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Federal budget tomorrow



APP
10 Jun 2021




ISLAMABAD: The incumbent government, led by Pakistan Tahreek-e-Insaf (PTI), is all set to present its third budget for the fiscal year 2021-22 in the Parliament on June 11 (Friday), amid the third wave of Coronavirus (Covid-19), which had affected world economies including Pakistan.

The budget will be presented by Federal Minister for Finance and Revenue, Shaukat Tarin.
 

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ISLAMABAD: Dispelling the impression of slowing down of CPEC projects, Federal Minister for Planning Asad Umar has said the government has allocated Rs87 billion for the Public Sector Development Program (PSDP) for the next budget 2021-22 for execution of CPEC projects.

The National Economic Council (NEC) approved an allocation of Rs42 billion for Western Alignment and Rs6.2 billion for Mainline (ML-1). The government allocated Rs7 billion for provision of basic necessities such as utilities and other infrastructure into the Special Economic Zones (SEZs) at Rashakai, Dhabeji, Faisalabad and Bostan.

“The appetite for making new commitments by Chinese companies is expected to increase, so the financing of ML-1 will now be finalized. The increased circular debt and nonpayment to IPPs had created difficulties which also hindered the ML-1, but now after debt clearing, the Chinese appetite for new investment would improve,” Asad Umar said while briefing newsmen here at the P Block along with CPEC Authority Chairman Lt Gen (retd) Asim Salem Bajwa on Tuesday.

The chairman CPEC Authority said that the Industrial Cooperation Framework was under consideration, which was part of deliverables for the next Joint Cooperation Committee (JCC) under CPEC. The agriculture transformation package announced by the government was shared with the Chinese side, so partnership and match-making between Pakistani and Chinese companies would be done, he added.

While responding to concerns raised by Sindh Chief Minister Syed Murad Ali Shah during the NEC meeting, the minister said the PPP had remained in the federal government four times and provincial government for six times but they had never utilized a penny for motorways in Sindh. He said the PTI government made a payment of Rs90 billion for the Multan-Sukkur Motorway. The federal government provided funding for several projects that stood at Rs93 billion and in the next budget this amount would go up to Rs125 to Rs130 billion, if taking into account of VGF in 2021-22.

The minister for planning said that the federal PSDP was increased from Rs660 billion in the outgoing fiscal to Rs900 billion for coming budget, registering an increase in allocation by 36.4 percent. The provincial allocation of ADPs increased from Rs867 billion in outgoing fiscal to Rs1,202 billion for the coming budget. The minister made a comparison and stated that there was a paradigm change in composition of PSDP under the PTI led government as the allocation of energy, transport and communication stood at 56 percent in the fiscal year 2016-17 but it decreased to 40 percent in 2021-22. He claimed that the government would undertake more road and other projects through public private partnership. The allocation of water sector increased from 4 percent in 2016-17 to 10 percent in 2021-22. The allocation for social sector and regional equalization jumped up from 23 percent in 2016-17 to 31 percent in 2021-22. The allocation for production sectors such as science and technology and IT has been increased from 2 percent in 2016-17 to 5 percent in 2021-22. The Viability Gap Fund (VGF) has been introduced and allocated 7 percent funds in the next budget. The allocation of other projects was reduced from 15 percent in 2016-17 to seven percent in 2021-22.

Asad Umar said the government had so far approved Rs240 billion projects through the PPP mode and another Rs530 billion projects were in the pipeline. He said that the government would bring 300,000 people into commanding areas for using agriculture purposes.

He said the government allocated Rs244 billion for motorways, highways, interprovincial/districts roads, airport, railway projects and 3,261 kilometre length of new roads will be added to the network. Some major projects including Khyber Pass Economic Corridor Project (Rs8.5 bn), Sukkur-Hyderabad Motorway Land (Rs4.6 bn), Eastbay Expressway Gwadar (Rs2.1 bn), Dualization & Improvement of Existing N-50-Yarik-Sagu-Zhob-210 km (Rs1.6 bn), construction of M-8 Hoshab-Awaran-Khuzdar (section-2)168 kms (Rs1.5 bn), improvement and widening of Chitral-Booni-Mastuj-Shandur Road (Rs2 bn), roads linking motorways in Punjab, Main Line I (ML-I) (Rs6.2 bn) and Gwadar Airport (Rs1.1 bn) would be constructed. Umar said tank and weapons don’t lead to development, instead inclusive development plays a vital role in bringing prosperity to the country.

He said that the HEC allocation increased to Rs44 billion and 105 universities would get benefit from 120 projects. The scholarships schemes of around 5 billion will benefit more than 6,000 scholars/faculty members.

To a query, he said that the throw forward stood at over Rs5.5 to Rs6 trillion at the moment. The NEC also approved that no new projects would be considered next time after March 31 deadline in order to improve quality of PSDP projects. Meanwhile, the government has decided to procure vaccine worth one billion dollars for Covid-19 for which the ECC meeting today is likely to grant approval.
 

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ISLAMABAD: Dispelling the impression of slowing down of CPEC projects, Federal Minister for Planning Asad Umar has said the government has allocated Rs87 billion for the Public Sector Development Program (PSDP) for the next budget 2021-22 for execution of CPEC projects.

The National Economic Council (NEC) approved an allocation of Rs42 billion for Western Alignment and Rs6.2 billion for Mainline (ML-1). The government allocated Rs7 billion for provision of basic necessities such as utilities and other infrastructure into the Special Economic Zones (SEZs) at Rashakai, Dhabeji, Faisalabad and Bostan.

“The appetite for making new commitments by Chinese companies is expected to increase, so the financing of ML-1 will now be finalized. The increased circular debt and nonpayment to IPPs had created difficulties which also hindered the ML-1, but now after debt clearing, the Chinese appetite for new investment would improve,” Asad Umar said while briefing newsmen here at the P Block along with CPEC Authority Chairman Lt Gen (retd) Asim Salem Bajwa on Tuesday.

The chairman CPEC Authority said that the Industrial Cooperation Framework was under consideration, which was part of deliverables for the next Joint Cooperation Committee (JCC) under CPEC. The agriculture transformation package announced by the government was shared with the Chinese side, so partnership and match-making between Pakistani and Chinese companies would be done, he added.

While responding to concerns raised by Sindh Chief Minister Syed Murad Ali Shah during the NEC meeting, the minister said the PPP had remained in the federal government four times and provincial government for six times but they had never utilized a penny for motorways in Sindh. He said the PTI government made a payment of Rs90 billion for the Multan-Sukkur Motorway. The federal government provided funding for several projects that stood at Rs93 billion and in the next budget this amount would go up to Rs125 to Rs130 billion, if taking into account of VGF in 2021-22.

The minister for planning said that the federal PSDP was increased from Rs660 billion in the outgoing fiscal to Rs900 billion for coming budget, registering an increase in allocation by 36.4 percent. The provincial allocation of ADPs increased from Rs867 billion in outgoing fiscal to Rs1,202 billion for the coming budget. The minister made a comparison and stated that there was a paradigm change in composition of PSDP under the PTI led government as the allocation of energy, transport and communication stood at 56 percent in the fiscal year 2016-17 but it decreased to 40 percent in 2021-22. He claimed that the government would undertake more road and other projects through public private partnership. The allocation of water sector increased from 4 percent in 2016-17 to 10 percent in 2021-22. The allocation for social sector and regional equalization jumped up from 23 percent in 2016-17 to 31 percent in 2021-22. The allocation for production sectors such as science and technology and IT has been increased from 2 percent in 2016-17 to 5 percent in 2021-22. The Viability Gap Fund (VGF) has been introduced and allocated 7 percent funds in the next budget. The allocation of other projects was reduced from 15 percent in 2016-17 to seven percent in 2021-22.

Asad Umar said the government had so far approved Rs240 billion projects through the PPP mode and another Rs530 billion projects were in the pipeline. He said that the government would bring 300,000 people into commanding areas for using agriculture purposes.

He said the government allocated Rs244 billion for motorways, highways, interprovincial/districts roads, airport, railway projects and 3,261 kilometre length of new roads will be added to the network. Some major projects including Khyber Pass Economic Corridor Project (Rs8.5 bn), Sukkur-Hyderabad Motorway Land (Rs4.6 bn), Eastbay Expressway Gwadar (Rs2.1 bn), Dualization & Improvement of Existing N-50-Yarik-Sagu-Zhob-210 km (Rs1.6 bn), construction of M-8 Hoshab-Awaran-Khuzdar (section-2)168 kms (Rs1.5 bn), improvement and widening of Chitral-Booni-Mastuj-Shandur Road (Rs2 bn), roads linking motorways in Punjab, Main Line I (ML-I) (Rs6.2 bn) and Gwadar Airport (Rs1.1 bn) would be constructed. Umar said tank and weapons don’t lead to development, instead inclusive development plays a vital role in bringing prosperity to the country.

He said that the HEC allocation increased to Rs44 billion and 105 universities would get benefit from 120 projects. The scholarships schemes of around 5 billion will benefit more than 6,000 scholars/faculty members.

To a query, he said that the throw forward stood at over Rs5.5 to Rs6 trillion at the moment. The NEC also approved that no new projects would be considered next time after March 31 deadline in order to improve quality of PSDP projects. Meanwhile, the government has decided to procure vaccine worth one billion dollars for Covid-19 for which the ECC meeting today is likely to grant approval.
its weird biden also proposed 2021 budget recently, and coincidentally its also 6 trillion but its in USD
 

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Large-scale manufacturing expands 9pc to help Pakistan surpass GDP growth target: Shaukat Tarin

Dawn.com
June 10, 2021



Finance Minister Shaukat Tarin unveiling the economic survey in Islamabad. – DawnNewsTV screengrab


Finance Minister Shaukat Tarin unveiling the economic survey in Islamabad. – DawnNews


Finance Minister Shaukat Tarin unveiled the Pakistan Economic Survey 2020-21 at a press conference in Islamabad on Thursday, revealing that the industrial and services sectors had helped the country post GDP growth of 3.94 per cent in the first 9 months of the fiscal year (July to March), significantly higher than the target of 2.1pc.

According to the survey document, the industrial and services sectors surpassed the government's expectations, and the minister particularly highlighted growth in large-scale manufacturing (LSM) which he said expanded 9pc.
The Pakistan Economic Survey is an annual report on the performance of the economy, focusing in particular on major macroeconomic indicators.


Sector-wise growth

Tarin started out by underscoring the impact of Covid-19 in causing the economy to contract last year. But, he said, the decisions of this government under Prime Minister Imran Khan helped the economy stabilise which resulted in improving performance on the growth front.

"The government itself had set [GDP] growth target at 2.1pc and the IMF had predicted and even lower number. But the decisions by this government such as incentivising manufacturing, textiles, construction, and interventions in agriculture have helped the economy recover."

According to the survey, Pakistan has recorded a provisional growth rate of 3.94pc in the fiscal year 2020-21. This came "on the basis of a rebound in almost all sectors".


The agriculture sector grew around 2.8 percent against a target of 2.8pc. The industrial sector registered a growth of 3.6pc against a target of 0.1pc, while services grew 4.4pc against a target of 2.6pc.
Last year, when overall GDP growth contracted by 0.4pc, industries and services sectors had posted negative growth of 2.6pc and 0.59pc, respectively.


In the industrial sector, Tarin said large-scale manufacturing (LSM) showed growth of 9pc, playing an important role in helping overall growth.

The minister said agriculture sector growth met its target despite the "cotton crop getting ruined" because yields of other crops compensated for that.

'Focus now on growth'

Tarin said he had told the prime minister it was time to focus on sustainable growth "until we go to 5-8pc GDP growth".

"We will do interventions and take care of the poor. The poor man has been crushed in this stabilisation phase because the dreams we have shown them have been of a trickledown economy. And this can only happen when growth is sustainable and continuous for 20-30 years," he said.

Tarin, however, emphasised that this growth should not be based on borrowing.

"Countries which had sustainable growth, they grew continuously for 20-30 years. What have we done? Every time we grow by borrowing money, which is credit-based growth."


Inflation

The headline inflation measured by the Consumer Price Index (CPI) was recorded at 8.6pc during July-April FY2021 against 11.2pc during the same period last year. The government had targeted inflation of 6.5pc for FY21.


The survey document says this was achieved "due to the government measures for maintaining price stability."

"Inflation in perishable food items increased 0.1pc against an exorbitant increase of 34.7pc during the same period last year," according to the PES.

The finance minister said the government wanted to control inflation "but prices are still high and affecting the common man".

"So the way to solve this is by increasing production and that is why we have focused on agriculture in this budget," Tarin said.

FBR tax collection

Federal Board of Revenue (FBR) tax collection came in at Rs3,780.3 billion, registering double-digit growth of 14.4pc during July-April FY2021 against Rs 3,303.4 billion in the same period last year.

The government had set a revised target of Rs4,691 billion for FBR, which was surpassed by more than Rs100 billion, according to the survey document.


Current Account

According to the survey, during FY2021, while the world was reeling from the economic impact of the pandemic, Pakistan's "external sector appeared as a key buffer for resilience."

"During July-March FY2021, current account posted a surplus of $959 million (0.5pc of GDP) against a deficit of $4,147m last year (2.1pc of GDP). The main driver of improvement in current account balance was the robust growth in remittances," it stated.

"The inflows accelerated posting a year-on-year growth of 26.2pc during the period under review over the same period last year and thus defying the general expectation of a decrease," it further noted.


Trade deficit

"During July-March FY2021, export of goods grew by 2.3pc to $18.7bn as compared to$18.3bn the same period last year. Import of goods grew by 9.4pc to $37.4bn as compared to $34.2bn last year. Consequently, the trade deficit increased by 17.7pc to $18.7bn as compared to $15.9bn last year," the survey said.


Nominal rise in debt

The finance minister said Pakistan's total debt had increased nominally in the last 9 months.
He said Pakistan's total debt increased Rs1.67 trillion in FY21 to reach Rs38 trillion. "Out of this Rs25 trillion is local debt while around Rs12.5 trillion is foreign debt."
 
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As Pakistan unveiled the Economic Survey 2020-21, the government announced it beat many earlier projections as the economy was able to stage a V-shaped recovery. Here are the salient features of the survey, according to AHL Research.

  1. Pakistan's GDP provisionally grew 3.9% during FY21. Growth for FY20 was revised down to -0.47% from -0.38% earlier.
  2. For FY21, GDP at current market prices stood at Rs47.7 trillion.
  3. Services sector saw a growth of 4.43%, mainly on the back of wholesale and retail trade segment (8.37%), and finance and insurance sector (7.84%).
  4. Agriculture sector registered a growth of 2.77%.
  5. Wheat witnessed a growth of 8.1%, rice 13.6%, while maize recorded a growth of 7.38%.
  6. Sugarcane recorded the second-highest ever production at 22%. On the other hand, cotton witnessed a negative growth of 22.8% resulting in 15.6% decline in cotton ginning.
  7. At the end of March 2021, Pakistan’s total public debt stood at Rs38 trillion. The domestic debt amounted to Rs25.6 trillion (up 13.8% YoY) while foreign public debt was Rs12.5 trillion.
  8. Average National Consumer Price Index (CPI) stood at 8.83%.
  9. Remittances increased by 29% YoY, amounting to $26.7 billion, as per 11MFY21 SBP data.
  10. Pakistan’s Foreign Direct Investment (FDI) hit $1.55 billion during 10MFY21, a decline of 32% YoY.
  11. Pakistan saw a current account surplus of $773 million in 10MFY21 against a deficit of $4,657 million recorded in the same period last year. During 10MFY21 total imports recorded a growth of 8% YoY to $48,625 million. Exports clocked in at $25,889 million, posting a jump of 6% YoY.
  12. Country recorded a trade deficit of $22,736 million compared to a deficit of $20,599 million in 10MFY21, seeing an increase of 11%.
  13. Per capita income for FY21 stood at Rs246,414 (+14.6% YoY). In dollar terms, it was $1,543 (+13.4% YoY).
 

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Budget 2021-22: Striving for a balanced approach?


Mettis News
Published June 10, 2021



Finance minister Shaukat Tarin has also hinted that incentives would be provided to export-oriented sectors and services sectors in the upcoming budget. — Dawn/File


Finance minister Shaukat Tarin has also hinted that incentives would be provided to export-oriented sectors and services sectors in the upcoming budget.


The upcoming budget for the fiscal year 2021-22, which is set to be rolled out on June 11 (Friday), is likely to be pro-growth with an overall focus on increasing expenditures.

A few months ago, the expectations were more skewed towards consolidation given that Pakistan had just resumed the previously stalled IMF programme. However, with the arrival of Shaukat Tarin as federal Minister for Finance, who categorically stated that his efforts during his tenure will be concentrated towards reviving and improving the growth rate of the economy, it is expected that the upcoming budget will target higher growth next year.

In this regard, the government has been holding discussions with the IMF to maintain its growth-centric policies, with the international body advocating prudent policies and measures for fiscal consolidation.

As Pakistan is already negotiating for maximum possible fiscal space to develop a growth-focused budget with higher expenditure on the development side and provision of subsidies, it can be said that economic growth, improved employment, pandemic support measures and managing fiscal imbalances will be the salient features of the upcoming budget. Moreover, Infrastructure, agriculture, manufacturing sector, as well as incentives to stimulate construction and housing are expected to be on the priority list.

Although these policy goals also featured in the previous budget, what’s different this time around is that the government has achieved some fiscal space to instigate more consistent and wide-ranging pro-growth measures.



Key fiscal targets
  • The overall outlay of the budget is expected at Rs8 trillion with an expected fiscal deficit of 5.5 per cent to 6pc of GDP for FY22 compared to an estimated deficit of 6pc of GDP during FY21.
  • The revenue collection target for FBR has been set at Rs5.8tr for FY22, which will be lower than IMF’s target of Rs6tr. Still, the target seems to be ambitious, as it is likely to be 23pc higher compared to the estimated collection of Rs4.7tr in FY20-21.
  • Additional revenue measures worth Rs350 billion are also expected.
  • The non-tax collection target will be set at Rs1.42tr.
  • For FY22, the government is expected to earmark Rs900bn for federal PSDP, an increase of 38pc from the previous budget. A key element is total development outlay, which includes provincial spending. It is expected that the government will set a provincial spending target of Rs1tr, taking the total development outlay to Rs1.9tr compared to last year’s budgeted outlay of Rs1.3tr (up 44pc).
  • Government is likely to set mark-up interest and defence expenditure targets at Rs3.1tr and Rs1.4tr, up 4pc and 9pc from last year’s budget, respectively.
  • The government also intends to increase salaries and pensions by 15-20pc.
  • The fiscal deficit is expected to be around Rs2.9tr in FY22 which could be 5.6pc of the GDP.
  • For subsidies, the government is expected to set a target of Rs530bn for FY22.
  • The current account deficit for FY22 is projected to be around $2.3bn which would be less than 1pc of the GDP.
  • The cotton bales output expected for FY22 would be around 10.5m bales.
  • The government may also earmark funds for Covid-19 to procure more vaccines in the upcoming year. According to a government statement, it has spent $250m for procuring vaccines in FY21 and the upcoming budget will see an enhanced amount for this purpose.


Expected budgetary measures

The government is targeting a GDP growth of 4.8pc for FY22, compared to 3.9pc achieved in FY21; and if achieved, this will be the highest GDP growth since FY18.
Stimulus measures following the onset of Covid-19 have already put Pakistan on a growth path. Going forward, a growth-friendly budget with an expansionary fiscal policy coupled with a low-interest rate regime is likely to keep economic activity upbeat.

To achieve higher growth in FY22, agriculture would be the core area in the upcoming budget.
Within the agriculture space, the federal government together with provinces is likely to continue targeted subsidies to farmers and may give shape to subsidies earlier announced on fertilisers, along with a few more steps to enhance agriculture productivity. This in turn is also likely to help check high food prices, which have been a major reason behind higher CPI inflation.

According to a report by Topline Securities, the government is also targeting cotton production of about 10.5m bales in FY22, which fell abysmally by 34pc to 5.6m bales in FY21. Cotton has a weight of 4pc in overall agriculture output. Moreover, to continue the momentum in industrial growth, the government is likely to reduce customs duties.

Besides growth, social safety and welfare schemes are also expected to remain in focus amidst Covid-19 and inflationary pressures, with the Ehsaas programme likely to stay in the limelight along with proposals regarding upward revision in minimum wage rate and continued government assistance in the ongoing fight against the pandemic.

It is evident from media reports that power tariff hikes are unlikely in the forthcoming budget as the new finance minister has clearly stated that masses will not be burdened with additional tariffs, while clearing up of the frightening circular debt will be achieved through other means.
The minister has also hinted that incentives will be provided to export-oriented sectors and services sectors with a particular focus on IT.

On the revenue front, targets are once again ambitious and stringent, possibly leading to an increased debt burden. The government is expected to achieve this by focusing on broadening the tax base through augmented documentation as opposed to introducing various new major taxes.

News reports also suggest that improving the fiscal health would be achieved through a focus on taxation reforms and harmonisation of taxes.

In the upcoming budget, the government is unlikely to impose any major new taxes or increase taxes, whereas it may reduce/abolish some customs duties and withholding taxes. However, the possibility of adjustments of tax burdens on higher income groups, increasing taxes on unnecessary items, and rationalisation of general sales tax (GST) cannot be ruled out.

Moreover, work towards automation of the tax system and implementation of the track-and-trace system is likely to be a key focus in achieving higher tax revenue.

Ensuring and implementing sustainable growth will require relaxation in taxes and duties while improving corporate cash flows. Many proposals have been put forth in this regard, while the government has reportedly approved a reduction in nearly 600 tariff lines spread over various industries including construction, steel, textiles, etc.

Furthermore, there has been sustained pressure by steel manufacturers to reduce turnover tax on their dealers, inadvertently opening up a new revenue stream for the government as turnover taxation discourages dealers from entering the tax net.

Non-tax revenues will also remain in focus. Petroleum levy, an important component of the non-tax revenues, is likely to remain low as the government is practising the policy of not completely passing on the impact of higher international petroleum products prices to end-consumers by taking a hit on petroleum levy.

The government may adopt a more targeted approach towards power subsidy, which in last year's budget amounted to Rs140bn. However, the government is expected to keep total subsidies at around Rs530bn compared to last year’s budget of Rs209bn.



Fiscal balance to remain under pressure

All these expected measures together are likely to keep pressure on fiscal balance. Maintaining fiscal stability and improving fiscal health while adopting a pro-growth and expansionary fiscal policy will be a real challenge for the government. Successfully striking this balance depends largely on successful negotiations with the IMF.

The actual budget is not expected to be significantly different from the commitments made to the IMF earlier; however, IMF may allow some relaxation in tax collection targets, albeit setting them close to Rs6tr.

Meanwhile, it is pertinent to mention that Pakistani authorities are presently in talks with the IMF for the finalisation of the proposed budgetary measures. There remains a possibility that some of the above measures do not appear in the final announcement on Friday, in the interest of keeping the fiscal deficit low.
 

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Rs8 trillion national budget to be presented today


The Frontier Post







ISLAMABAD (APP): Pakistan Tehreek-e-Insaf government is going to present its third budget for the fiscal year 2021-22, with an estimated outlay of around Rs8 trillion, on June 11 (today).

The National Assembly is already in session where the budget for the fiscal year 2021-22 would be presented, official sources said.

Like last year, the budget for the upcoming year has been formulated considering the impact of COVID-19 on the people and businesses of the country, hence mitigating people’s sufferings, reforming agriculture sector, promoting industry and businesses would be the main focus of the document, source said.

“The government of Pakistan is firmly committed to presenting a pro-people, business-friendly and growth-oriented Federal Budget FY 2021-22.

The government will pursue an all-inclusive, sustained and robust economic growth through short, medium and long-term economic planning,” official sources said.

In addition to fiscal management, revenue mobilization, measures for economic stabilization and growth, reduction in non-development expenditures; boosting exports besides job creation and people friendly policies for the socioeconomic prosperity of the country would feature in the budget.

It would also focus on social sector development besides introducing reforms for improving governance and boosting private sector for investment.

On the revenue side, though no new taxes would be introduced, the government would introduce measures for bringing improvements in the system of tax collection, broadening the tax base, and facilitation to tax payers, sources said arguing that a strong revenue generation will play a crucial role in achieving the targets for economic growth.

The government is likely to set the revenue collection target at Rs5.8 trillion for the fiscal year 2021-22.

The budget is being prepared in close coordination between all departments and ministries involved in budget related events.

Meanwhile, Finance Minister, Shaukat Tarin Thursday launched Pakistan Economic Survey (2020-21), which highlighted that the country’s economy was on growth path and witnessed 3.8 percent growth despite negative impacts of Coronavirus pandemic, which had hit hard the world economies.
 

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Finance Minister Shaukat Tarin presents budget for FY2021-22


All eyes are on the National Assembly as the federal budget for the fiscal year 2021-22 is being presented by Finance Minister Shaukat Tarin on the floor of the house.


Tarin began his speech by saying it was an honour for him to present the PTI's third buget.


He said there were a lot of difficulties but this government had laid the ground for the economy to revive and now "it is going towards development and prosperity".


Lawmakers from the government and opposition have started arriving for the session, and Prime Minister Imran Khan and opposition leader Shehbaz Sharif are also in the parliament building.




Asked by a reporter whether the budget will be people-friendly as he arrived for the session, Prime Minister Imran said: "Everyone will be happy [by the budget]."





Prior to the budget session, PPP chairperson Bilawal-Bhutto Zardari chaired a meeting of the PPP parliamentary party to decide the party's strategy for the session.


Bilawal directed PPP MNAs to give a "tough time" to the government, saying the government had devised an "anti-poor", "political" and "selected" budget.





According to Radio Pakistan, the federal cabinet will meet in Islamabad today to discuss and approve budget proposals. Prime Minister Imran will preside over the meeting.





Information Minister Fawad Chaudhry said that all of Pakistan's economic indicators were positive, adding that the country was moving towards economic stability after a long time.


"The country's people and institutions have full faith in Prime Minister Imran Khan which has made economic and political stability possible," he said. The minister also urged the opposition to treat accountability and reforms separately, and take part in talks on electoral and judicial reforms.





Meanwhile, the opposition has said that it will not allow an anti-people budget and will do everything to stop its approval. Last month, Leader of the Opposition in the National Assembly Shehbaz Sharif hosted a dinner reception for all mainstream opposition parties on the upcoming budget.


Despite the current differences between the PPP and the PML-N, PPP Chairman Bilawal Bhutto-Zardari has said that the party will support Shehbaz on the budget.


Speaking at a press conference, Bilawal had said that PPP members would come and vote on the day of the budget, adding that it was up to Shehbaz as the leader of the opposition in the National Assembly to "do his work and stop the government's budget".


In a pre-budget seminar held last week, the PML-N had presented a dismal picture of the state of economy in the country due to the “failed fiscal policies” of the PTI government. Former finance minister Ishaq Dar also stressed the need for having a “serious review” of the economic policy to bring Pakistan out of the economic ‘mess’.

Targeting growth

The upcoming budget for the new fiscal year is likely to be pro-growth with an overall focus on increasing expenditures.


A few months ago, the expectations were more skewed towards consolidation given that Pakistan had just resumed the previously stalled IMF programme. However, with the arrival of Shaukat Tarin as federal Minister for Finance, who categorically stated that his efforts during his tenure will be concentrated towards reviving and improving the growth rate of the economy, it is expected that the upcoming budget will target higher growth next year.


In this regard, the government has been holding discussions with the IMF to maintain its growth-centric policies, with the international body advocating prudent policies and measures for fiscal consolidation.



As Pakistan is already negotiating for maximum possible fiscal space to develop a growth-focused budget with higher expenditure on the development side and provision of subsidies, it can be said that economic growth, improved employment, pandemic support measures and managing fiscal imbalances will be the salient features of the upcoming budget. Moreover, Infrastructure, agriculture, manufacturing sector, as well as incentives to stimulate construction and housing are expected to be on the priority list.


Although these policy goals also featured in the previous budget, what’s different this time around is that the government has achieved some fiscal space to instigate more consistent and wide-ranging pro-growth measures.

Key fiscal targets

  • The overall outlay of the budget is expected at Rs8 trillion with an expected fiscal deficit of 5.5 per cent to 6pc of GDP for FY22 compared to an estimated deficit of 6pc of GDP during FY21.
  • The revenue collection target for FBR has been set at Rs5.8tr for FY22, which will be lower than IMF’s target of Rs6tr. Still, the target seems to be ambitious, as it is likely to be 23pc higher compared to the estimated collection of Rs4.7tr in FY20-21.
  • Additional revenue measures worth Rs350 billion are also expected.
  • The non-tax collection target will be set at Rs1.42tr.
  • For FY22, the government is expected to earmark Rs900bn for federal PSDP, an increase of 38pc from the previous budget. A key element is total development outlay, which includes provincial spending. It is expected that the government will set a provincial spending target of Rs1tr, taking the total development outlay to Rs1.9tr compared to last year’s budgeted outlay of Rs1.3tr (up 44pc).
  • Government is likely to set mark-up interest and defence expenditure targets at Rs3.1tr and Rs1.4tr, up 4pc and 9pc from last year’s budget, respectively.
  • The government also intends to increase salaries and pensions by 15-20pc.
  • The fiscal deficit is expected to be around Rs2.9tr in FY22 which could be 5.6pc of the GDP.
  • For subsidies, the government is expected to set a target of Rs530bn for FY22.
  • The current account deficit for FY22 is projected to be around $2.3bn which would be less than 1pc of the GDP.
  • The cotton bales output expected for FY22 would be around 10.5m bales.
  • The government may also earmark funds for Covid-19 to procure more vaccines in the upcoming year. According to a government statement, it has spent $250m for procuring vaccines in FY21 and the upcoming budget will see an enhanced amount for this purpose.
Expected budgetary measures

The government is targeting a GDP growth of 4.8pc for FY22, compared to 3.9pc achieved in FY21; and if achieved, this will be the highest GDP growth since FY18.


Stimulus measures following the onset of Covid-19 have already put Pakistan on a growth path. Going forward, a growth-friendly budget with an expansionary fiscal policy coupled with a low-interest rate regime is likely to keep economic activity upbeat.


To achieve higher growth in FY22, agriculture would be the core area in the upcoming budget.


Within the agriculture space, the federal government together with provinces is likely to continue targeted subsidies to farmers and may give shape to subsidies earlier announced on fertilisers, along with a few more steps to enhance agriculture productivity. This in turn is also likely to help check high food prices, which have been a major reason behind higher CPI inflation.


According to a report by Topline Securities, the government is also targeting cotton production of about 10.5m bales in FY22, which fell abysmally by 34pc to 5.6m bales in FY21. Cotton has a weight of 4pc in overall agriculture output. Moreover, to continue the momentum in industrial growth, the government is likely to reduce customs duties.


Besides growth, social safety and welfare schemes are also expected to remain in focus amidst Covid-19 and inflationary pressures, with the Ehsaas programme likely to stay in the limelight along with proposals regarding upward revision in minimum wage rate and continued government assistance in the ongoing fight against the pandemic.


It is evident from media reports that power tariff hikes are unlikely in the forthcoming budget as the new finance minister has clearly stated that masses will not be burdened with additional tariffs, while clearing up of the frightening circular debt will be achieved through other means.


The minister has also hinted that incentives will be provided to export-oriented sectors and services sectors with a particular focus on IT.


On the revenue front, targets are once again ambitious and stringent, possibly leading to an increased debt burden. The government is expected to achieve this by focusing on broadening the tax base through augmented documentation as opposed to introducing various new major taxes.


News reports also suggest that improving the fiscal health would be achieved through a focus on taxation reforms and harmonisation of taxes.


In the upcoming budget, the government is unlikely to impose any major new taxes or increase taxes, whereas it may reduce/abolish some customs duties and withholding taxes. However, the possibility of adjustments of tax burdens on higher income groups, increasing taxes on unnecessary items, and rationalisation of general sales tax (GST) cannot be ruled out.


Moreover, work towards automation of the tax system and implementation of the track-and-trace system is likely to be a key focus in achieving higher tax revenue.


Ensuring and implementing sustainable growth will require relaxation in taxes and duties while improving corporate cash flows. Many proposals have been put forth in this regard, while the government has reportedly approved a reduction in nearly 600 tariff lines spread over various industries including construction, steel, textiles, etc.


Furthermore, there has been sustained pressure by steel manufacturers to reduce turnover tax on their dealers, inadvertently opening up a new revenue stream for the government as turnover taxation discourages dealers from entering the tax net.


Non-tax revenues will also remain in focus. Petroleum levy, an important component of the non-tax revenues, is likely to remain low as the government is practising the policy of not completely passing on the impact of higher international petroleum products prices to end-consumers by taking a hit on petroleum levy.


The government may adopt a more targeted approach towards power subsidy, which in last year's budget amounted to Rs140bn. However, the government is expected to keep total subsidies at around Rs530bn compared to last year’s budget of Rs209bn.

Fiscal balance to remain under pressure

All these expected measures together are likely to keep pressure on fiscal balance. Maintaining fiscal stability and improving fiscal health while adopting a pro-growth and expansionary fiscal policy will be a real challenge for the government. Successfully striking this balance depends largely on successful negotiations with the IMF.


The actual budget is not expected to be significantly different from the commitments made to the IMF earlier; however, IMF may allow some relaxation in tax collection targets, albeit setting them close to Rs6tr.


Meanwhile, it is pertinent to mention that Pakistani authorities are presently in talks with the IMF for the finalisation of the proposed budgetary measures. There remains a possibility that some of the above measures do not appear in the final announcement on Friday, in the interest of keeping the fiscal deficit low.




 

ghazi52

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PTI govt's 'pro-growth' budget for FY2022


Dawn.com
June 11, 2021


The PTI-led government on Friday unveiled the federal budget for the fiscal year 2021-22 amid opposition protest.

The total size of the budget or the total expenditure budget for the next year is Rs8,487 billion — almost 19 per cent higher than last year's budgeted expenditure of Rs7,136 billion.

For FY22, the government has set the GDP growth target at 4.8 per cent, Finance Minister Shaukat Tarin announced.
 

ghazi52

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Before deep pockets start the propaganda that defence budget is 80% of total budget, here are actual figures of defence budget from Budget 2021.

1373/8487 * 100 = 16.1 %

Defence budget is only 16% of total budget. Note that and pass it on.

© Faizan Hayat

1623422614824.png
 

Omar Moazzam Batta

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Federal budget tomorrow



APP
10 Jun 2021




ISLAMABAD: The incumbent government, led by Pakistan Tahreek-e-Insaf (PTI), is all set to present its third budget for the fiscal year 2021-22 in the Parliament on June 11 (Friday), amid the third wave of Coronavirus (Covid-19), which had affected world economies including Pakistan.

The budget will be presented by Federal Minister for Finance and Revenue, Shaukat Tarin.
If it passes from National Assembly and Senate so it is beneficial for Pak's economy, The way opposition is opposing the budgets so Govt can face difficulty to pass it.
 

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