With eye on upcoming elections, PML-N unveils Rs 5.9tr budget

ISLAMABAD: With an eye on the upcoming general elections, the Pakistan Muslim League-Nawaz (PML-N) on Friday unveiled its sixth consecutive federal budget with a total outlay of Rs 5.932 trillion for the fiscal year 2018-19. The budget, dubbed as growth-oriented and pro-people by the ruling party, set the GDP growth target for 2018-19 at 6.2%, with the proposed revenue generation at Rs 4.435 trillion against total expenditure of Rs 5.246 trillion. In his budget speech in the National Assembly, newly appointed Finance Minister Miftah Ismail forecast the budget deficit at 4.9% of the GDP in fiscal year 2018-2019, adding that budget deficit would hit 5.5% for the current fiscal year, missing the government’s fiscal deficit target of 4.1%. The minister claimed that the proposed budget is aimed at providing substantial relief to the masses and paving way for realizing the objectives of inclusive and sustainable economic growth through a vast array of measures. Presenting the budgetary proposals for FY 2018-19, the minister spelled out major economic benchmarks for upcoming fiscal year, including the real GDP targeted to grow at 6.2%, setting target of inflation below 6%, tax to GDP ratio to 13.8% and budget deficit to 4.9%.The budget aims to contain net public debt at 3.2 % of the GDP, with foreign exchange reserves to remain at $ 15 billion and FBR tax revenue target proposed at Rs4.435 trillion. After transfer to provincial governments, the net revenue of the federal government is estimated at Rs 3.070 trillion in 2018-19 as compared to revised estimates of Rs 2.676 trillion in the current financial year. Total federal expenditure for FY 2018-19 is budgeted at Rs 5.932 trillion, compared to the revised estimates of Rs 4.857 trillion for 2017-18, showing an increase of 8%. The size of Public Sector Development Programme (PSDP) for FY 2018-19 has been put at Rs 2.043 trillion, including Rs 1.030 trillion for federal PSDP and Rs1.013 trillion for provinces. The resource availability during FY 2018-19 has been estimated at Rs 4,917.2 billion against Rs 4,713.7 billion last year, while the net revenue receipts for 2018-19 have been estimated at Rs 3070.4 billion indicating an increase of 4.9% over budget estimates of 2017-18. The total tax revenue target is Rs 4,888.6billion, of which the FBR taxes comprise Rs 4,435 billion.”This target will be achieved through improved tax steps and improved tax administration. The tax base is being expanded and the per cent of tax is being reduced,” the finance minister said. With the tax rates reduced for all tax brackets, the government expects the tax net will see a considerable increase as it estimates the revenues from direct taxes to increase next year, Ismail said. It also expects indirect taxes to increase by about Rs280 billion, he added. The non-tax revenue target has been set at Rs 1,246 billion. The provincial share in tax revenue will be increased from Rs 2,316 billion to Rs 2,590 billion, he added. The government intends to restrict the overall fiscal deficit to Rs 1890.2 billion or 4.9% of the GDP, down from the revised estimates for the year 2017-18 which stood at 5.5%, Ismail said. While the government expects to raise 33.4% more in external loans, it also faces a 137.7% jump in repayments as loans mature. In maturing loans, long-term foreign loan repayments will rise 110% to Rs 601.8 billion from last year, while repayments of short-term loans will jump 337.7% to Rs174.2 billion compared to Rs39.8 billion a year ago. To finance its Rs 1,890 billion deficit, the government will jack up borrowing from local banks by 160.2% – from Rs 390 billion to Rs 1,015 billion.The government also plans to float Sukuk bonds. The government additionally expects to generate Rs 200 billion from the auction of treasury bills over the last year’s budgeted figure. The finance minister announced a Rs 25 billion special package for development in Karachi.”So far Rs 16 billion have been spent on the Green Line project in Karachi, but the Sindh government has been unable to issue contracts for the purchase of buses. Today, I propose that if the Sindh government is unable to purchase the buses for Karachi, the federal government is ready to do so,” he said.”To address Karachi’s chronic water shortages, the government is announcing large-scale desalination scheme to make sea water usable. This plant will be constructed through the private sector and will provide 50 million gallons of water a day,” he added. “Rs 5 billion will be allocated for the construction of roads, fire brigades and bridges in the coming fiscal year. Rs8 billion will be set aside for expansion of the Expo Centre,” he added. A special package called the 100.100.100 programme focusing on children’s development was also announced by the minister.”This is the federal government’s commitment to ensure that 100% of Pakistani children will be enrolled in schools, 100% of children will be retained in schools and finally, 100% will graduate from schools,” he said, adding that the government would pay for the transportation of female students to school. The PM’s National Health Programme, under which 3,000,000 families across Pakistan are already receiving coverage, will be extended to all districts in the country and will help achieve the Sustainable Development Goals, Ismail announced. Another special package amounting to Rs10 billion ? along with a supplementary grant if necessary? was announced for children’s health. To further encourage remittances through formal channels, the government has decided to introduce a prize scheme for overseas Pakistanis. All home remittance transactions sent through commercial banks, exchange companies and other financial institutions will be included in monthly lucky draws. Details of the scheme are being finalized and shall be announced shortly by State Bank of Pakistan. Published in Daily Times, April 28th 2018.