Pakistan National Assembly Passes Budget for Fiscal Year 2023-24 Amid IMF Conditions
ISLAMABAD: Pakistan’s National Assembly has approved the budget for the upcoming fiscal year 2023-24, overcoming challenges posed by the International Monetary Fund (IMF). In order to secure a much-needed rescue package, the government introduced several modifications to the budget, which were confirmed by Finance Minister Ishaq Dar during the session.
Addressing the fiscal deficit: To address the fiscal deficit, the government plans to raise an additional Rs215 billion through new taxes and implement spending cuts of Rs85 billion. These measures, along with other strategies, aim to narrow the fiscal gap.
Key highlights:
- The budget’s total outlay amounts to Rs14,480 trillion.
- The tax target has been increased to Rs9,415 billion.
- Rs801 billion has been allocated for pensioners.
- The National Finance Commission (NFC) allocation has been raised to Rs5,390 billion.
- New taxes worth Rs215 billion have been introduced.
- The Benazir Income Support Programme (BISP) receives an allocation of Rs466 billion.
- Rs900 billion is allocated for the Public Sector Development Programme.
Government defends pension rule amendment: During the session, the finance minister defended the government’s decision to amend pension rules, stating that it was a substantial burden on the country. As per the new restriction, government employees from grades 17 to 22 are now eligible for only one pension, excluding those below grade 17. Finance Minister Dar emphasized that the issue of former government employees withdrawing multiple pensions needed resolution.
Proposal rejected by majority: Maulana Abdul Akbar Chitrali from Jamaat-e-Islami proposed forwarding the Finance Bill 2023-24 to the Council of Islamic Ideology for approval. However, the majority in the house rejected this demand.
Meeting with IMF Managing Director: The decision to amend the budget was influenced by Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva during the Global Financing Summit in Paris. Pakistan has around five days before the expiry of the IMF’s Extended Fund Facility agreed upon in 2019, which is set to conclude on June 30. Pakistan has been striving to secure $1.1 billion of funding, which has been stalled since November, under the facility’s ninth review.
Positive outcomes of talks with the IMF: Finance Minister Dar provided details to the house, stating that Pakistan agreed on Rs215 billion in taxes after extensive discussions with IMF officials. He assured that these taxes would not burden the poor and middle segments of society. Furthermore, the government plans to reduce running expenditure by Rs85 billion without impacting the proposed development budget, salaries, and pensions of federal government employees. The finance minister expressed the government’s commitment to transparency, promising to make all the details public by publishing the agreement on the Ministry of Finance’s official website.
Summary of budget changes:
The tax collection target of the Federal Board of Revenue (FBR) has been raised from Rs9.2 trillion to Rs9.415 trillion. The provincial share has increased from Rs5.276 trillion to Rs5.390 trillion, the federal government’s total expenditure estimate has risen from Rs14.460 trillion to Rs14.480 trillion, and the pension estimate has been adjusted from Rs761 billion to Rs801 billion. Additionally, the subsidy estimate stands at Rs1.064 trillion, and grants amount to Rs1.405 trillion. These measures aim to reduce the overall budget deficit by Rs300 billion, consisting of Rs215 billion in taxes and Rs85 billion in reduced running expenditures.
Published in PakWeb, June 26, 2023.
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