ISLAMABAD: Pakistani Finance Minister Ishaq Dar will table the federal budget for the fiscal year 2023-24 in the house today with a proposed outlay of Rs14.7 trillion.
With a higher consolidated budget deficit of over 6% of the Gross Domestic Product (GDP), it will also dole out funds on different targeted schemes to lure voters in the next general elections. Moreover, the government has set the Federal Board of Revenue’s (FBR) tax collection target at Rs9.2 trillion, and a non-tax revenue target of Rs2.7 trillion.
For the non-tax revenue target, the government has a plan to secure powers by amending the finance bill to raise the petroleum development levy (PDL) from Rs50 per litre to Rs55-60 per litre in order to collect Rs870 billion in the next budget against revised estimates of Rs550 billion for the outgoing fiscal year.
As the new government comes into power after the next general elections, it will have to introduce a mini-budget in order to align the economic realities with the International Monetary Fund for securing a fresh bailout package.
It is yet to be seen how the government makes efforts to satisfy the IMF on the revival of the stalled programme. The continuing stalemate might jeopardise the dwindling foreign exchange reserves, as the State Bank of Pakistan-held reserves have decreased to below $3.9 billion.
Without striking a broader budgetary framework with the IMF, it will become impossible for the government to sign the staff-level agreement, so all will depend upon fulfilling three conditions; unveiling the next budget in line with the IMF guidelines, securing external financing of $6 billion and ensuring a market-based exchange rate.
The IMF programme will end on June 30, so there is no possibility of any further extension. There is a credibility gap on the sanctity of the budgetary numbers because changes are made on a frequent basis during the course of the year, so there is a need to present a realistic budget for the next financial year, the economists believe.
The tenure of the Pakistan Democratic Movement (PDM)-led government is going to expire on August 12. However, the government has approved the allocation of Rs90 billion for the execution of the SDGs Achievement Programme (SAP) for the next budget against the revised allocation of Rs116 billion for the ongoing financial year.
The first and foremost priority of the government will be ensuring external debt servicing, which requires $25 billion in the next budget. It is yet to be seen how the government plans to generate such a whopping figure when it had secured just less than $8.1 billion in the first ten months of the current fiscal year out of the total budgeted figure of $22.8 billion on account of external loans and grants.
There are no easy solutions ahead, so deep-rooted structural reforms will be needed to steer the economy out of the crisis.
