said, “The debt increased by 98% in PTI tenure.” He added that God saved Pakistan from going default.
“We did not care for political loss in trying to save Pakistan from default. People must see who saved Pakistan from default and who pushed Pakistan towards it,” Dar said.
He demanded that people who attacked military installations on May 9 – the day when violent protests turned up in the wake of Imran Khan’s arrest – should be held accountable for their actions.
The federal cabinet had agreed to increase salaries of government employees by 30% to 35%.
The salaries of employees working in Grades 1-16 will be increased by 35% and employees of Grades17-22 will get a 30% release.
Based on the approval granted during the cabinet meeting
However, the increase will be made through ad-hoc relief allowance basis instead of changes to basic income structure.
Pensions for former government employees will also be raised by 17.5%.
Mileage allowance, orderly allowance, deputation allowance and special conveyance allowance for disabled will also be increased.
The decision was made in a meeting ahead of the budget session in the National Assembly.
Addressing the meeting, Prime Minister Shehbaz Sharif said that pensions and salaries must be increased to allow the ordinary person to survive inflation.
The PDM-led government tabled Rs14.460 trillion in the National Assembly on Friday. Aaj News visualized the budget in the brief document for both expenditure and revenue and the resulting pie charts show over half the money going to the payment of debt. This is more than the entire tax and non-tax revenue of the federal government.
Consequently, Pakistan will be borrowing more money from international lenders and by floating T-bills and bonds.
The country will be paying Rs7.303 trillion in interest payments. This is 50.5% of the total budget. The share of interest payment has grown over the years.
Of the remaining money, Rs1.074 billion will be spent on subsidies.
The federal government will use Rs714 billion to cover its expenses including salaries.
The defense budget, which has been increased after three years to Rs1804 billion, has a much smaller share than the interest payments.
Development projects under the Public Sector Development Program (PSDP) get only 6.6% of the total spending at Rs950 billion.
Pensioners will receive Rs761 billion or 5.3% of the budget.
On the other hands, the country has little money to cover its expenditure. The total revenue of the federal government stands at Rs6887 billion or 47.6% of the total expenses.
To meet the expenditure, Pakistan will borrow more money from international lenders. It will also seek grants. The total money it expects to receive from external institutions and countries is Rs2527 billion.
This is still insufficient to cover the expenditure. So, the government will float T-Bills, Sukuk, and other bonds to raise Rs3124 billion and borrow at least Rs1906 from local banks.
Pakistan is speaking to its bilateral creditors to restructure its debt, the cash strapped country’s finance minister said on Friday.
Pakistan’s IMF programme runs out this month with about $2.5 billion in funds yet to be released as it struggles to strike an agreement with the lender, as it grapples with record inflation, fiscal imbalances and critical levels of reserves that cover barely a month worth of imports.
Bilateral creditors made up $37 billion of Pakistan’s debt in the fiscal year 2021, out of which $23 billion is owed to China, according to an IMF country report released last year.
Minister Ishaq Dar said, “We are in the process of engaging bilateral lenders to restructure debt,” speaking on Geo News hours after presenting the country’s national budget.
“No haircuts will be made… Interest will be serviced, and principal payments will be staggered,” said Dar.
In order to unlock funding under its long delayed 9th review, Pakistan is required to secure firm and credible financing commitments to close the $6 billion gap. The government has only been able to get commitments of $4 billion, mainly from Saudi Arabia and the United Arab Emirates.
The country has also rolled over debt from China as its reserves reach critical levels.
“This is geopolitics. I can’t say much on camera,” he said while responding to a query on the delay in signing the deal with IMF. “Pakistan’s programme of the ninth review should have been over in February. This is total unfair treatment to Pakistan.”
He blamed political instability, May 9 events, the IMF, and “other” institutions for the delay in the IMF programme.
“You should not corner Pakistan in such a way, I am speaking about those institutions,” he said and reiterated the country has completed all requirements.
He was adamant that the FBR would meet the revenue target as it was not any “guestimate”.
When asked about the government’s intention to allow people to bring $100,000 here and no question would be asked, the finance minister said that earlier it was Rs10 million that amount to $100,000.
“So this is the revival of that same scheme,” he said and dispelled the impression that it was considered as an amnesty. Dar added that the step was taken on demand of the business community.
Pakistan has sought Rs5.51 trillion ($19 billion) from external sources including the International Monetary Fund (IMF) and commercial banks to meet its financing in the fiscal year 2023-24 budget.
The government estimated external loans stand at Rs5,510,580 million, which is estimated at $19.002 billion in FY23-24 at an exchange rate of Rs290 to the US dollar, according to the finance ministry’s ‘Explanatory Memorandum on Federal Receipts’.
The amount is over 180% higher than the revised estimate for the outgoing fiscal year stood at Rs1.951 trillion, the document shows and comes at a time of rising interest rates in the global financial markets.
According to the federal budget proposals, a loan of Rs969 billion would be obtained from the IMF for budgeting. This amount is $2.4 billion.
In the financial year ending 2022-23, it was estimated to receive Rs558 billion from the IMF for budgeting, but the amount received was Rs172.84 billion. The government expects to receive Rs145 billion from the Islamic Development Bank.
Similarly, Saudi Arabia would keep an amount equivalent to Rs870 billion as a time deposit in the banks of Pakistan. Pakistan would get Rs435 billion from the auction of Eurobonds
Pakistan is expected to get oil facilities worth Rs29.5 billion from ECO countries.
Despite borrowing from the IMF, experts have said that Pakistan’s expenses would not be met and the government would get an equivalent loan of Rs1,305 billion from commercial banks.
Along with the budget for the next fiscal year, the government is planning to announce new restrictions on bringing and keeping foreign currency in Pakistan.
The new legislations are expected to include fines as well as prison sentences for any persons or organisations hoarding foreign currency in the country.
The government has also decided that it will raise the limit of foreign currency that can be brought to Pakistan from abroad to $100,000. People bringing foreign exchange under the limit will not be asked to declare their source of earning.
Pakistani soldiers patrol near the Pakistan-Iran border on February 25, 2020. AFP
The federal government has allocated Rs1.804 trillion for the Defence Division in the Federal Budget 2023-24.
In the previous budget 2022-23, the allocation for Defence Division was Rs1.52 trillion whereas this year, the government had made an increase of Rs281 billion, clearly indicating that there will be no compromise on the defence of the motherland.
Finance Minister Ishaq Dar made the announcement while tabling the budget at the National Assembly on Friday.
Journalists work during a demonstration to mark World Press Freedom Day in Islamabad on May 3, 2018. Reuters
Information Minister Marriyum Aurangzeb has said the federal government has allocated an amount of Rs1 billion in the budget for the fiscal year 2023-24 for health insurance of working journalists and media workers.
“Delighted to announce that an allocation has been made in the budget for health insurance of working journalists for the first time ever,” the minister said in a tweet.
She extended gratitude to Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar for allocating funds for the “very important measure”.
“I am certain that, jointly, these measures will play a major role in the growth of our film industry and improvement in the welfare of our nation’s Artists. This will play a key role in the promotion of Pakistan’s narrative, heritage and culture through films, as well as the growth of screen tourism in Pakistan,” said Marriyum
The government has reduced the customs duty on the import of hybrid vehicles to a mere one per cent, shows Finance Bill. Earlier, the custom duty was 20%.
Below are the details for you
Hybrid electric vehicles: 1%
“The concession shall be admissible to manufacturers on import of the same variant to be assembled / manufactured locally subject to certification and quota determination by the Engineering Development Board (EDB),” said the Finance Bill.
Earlier, the customs duty was 20% on such vehicles.
Hybrid electric vehicles: 1%
The concession would be applicable to gross vehicle weight (g.v.w.) not exceeding 5 tonnes and g.v.w. exceeding 5 tonnes but not exceeding 20 tonnes. Earlier, there was a 30% levy on them.
The customs duty has been kept at four per cent for the following products
Battery pack and its parts: Thermistor, resistor, capacitor, and bus bar.
Cooling system for battery packs including blower, tubes, hoses, pump
Sensor hybrid vehicle battery voltage
Inverter assembly with converter (power control unit)
Electric motor and generator for transaxle assembly
Battery charging system/inlet connectors
Hybrid system control unit / hybrid ECU
Junction box
The customs duty has been kept at three per cent for the plug-in-hybrid electric vehicle
Battery pack and its parts: Thermistor, resistor, capacitor, and bus bar.
Cooling system for battery packs including blower, tubes, hoses, pump
Sensor hybrid vehicle battery voltage
Inverter assembly with converter (power control unit)
Electric motor and generator for transaxle assembly
Prime Minister Shehbaz Sharif said that political instability was the most ‘alarming factor’ leading to detrioration of the economy, and state institutions were in agreement with the government to ensure the country was stable enough to move forward.
“There is a concerted effort to promote political instability in the country,” he said while speaking to the cabinet ahead of the budget session. He added that foreign investments and local businessmen had both been discouraged by the political protests of the last year.
Shehbaz said that his government had fulfilled all conditions laid down by the International Monetary Fund, but the staff level agreement was yet to be signed.
He said he had asked the IMF chief for a ‘verbal commitment’ so he could proceed with removing other hurdles to the budget.
“The previous government had abandoned the IMF program,” Shehbaz said. He also blamed the Pakistan Tehreek-e-Insaf for destorying the economy and said his government had worked hard in the last 14 months to set things right.
“Inflation is high everywhere in the world today,” he said. “The challenge before us is to to make life easier for the ordinary person.”
Shehbaz said that the government had consulted businessman and exporters before finalising the budget. He added that he had reached the conclusion that the agriculture sector in particular could give Pakistan higher returns quickly.
The prime minister said that young men were losing interest in agriculture after getting education but the government had planned newer measures to incentivize agriculture. This, he added, would also lower rural to urban migration.
“We must look into raising salaries and pensions so the ordinary man can survive in this economy,” Shehbaz said.
He also said that the government was hopeful of signing a new gas contract to fulfill Pakistan’s energy needs.
Federal cabinet has approved Rs1150 billion budget for development programmes, sources told Aaj News.
A special meeting of the federal cabinet chaired by the Prime Minister is under way in committee room No. 2 of The Parliament House, where budget documents were delivered for the cabinet members while the mobile phones of the members have been kept outside the room.
In addition, the documents of tax targets prepared by the Federal Board of Revenue have also been delivered for the cabinet meeting.
Moreover, Finance Minister Ishaq Dar, finance ministry, and FBR officials will brief the participants on the budget for the next fiscal year.
Here is the breakdown of the amount allocated for different sectors:
Infrastructure: Rs491.3 billion
Power: Rs86.4 billion
Water reservoirs and water sector: Rs99.8 billion
Transport and communication: Rs263.6 billion
Physical planning and construction: Rs41.5 billion
Social: Rs241.2 billion
Health: Rs22.8 billion
Education and higher education: Rs81.9 billion
Sustainable development goals: Rs90 billion
The government has kept a growth target of 3.5 per cent for the financial year 2023-24.
The Federal Government has laid out a summary of its annual plan, detailing the amounts allocated to each governmental department, according to documents seen by Aaj News.
Here are the highlights, all amounts are in Rupees (millions).
The government has set an inflation estimate of 21% for the next fiscal year as part of its annual plan, according to documents seen by Aaj News.
The 21% rate would be a tall ask, given that the inflation rate is at a historic high of 38% on a monthly basis. The government had set an inflation estimate of 11% in the last year, but the it ended up around 25%.
Here are other highlights of the government’s annual targets
GDP target set at Rs99,335 billion
Indirect taxation target set at Rs6,482 billion
National Savings target set at Rs14,170 billion
Net Factor Income from Abroad target set at Rs6,971 billion
Photo via Aaj News.
The government has also set sectorwise targets for the next fiscal year, most of them revised down from last year.
Pakistan’s defence budget is expected to be increased in budget 2023-24 after a gap of three years.
The defence budget is expected to be raised from Rs1530 billion to Rs1800 billion, an increase of 11.1%.
The budget for the armed forces has not been increased since 2020. Two of these budgets were during the covid pandemic, where the government was looking to cut down costs. However, the budget was not increased even after the change of government last year as the government tried to fix a fast-deteriorating economy. The salaries of armed forces personnel have also not been increased since 2020.
Here is a comparison of how much countries around the globe spend on their military budget.
Country
Military Budget
United States
$877 billion
China
$293 billion
India
$76 billion
Saudi Arabia
$55.6 billion
Iran
$24.6 billion
UAE
$22.5 billion
Turkiye
$20.7 billion
Pakistan
$11 billion
Here is a comparison of how much these militaries spend per soldier:
Pakistan’s government will present its annual budget to parliament on Friday needing to satisfy the IMF to have any chance of securing the release or more bailout money, with the crisis-riven country due to hold elections by November.
The risk of default on sovereign debt is rising, with the economy creaking under twin deficits and record high inflation, which has further dented the popularity of Prime Minister Shehbaz Sharif’s coalition ahead of the vote.
The economy could slide closer to the cliff edge as a result of the latest bout of political instability, with former Prime Minister Imran Khan, the main opposition leader, locked in a dangerous struggle with the country’s powerful military.
Against the backcloth of this political drama, Finance Minister Ishaq Dar is set to deliver his budget speech to parliament after 4:00 pm (1100 GMT) on Friday.
Some budget figures were announced earlier this week, including development spending of 1,150 billion Pakistani rupees ($4 billion), and an economic growth target of 3.5% for the coming fiscal year.
Sources have also told Reuters that preliminary budget proposals envisaged a fiscal deficit of 7.7% of GDP, with total spending at 14.5 trillion Pakistani rupees ($50.7 billion) and revenue collection at 9.2 trillion Pakistani rupees ($32.2 billion). The proposals also set an inflation target of 21%, well below the record high of nearly 38% inflation recorded in May.
On Thursday, the International Monetary Fund said that it has been discussing the budget with Pakistan.
Sharif’s government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month.
“The focus of discussions over the FY24 budget is to balance the need to strengthen debt sustainability prospects while creating space to increase social spending,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said on Thursday.
Pakistan missed almost all of its economic targets set in the last budget, most notably its growth target, which was initially set at 5%, revised down to 2% earlier this year.
Growth is now projected to be just 0.29% for the fiscal year ending June 30.
Foreign exchange reserves have dipped below $4 billion, according to data released by the central bank on Thursday, enough to cover barely a month of imports.
The government has no fiscal space to introduce popular measures that will win it votes or a stimulus to spur flagging economic activity, with limited avenues for raising revenue in the short term and domestic and international debt obligations continuing to mount.
Sharif’s coalition could take some comfort the troubles surrounding opposition leader Khan, whose party has suffered a string of defections of key leaders following a crackdown by the military.
Khan was ousted in a parliamentary confidence vote last year, but polls show he remains Pakistan’s most popular politician. He is now fighting numerous legal cases, ranging
from corruption to incitement and abetting murder that could result in him being barred from contesting the election.
