ISLAMABAD: The outgoing PML-N government’s newly appointed Finance Minister Miftah Ismail presented a sixth full-term budget in the National Assembly Friday amid a raucous protest staged by opposition leaders calling for a budget covering only the remaining three months of the incumbent government’s tenure.
“This is a historic moment for the parliament that the 6th budget is being presented. A government cannot run for a day without the budget. The provincial government’s cannot decide their budgets without approval of the federal budget,” Ismail explained.
“We cannot interrupt the 5.8 per cent GDP growth. However the next government will have the right to make changes to the budget,” he assured the opposition.
“Today’s budget is a reflection of Nawaz Sharif’s vision. We are missing him here today.”
“In 2013 the PML-N government came to power and set up a programme for the economy. We faced certain challenges under the leadership of Nawaz Sharif. Serving the public was our only motivation,” he added.
During Ismail’s address, members of the opposition continued their protests through uninterrupted chanting. They surrounded his dias and threw papers in the air. Opposition members ripped apart copies of the budget while PML-N members encircled Ismail’s dias to keep the protesters at a distance.
The budget speech began with the finance minister recounting the government’s new tax package, through which it has lowered tax rates considerably. Ismail said the government is using data mining and other technologies to catch tax thieves.
“We have given people one last chance to declare their domestic assets. We will catch them and prosecute them if they do not avail our tax amnesty package,” he asserted.
“Due to high economic growth in the last five years, the size of the economy has increased unusually. It has risen from Rs22,385 billion in 2013 to Rs34,396 billion in 2018. The per capita income during this time has risen from Rs129,005 to Rs180,204,” Ismail announced.
According to a copy of the Budget 18-19, the total budgeted outlay has been set at Rs5,932.5bn from Rs5,103.88bn last year ─ a 10.6pc increase over revised figure, and a 16.2pc increase over last year’s budgeted figure. The revised outlay for 17-18 came to Rs5,361bn.
The target GDP growth rate for the upcoming fiscal year has been set at 6.2pc against FY17-18’s target of 6pc. The government intends to keep inflation to below 6pc.
The intended tax to GDP ratio is 13.8pc, while net public debt is targeted at 63.2pc of the GDP.
A $15bn target for forex reserves has been set in FY18-19.
As part of the budget strategy, social protection programmes will be continued in the upcoming fiscal year.
“The objective of the medium term macroeconomic policy, besides improved economic growth, is to correct the balance in the external account,” Ismail said.
“The fiscal deficit will be reduced in the next three years and the environment for investment will be improved.”
“The government will continue investment in social protection and the Benazir Income Support Programme, and will take steps for the underprivileged communities through targeted subsidy schemes. Rs125bn has been allocated to the BISP, while Rs189bn has been set aside for total subsidies. Rs10bn has been proposed for PM’s Youth Scheme,” he said.
Revenue
The total tax revenue target is Rs4,888.6bn, of which the FBR taxes comprise Rs4,435bn.
“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 Rs280bn, he added.
The non-tax revenue target has been set at Rs1,246bn, according to a copy of the budget 18-19.
The provincial share in tax revenue will be increased from Rs2,316bn to Rs2,590bn, Ismail added.
Expenditure
As expected, the budget hikes current expenditures and cuts development. This is the first PML-N budget to do so. The hike in current expenditures is roughly 20pc, while development expenditure has been cut 20pc.
The share of current and development expenditure respectively in the total budgetary outlay is 80.6pc and 19.4pc. Current expenditure has been estimated at Rs4,780.4bn, while development expenditure is set at Rs1,152.1bn.
Salaries and pensions
A 10pc ad-hoc relief allowance will be provided to civil and armed forces employees with effect from July 1, 2018, according to the budget speech 18-19.
A 10pc increase across-the-board is also being proposed for pensioners, Ismail said.
Considering the difficulties of low-paid pensioners, the minimum pension is being increased to Rs10,000 from the current Rs6,000.
Similarly, family pension will also be increased to Rs7,500 from Rs4,500 previously.
The minimum pension of pensioners above the age of 75 will be Rs15,000.
PSDP
The size of the FY18-19 PSDP has been estimated to be Rs1,650bn, of which Rs850bn has been allocated to the provinces, while Rs800bn has been allocated to the federal government.
According to the Budget Speech 18-19 document, “Additional resources of Rs230bn [in the PSDP] will be financed through autonomous organisations, public-private partnerships, and other means. Investments in the water, road infrastructure, electricity sectors and the China-Pakistan Economic Corridor (CPEC) will be protected.”
Under the PSDP, Rs47bn has been allocated to the Higher Education Commission, Rs37bn for basic health and Rs10bn for the PM’s Youth Programme.
Development expenditure outside the Public Sector Development Programme (PSDP) has been estimated at Rs180.2bn for FY18-19, which is 18.4pc higher than FY17-18 estimates.
Defence
The defence budget has been set at Rs1,100bn from a revised budget estimate of Rs999bn in the previous year ─ 18.5pc of the total budgeted outlay, and a 19.5pc increase over the budgeted amount for last year.
The increase in the defence budget for 18-19 is the highest since the PML-N took over in 2013.
Meeting expenses
The government intends to restrict the overall fiscal deficit to Rs1890.2bn or 4.9pc of the GDP, down from the revised estimates for the year 2017-18 which stood at 5.5pc, Ismail said.
To meet expenditures, bank borrowing is projected to be Rs1,015.3bn in FY18-19, which is roughly 2.6 times higher than last year’s budgeted figure, although the increase is not reflected in borrowing from the State Bank of Pakistan.
The government also plans to float Sukuk bonds while borrowing from local banks is expected to be significantly higher than FY17-18.
The government also expects to generate an additional Rs155bn from the auction of treasury bills over the last year’s budgeted figure, according to the Budget 18-19.
“I understand the pain for democracy and Constitution,” said Prime Minister Shahid Khaqan Abbasi while addressing the Parliament. “We want to present the budget for continuity of the system. Whichever party comes can change the budget.”
Addressing the opposition’s reservation about Miftah Ismail, the newly appointed finance minister, presenting the budget,PM defended the same saying that “It is the cabinet’s decisions and nothing unconstitutional about this.”
‘No right to present full-term budget’
At the outset of the session, Opposition Leader in the National Assembly Syed Khursheed Shah protested against the outgoing PML-N presenting a full-term budget instead for the remaining three months of its tenure.
“Unfortunately, the government is snatching the right of the next assembly with today’s budget,” said Shah. “My wish is that whichever party wins the elections, has the right to present the budget.”
“This government has no ethical right to present the budget for the entire year.”
“This mandate is given when a person comes into Parliament after being elected,” he continued. “What pains me is that Nawaz Sharif champions the narrative ‘vote ko izzat do’ [respect the vote], yet you [PML-N] are destroying the honour of vote.”
“You had an elected minister, Rana Afzal, but you brought in a person with no mandate through wrong interpretation of the Constitution,” said Shah referring to the appointment of Miftah Ismail as the finance minister on Friday morning.
“I always say respect the Parliament and make it supreme; but once again, you are making decisions outside the Parliament. This is the first time an un-elected person is presenting the budget.”
“Could PM Abbasi not have presented the budget? Even the chief minister has presented budget in the past,” pointed out Shah.
Shah Mehmood Qureshi of Pakistan Tehreek-i-Insaf (PTI) shared the same sentiments as Shah, saying: “Instead of an elected minister, you [PML-N] are giving the mandate to present the budget to an un-elected person.”
“A new tradition is being set,” he alleged. “The leader of the opposition has said there is no moral justification for the government to present the full-year budget.”
He highlighted that the budget being presented had not been endorsed by the National Economic Council (NEC). “Three CMs — of Sindh, KP and Balochistan — walked out from the meeting. What kind of democracy and government is this where three provinces are strongly expressing their distrust of the Public Sector Development Programme (PSDP), yet you want to endorse it.”
Speaker Ayaz Sadiq urged the opposition leaders to keep their statements short so that the “group picture of MNAs” could be taken while there was still light.