ISLAMABAD: Finance Minister Ishaq Dar presented the federal budget for the fiscal year 2017-18 today with an estimated outlay of Rs 4.8 trillion.

The national budget, the last by PML-N government of its five year tenure focused on reviving the economy, resolving the energy crisis, reducing non-development expenditures and providing relief to the masses. Promotion of investment and people friendly policies for the socio-economic prosperity of the country are also a part of the ambitious budget.

Defence allocation increased by Rs 85 b

  • The allocation for defence in the upcoming budget is Rs 945 billion, showing an increase of Rs 85 billion in the defence budget as compared to 2016-17 budget. A number of special measures include following
  • All Army officers and jawans will receive a 10pc special allowance in lieu of their sacrifices in Pakistan’s war against militancy.
  • This ‘special allowance’ is separate from the 10pc increase in salaries for government employees and army personnel.
  • A new financial scheme was also announced for the families of martyred soldiers and police personnel.
  • Frontier Constabulary’s jawansto be given a fixed allowance of Rs8,000 per month ( extra) .


Budget at a glance : Key Features

  • The total outlay of the budget isRs4.75 trillion .
  • Total tax revenues target has been set atRs4.33tr , of which the Federal Board of Revenue will collect Rs4.01tr.
  • The development expenditure for next year will beRs1.001tr .
  • The defence budget has been set atRs920.2bn .
  • The minimum wage has been set atRs15,000 .
  • By summer 2018, nearly 10,000MW of electricity will be added to the national grid, eliminating load-shedding completing.
  • BISP will be allocatedRs121b for 5.5 million beneficiaries.

Budget targets

  • Increase real GDP growth of 6%.
  • Take investment to 17% of GDP.
  • Contain inflation below 6%.
  • Contain budget deficit to t 4.1% of GDP.
  • Increase the tax to GDP ratio to 13.7%.
  • Enhance FBR revenues by 14%, and increase federal expenditures by 11%.
  • Increase non-tax receipts by 7%.
  • Current expenditure to be kept under tight control.
  • Maintain foreign exchange reserves at a level that can cover a minimum of 4 months of imports.
  • Limit the net public debt to GDP ratio to below 60% of GDP.
  • Continue targeted social interventions.


  • Nearly Rs1.001tr will be given out in agricultural loans next year.
  • Agricultural credit will be extended at 9.9pc on two million ‘small loans’ of Rs50,000 for farmers who hold up to 12.5 acres of land.
  • Imported fertiliser will be subsidised and sold for Rs1,000 per bag.
  • DAP fertiliser will be subject to a fixed sales tax.
  • Urea will continue to be sold at Rs1,400 per bag by reducing taxes and subsidies.
  • Other fertilisers’ prices will be kept constant through tax adjustments.
  • Hybrid seeds for canola and sunflower crops will be exempted from duty.
  • The State Bank will help link the banking system to the Land Record Management Information System to facilitate farmers in securing loans.
  • Agricultural tubewells will be provided subsidised electricity.
  • Certain imported machinery for poultry farming will be charged a lower sales tax rate of 7pc, compared to 17pc previously.


  • Mark-up rate on Long Term Financing Facility will be reduced from 11.4pc to 5pc.
  • Duty-free import of textile machinery will be allowed.
  • Zero-rated sales tax regime for textiles, leather, sports goods, surgical goods and carpets will be continued.
  • To stabilise cotton prices, cotton hedge trading will be introduced.
  • A Brand Development fund will also be created.
  • 1,000 stitching units will be established.
  • An online business-to-business and business-to-consumer portal for textile trading will be introduced.


  • A Risk Sharing Guarantee Scheme for low-income housing will be launched. Under this scheme, the Government will provide 40pc credit guarantee cover to banks and DFIs for home financing for up to Rs1m.


  • Pakistan Development Fund will be established to provide long-term infrastructure financing for commercially viable public sector and public-private partnership projects.
  • Pakistan Infrastructure Bank will be established to provide loans to private infrastructure projects.

Financial sector

  • Microfinance institutions will provide loans to low-income individuals worth Rs8bn in total.
  • Withholding tax on cash withdrawals by branchless banking agents will be eliminated.

Small and medium enterprises

  • SMEs will be provided easy-to-access loans through a risk mitigation facility secured with Rs3.5bn from the State Bank.

Information Technology

  • An IT park is being established with the help of South Korea in Islamabad at a cost of Rs6bn.
  • Startup software houses will be exempted from income tax for the first three years.
  • IT exports from Islamabad and other federal territories will be exempted from sales tax.
  • IT companies shall be allowed to open foreign exchange accounts in Pakistan on the condition that deposits in these accounts shall only be allowed through remittances from abroad in respect of their export earnings. They will be allowed to use these accounts for meeting business related payments outside Pakistan.
  • Withholding tax on mobile phone calls to be reduced from 14pc to 12.5pc, while the sales tax will also be reduced to 17pc from the current 18.5pc.
  • The customs duty on smartphone sets will be cut to Rs650 per set from Rs1,000 per set.
  • Import duty on mobile telecom products will be reduced.

Development expenditures

  • Federal development expenditures have been increased 37pc.
  • Infrastructure will get 67pc of the PSDP budget. Rs411bn will be allocated for transportation and communication, of which Rs320bn will be allocated to national highways, Rs43bn for railways, and Rs44bn for other projects.


  • 10,000 megawatts of electricity will be added to the national grid by summer 2018.
  • Rs401bn rupees will be allocated to energy projects.
  • Energy for All program will receive Rs12.5bn.
  • Dasu Hydro Power project will get Rs54bn.
  • LNG-based power plants in Balloki and Haveli Bahadursha to receive Rs76.5bn.
  • Diamer Bhasha Dam Lot-1 will receive Rs21bn.
  • Neelum Jhelum Hydro Power Project will receive Rs19bn.
  • Tarbela-IV extension will receive Rs16.4bn.
  • Jamshoro coal-fired plant will receive Rs16.2bn.


  • Government will focus on building dams, canals and water course and improving the water distribution infrastructure.
  • Rs38bn will be allocated under this head.

Roads and highways

  • Rs320bn will be allocated to national highways.


  • Rs45.9bn to be allocated to Railways, for 75 new engines, 830 bogies and 250 coaches and the Peshawar to Karachi railway line.

Human development

  • Rs35.7bn for the Higher Education Commission compared to Rs21.5bn last year.
  • The Ministry of National Health Services, Regulations and Coordination will receive Rs49bn.
  • A new programme for hospitals will receive Rs8bn.
  • Rs12.5bn will be allocated for Clean Drinking Water for All.
  • Sustainable development goals will get Rs30bn.


  • 31 new projects, including a new international airport, 200-bed hospital, 200MW power generation plant and a desalination plant.


  • Rs180bn have been allocated for CPEC projects.

Special projects

  • Rs45.6bn for projects Azad Jammu & Kashmir, Gilgit Baltistan and Fata.