Featured Finance Minister Shaukat Tarin presents budget for FY2021-22

[ghazi52]

Shedding light on the issues, the finance minister said that inflation is a problem as it is affecting the low-income segment.

“It should be accepted that inflation is rising due to rise in food prices.”He claimed that $16 billion reserves are enough for imports for three months. Sufficient reserves are fuelling rupee stability.


“Pakistan is a food deficit country because the sector was neglected for past 15-20 years,” he clarified.

“We have to make Pakistan a food-sufficient country and for that, we have to focus on agriculture,” Tarin added.

Commodity warehousing, cold storages are the need of the hour. Moreover, the country needs administrative control mechanism.

Government debt is declining, public debt rose due to the Covid-19 package.

Growth plans

For the fiscal year 2021-22, the Imran Khan-led government aims for inclusive and sustainable growth.
With a target of 4.8% growth rate, the premier wants to turn the direction of the country.

During his budget speech, Tarin mentioned that four to six billion households will be given up to Rs5 lac interest-free loans.

Every agriculture-based household to get interest-free loans worth Rs1.5 lac, he said. While Rs20 lacs would be given in low-interest loans for low-cost housing.

The government aims to provide relief to the lower segment, hence this segment will be granted good incentives.

In Pakistan, 65% of the population is below 30 years of age and if the government cannot create jobs, it will wasting national advantage.

Read more: Pakistan succeeded in reviving economy despite Covid pandemic: Forbes

“Therefore, we want to ensure 6-7% growth over next few years,” Tarin added.

Special economic zones (SEZs) will be used to create jobs which will also ensure growth in exports.
While unveiling the budget, the finance minister mentioned that PTI’s government has decided to provide tax relief package.

Subsidy worth Rs3 lac rupee subsidy will be given. And for the first time, mortgage financing has been started.

Mark-up rates have been stabilized. Cash transfer, Kamyab Jawan programme, interest-free loans are all part of the Ehsaas programme, the government has allocated Rs260 billion for this development programme.

Energy sector

In the budget for the next fiscal year, a special plan for the elimination of circular debt would be introduced.

“The government plans to reduce line losses through investment,” Tarin added. Moreover, an electric vehicle policy would also be announced.

Development expenditures

In the next fiscal year, the government has increased the PSDP budget to Rs900 billion from Rs630 billion.

Tarin assured that the government would improve road infrastructure. Furthermore, through PSDP, it will invest in high return projects.

Agriculture

Unveiling the federal budget, the finance minister announced a national agriculture emergency programme.

The government plans to enhance livestock on modern lines and has decided to allocate Rs12 billion for the most important sector.

Dasu, Diamar-Bhasha and Mohmand dams are a part of the budget. Rs91 billion have been allocated for water resources. Moreover, Rs14 billion have been allotted for the Neelum Jhelum power project.

Tarin mentioned that the ML-1 project will be completed in three packages.

 

[ghazi52]

Sharing the allocations for next year, he mentioned that Rs22 billion have been allocated to produce 100 MW electricity at Jamshoro.

Moreover, Rs22 billion have been allocated for coal-based power projects, Rs16.5 billion for Tarbela fifth extension and Rs118 billion for different power transmission lines.

Provincial transformation

Rs16.5 billion have been allocated for Karachi-based projects for the fiscal year 2021-22.
The federal government will grant Rs98 billion.

For developmental projects in Gilgit-Baltistan, the government has allocated Rs40 billion. Meanwhile, Rs54 billion have been allocated for Khyber-Pakhtunkhwa. Rs 601 billion will be given to South Balochistan for uplift programs, he added.

Train mentioned that Pakistan People’s Party has 50 projects worth Rs2 trillion, which include railway, water, aviation, road and health schemes.

Climate change

The federal minister stated that Pakistan is one of the 10 countries most hit by climate change.

Highlighting PM Imran's vision of planting trees, he said Rs14 billion have been allocated for the government’s vision of “One Billion Tree Tsunami.”

Rs118 billion have been allotted under PSDP for the social uplift.

Non-tax revenues to rise by 22% during FY22, meanwhile federal expenditures to rise 15%.

Under the budget, $1.1 billion have been allocated for vaccine import

Sector-wise break-up

The finance minister stated that Rs12 billion have been allocated for SMEs.

Rs10 billion for the Kamyab Jawan programme and Rs66 billion will be granted to HEC, he said.

A self-assessment scheme would be introduced in the next fiscal year. Individuals can prepare their own tax returns.

Moreover, Tarin mentioned that an e-audit system will be introduced and audit will be done by international auditors.

Income and expenditure taxes would be primary instruments. Technology will be used to identify new taxpayers.

Providing relief, the finance minister said no taxes to be applied on salaried class.

Without substantial information, the Federal Board of Revenue would not conduct audits, he said.

Moreover, all retail and wholesale transactions will be added in the tax net and the rich people would be urged to pay their due taxes.

The finance minister added that gifts will be awarded on sales tax receipts through a lucky draw on monthly basis.

Tarin revealed that Pakistan's single window project will be introduced for fast-track clearings goods from ports. A special cell for the retail sector will be established by FBR.


Moving towards tax relaxation for the auto sector, Tarin said that 850 CC cars will be exempted from federal excise duty and sales tax would be reduced.

The government decided to reduce sales tax on electric vehicles from 17% to 1%.

Moreover, for the uplift of a particular sector, import of plant, machinery, raw material in special technology zones will be exempted from taxes.

For the telecom sector, federal excise duty has been reduced from 17% to 16%, he said adding that the withholding tax will be reduced by 40%.

Moreover, the WHT from 12 documented sectors to be withdrawn, which include banking, Pakistan Stock Exchange, margin financing, air travel services, international transactions from debit and credit card, he added.

The finance minister further added that the WHT on mobile phone services has been reduced from 12% to 10%.

The government plans to further reduce taxes on mobile phone services to 8%.

Withholding tax on oil field services, warehousing services and collateral services have been reduced to 3% from 8%.

Furthermore, capital gains tax reduced from 15% to 12.5%. Furthermore, capital gains tax reduced from 15% to 12.5%. Tarin also revealed that the government plans to further reduce CGT in years to come.

 

[ghazi52]

Salient Features of Development Projects Budget 2021-22

Rs 25 billion for small dams in Sindh.
Rs 118 billion for energy and power projects.
Rs 22 billion for Jamshoro coal power plant.
Rs 16 billion for KI, KII projects in Karachi and Tarbela power plant.
Rs 100 billion for special development packages for the development of poorer cities.
Rs 98 Billion for Karachi Transformation Plan.
Rs60 billion for Azad Jammu and Kashmir, which was previously Rs56 billion.
Rs47 billion for Gilgit Baltistan, which was Rs32 billion before.

 

[VCheng]

You should be worried about your own country

Biden’s defense budget aims to curb China, gives troops 2.7% raise

U.S. President Joe Biden's $715 billion Department of Defense budget includes a 2.7% pay raise for troops and shifts billions in spending from old systems to help pay to modernize the nuclear arsenal to deter China.

www.reuters.com

LOL! I now have the right to vote in Pakistani elections too, thanks to the present setup.

(I guess that also dismisses your objecting whataboutery.)

 

[خره مينه لګته وي]

Military/Defense Budget in USD?

8787684297.00 USD

eight billion seven hundred eighty-seven million six hundred eighty-four thousand two hundred ninety-seven

Around $8.7B (USD)

 

[ghazi52]

BUDGET 2021-22: Govt on spending spree with third budget


Khaleeq Kiani
June 12, 2021

• Interest-free loans for starting businesses and farm inputs
• Ehsaas cash transfers allocation increased
• Capital Gains Tax on stocks slashed
• Universal health coverage through Sehat cards
• Increase in pay and pension of government employees
• Tax relief for women entrepreneurs


ISLAMABAD: With certain limitations imposed by the ongoing Covid-19 pandemic and the International Monetary Fund (IMF) programme, the government on Friday announced its third budget with an expansionary and feel-good approach, significantly increasing subsidies and incentives for big business, manufacturing, corporate market and agriculture sectors and proposing about 24 per cent hike in revenues, including Rs506bn worth of additional measures.

“The stabilisation phase is now over, and budget 2021-22 will focus on inclusive and sustainable growth…fostering growth with investment,” Finance Minister Shaukat Tarin said in his budget speech which was marred by loud sloganeering by the opposition parties.

The additional revenues of Rs506bn are based on Rs264bn worth of policy measures and Rs242bn of administrative. The budget more than doubles (226pc) subsidy allocations and significantly hikes surcharges and levies on oil and gas, including a 36pc increase in petroleum levy. It also allows a 10pc increase in salaries (ad hoc allowance) and pensions at an additional cost of Rs160bn and promises universal health coverage through Sehat Card.

As such, the revenue plan is based on massive reliance on indirect form of taxation and that too mostly outside the divisible pool sources that keep the federation financially floating. For example, Rs115bn alone would be additional revenue on account of gas infrastructure development cess that would increase by a massive 767pc to Rs130bn next year against just Rs15bn this year.

A similar and even bigger additional revenue of Rs160bn is targeted to flow from petroleum levy on oil projects which means petroleum prices would go up in the next fiscal year. The target for petroleum levy is Rs610bn for next year, up 35pc from current year’s Rs450bn that would now touch Rs500bn by June 30, 2021.

Another 260pc increase is expected in natural gas development surcharge to Rs36bn next year, compared to just Rs10bn this year. Also a 52pc increase would come in as royalty on crude oil to Rs35bn and yet another 20pc higher revenue from royalty on natural gas.

About 68pc increase is projected in extraordinary receipts from UN operations at Rs47bn against Rs28bn this year. A higher amount of Rs30bn (48pc) is expected from dividends to Rs90bn next year.

At the same time, the budget projects next year’s fiscal deficit at 6.3pc of GDP (Rs3.42tr) that too with more than 1pc of GDP (Rs570bn) cash surpluses from the provinces.

The revenue target for next year is targeted at Rs5.829tr, compared to Rs4.691tr this year, showing an overall increase of Rs1.138tr (24pc). About Rs635bn would accrue automatically on account of 8.2pc inflation and 4.8pc GDP growth rate.

The finance minister said the trickledown effect had not helped the vulnerable over the past 74 years and hence the government would change the course of history by uplifting 4-6 million low income households in the next year, through bottom-up approach. This would include Rs500,000 interest free business loan to every household, Rs250,000 interest free farming loan and Rs200,000 interest free loan for tractors and machineries and Rs2m worth of low-interest loan for house building.

The next year’s budget entails major concessions to the manufacturing sector, including automobile, textiles, pharmaceutical industry, mobile phone and information technology, and even small and medium enterprises (SMEs) through reduction in import duties on raw material and lower general sales.

A major favour has also been given to the stock market through reduction in capital gain tax from 15pc to 12.5pc, while a series of withholding taxes have been removed, including those on banking transactions, stock exchange transactions, margin financing, air-travel services, debit and credit card-based international transactions and mineral exploration.

The amount of subsidies for next year has been targeted at Rs682bn, almost 226pc higher than current year’s Rs209bn which was later revised to Rs430bn. But this is mostly on account of payments to independent power producers and tariff differential subsidies. Of this, about 327pc increase has been projected for the power sector to Rs596bn next year against Rs139.5bn this year. Of this, a major increase of over Rs120bn or 90pc is projected to go to K-Electric whose share in subsidies would increase to Rs245bn from Rs129bn this year.

The federal expenditures are budgeted at Rs8.487tr for next year against Rs7.34tr of revised estimate for the current year, showing an increase of 15pc. The gross revenues on the other hand are targeted at Rs7.909tr, compared to revised Rs6.395tr of this year, showing an increase of 24pc.

Non-tax revenues are projected to be higher by 22pc next year to Rs2.079tr, compared to Rs1.7tr this year. Of the total FBR revenue of Rs5.829tr, the share of indirect taxes is estimated at Rs3.647tr next year against Rs2.9tr this year, up by 26pc, while growth in direct taxes is less than 22pc at Rs2.18tr against Rs1.789tr this year.

The provincial share in federal taxes would increase form Rs2.7tr this year to Rs3.4tr next year, up by about Rs707bn or 25pc, but about Rs570bn would be retained by the federal government as provincial cash surplus to contain federal deficit that would otherwise go beyond 7.1pc of GDP.

The current expenditure of the federal government would be around Rs7.5tr next year, up 14pc over current year’s Rs6.56tr. The interest payments are projected at Rs3.06tr, compared to Rs2.85tr this year, an increase of 7pc. The pension bill, excluding the latest 10pc increase, is estimated at Rs480bn of which Rs260bn goes to the military pensioners.

The running of the entire civil government would cost Rs479bn, down from Rs487bn this year, while defense expenditure would go up to Rs1.37tr against Rs1.29tr this year, showing an increase of just 5.8pc. The Public Sector Development Programme (PSDP) is projected at Rs900bn next year against Rs650bn this year which has now been cut by another Rs20bn.
The hallmark of the taxation side is reintroduction of self-assessment scheme that was previously introduced by the Musharraf government, but this is balanced through a third-party audit and a restriction on tax notices by the Federal Board of Revenue.
The finance minister said the budget did not impose any new tax on salaried class. The tax compliance costs would be reduced, putting an end to profile updation every year despite submission of entire data as part of tax returns. The budget also provided relief in federal excise and sales taxes on locally manufactured cars of less than 850cc and electric vehicles.
The minister also announced relief measures on setting up of cold storages for agriculture products and tax exemptions on Covid-related medical equipment, etc, for another six months. He also promised a minimum wage of Rs20,000 per month for private workers, an increase of 20pc.

He said the government had given an economic programme in the budget which addressed welfare of all segments of society, from agriculture to industry and from services to social sector, from labour to farmer to women to students, homeless, government servants, youth and the poor households.

Published in Dawn, June 12th, 2021

 

[Big_bud]

The budget is good and welcomed but could have been better. The fiscal deficit is 2.9 trillion whereas it could have been increased to make more room for subsidies and development. We need to get rid of external borrowing and increase our exports no doubt about that. But borrowing from state bank of Pakistan can be increased to support people who have been pushed below poverty line due to impacts of COVID. Our dollar spending and earning should be balanced but rupee spending can always be more than our earning. Because we can go bankrupt if we don't have money to pay our external debts but we can't go bankrupt on our internal loans. Government can always print more rupees in case of difficulties. Yes, printing money could cause inflation but how can local production be expected to increase when people don't have money to purchase?

Look at the USA, their government debt stands at 28.2 Trillion dollars. As long as you have a potent industry in your own country and you are not heavily reliant on imports, printing a little bit of extra money to boost your economy should not be that big of a problem. 52% of our budget is going in debt financing and defence. 48% remaining is too little for 22 crore people.

 

[ghazi52]

Power subsidies raised by over 300pc

Mushtaq Ghumman
12 Jun 2021

ISLAMABAD: The federal government has increased power sector subsidies by over 300 percent to Rs 510 billion for fiscal year 2021-22 as compared to Rs 124 billion allocated in budget for 2020-21, which was later revised upward to Rs 350 billon.

Of this, an amount of Rs 136 billion has been earmarked for the Independent Power Producers (IPPs).

The government recently paid Rs 89.2 billion to 20 IPPs as per revised agreements and increased allocations for Power Holding Private Limited (PHPL) by 152.6 per cent to Rs 118 billion against revised allocations of Rs 46 billion during 2020-21. Allocation for inter-Disco tariff differential has been enhanced by 67 per cent to Rs 184 billion for 2021-22 as compared to budget allocations of Rs 110 billion in 2020-21 and revised estimate of Rs 191.830 billion. This implies that inter-Disco tariff differential subsidy has been reduced by over 4 per cent vis-à-vis revised allocations.

Allocation for subsidy to Karachi Electric (KE) has been massively enhanced by 450 per cent to Rs 85 billion for 2021-22 as compared to budget allocation of Rs 15.5 in 2020-21 which was revised to Rs 16 billion.

KE will get a subsidy to Rs 56 billion as tariff differential in 2021-22 which is 460 per cent higher than budget allocation of Rs 10 billion in 2020-21 and 250 per cent higher than revised allocation of 2020-21. An amount of Rs 7 billion has been earmarked for KE's tariff differential for agriculture tube wells in Balochistan. KE will also get Rs 22 billion as industrial support package in 2021-22 which is higher by 340 per cent against Rs 5 billion of 2020-21. Tariff Differential Subsidy (TDS) for agri tub-wells in Balochistan has been increased to Rs 4.4 billion for 2021-22 against budget allocation of Rs 3 billion, which was later revised to Rs 7 billion. An amount of Rs 7.6 billion has been earmarked to pay to Wapda/ Pepco receivables of ex-FATA. However, no amount has been allocated to pay to Wapda on account of tariff differential for AJ&K, despite the fact that an amount of Rs 1 billion had been allocated for 2020-21 which was revised upward to Rs 27 billion. An amount of Rs 2 billion has been earmarked for tariff differential to AJK as compared to revised allocation of Rs 36.537 billion.

Allocation for payment of Discos receivables of merged districts of KP has been enhanced by 80 per cent to Rs 18 billion for 2021-22 against Rs 10 billion in budget estimates, which was later on revised to Rs 15 billion.

For Industrial Support Package (ISP) an amount of Rs 15 billion has been earmarked in budget of 2021-22 while Rs 26 billion has been allocated for zero rated industries subsidy.

 

[Mav3rick]

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.

Correct Defence Budget must include all defense related expenses, including Pensions and so it becomes:

Rs. 1373 Billion + Rs. 360 Billion (Pension of retired Military Personnel) = Rs. 1733 => 1733/8487 * 100 = 20.4%

The above also does not include any ad-hoc or supplementary grant, as is the case on occasions when services of the Military is required such as Zarb-e-Azb or for transportation of vaccines or civil assistance etc.

NOTE: The above also does not include land which is given to the Military mostly free of cost so if you start adding that up.........

 

[mumairb]

What was the total defense budget %(including pension etc) last year and years before that ??

Was it less than this proposed budget ??

Correct Defence Budget must include all defense related expenses, including Pensions and so it becomes:

Rs. 1373 Billion + Rs. 360 Billion (Pension of retired Military Personnel) = Rs. 1733 => 1733/8487 * 100 = 20.4%

The above also does not include any ad-hoc or supplementary grant, as is the case on occasions when services of the Military is required such as Zarb-e-Azb or for transportation of vaccines or civil assistance etc.

NOTE: The above also does not include land which is given to the Military mostly free of cost so if you start adding that up.........

 

[Pakstallion]

Views of a Pretty good economist who’s not biased.

 

[ghazi52]

'We will not play politics with the poor': Shaukat Tarin in post-budget presser

ISLAMABAD: The main focus of the "inclusive growth-oriented" federal budget for the fiscal year 2021-22 was to uplift the poor so they would not have to wait for the trickledown effect of economic progress, Federal Minister for Finance and Revenue Shaukat Tarin said Saturday.

For the last 74 years, low-income people have been waiting for this trickledown effect, but their condition could not be improved and they remained deprived of houses, businesses, cash and health facilities, the finance minister said, while addressing the post-budget press conference in Islamabad.

He said the government was now directly targeting the poorest of the poor and facilitating them with different initiatives to upgrade their life standard without waiting for the trickledown effect, which he said needed around 20 years of stable economic growth to take effect.

He said that this was not an easy task.

The minister said that the government, through this budget, will utilise the ‘bottom-up-approach', for around six million low-income households.

Under this initiative, every household will be provided a Rs500,000 interest-free business loan. Every farming household will be given Rs150,000 in loans for every crop, Rs250,000 interest-free farming loans and Rs200,000 interest free loans to buy tractors and machinery.

He said that low-interest bearing housing loans up to Rs2 million will be provided to help people buy their houses and besides that every household will be provided a Sehat Card to facilitate them in times of need.
In addition, the minister said that one person from every household will be provided free technical training to ensure employability so that the family earns respectable income.

The minister said that no doubt the government does not have space to provide these loans, which could be done through wholesale financing of commercial banks for which the government would be providing guarantees of recovery.

The minister said that the identification of the poorest households would be done through a non-political survey all over Pakistan. “We will not play politics with the poor,” the minister added.
Another primary focus of the government was to promote exports and take them up to 20% of the GDP from just the current 8%, he said, adding that to bring stability in the country, there was dire need to enhance exports.

The minister said that for the first time, a growth oriented budget was presented which introduced innovation to enhance revenue collection, expansion of incentives for exporters, abolished duty on local industry and brought innovation in the auto industry.

 

[syedtalhamaududi]

Failed people's party finance minister is the new financial guru for dunkey raja's party. Let's see the reality after all the backslapping
What has zardaro done wrong that he also can't be included in people's party b team

 

[Patriot forever]

This is an extraordinary budget on the expenditure side, there is no expense in the budget that is unnecessary.

CAD is expected to be 3b, in my opinion it will come around 4-6b. 1-2% of Gdp. It has to be contained within 2%. Unless we tinker with the currency we will restrict CAD in a manageable range, but will come at a cost of inflation. Crude, Coal, LNG, steel, palm oil, soy bean oil, tea, lentils all essential commodities that we import and have no local substituion are sky rocketing. Add an extra couple of billions on TERF flows.



On the revenue collection fbr will cross 5b but with a narrow margin, same like last time it will be revised downward. Expect petroleum levy to be negligible because the oil prices are going to sky rocket. Petrol prices will go up for sure if oil keeps this trend. Have to move fast without wasting precious months on fbr proposals/reforms in budget.

Income tax rates are already lower than what tbey used to be in 2017, plmn also increased gst in the middle of their term, imposed WHT etc. We dont have such options available, instead there is huge tax relief offered from WHT, IT zero rating, raw material imports.

A very challenging year especially due to external factors.

 

[Norwegian]

Failed people's party finance minister is the new financial guru for dunkey raja's party. Let's see the reality after all the backslapping
What has zardaro done wrong that he also can't be included in people's party b team

Failed? Are you referring to Ishaq Dollar policies that nearly bankrupted Pakistan