ISLAMABAD: Minster for Industries Hammad Azhar presented the federal budget for the fiscal year 2020-21, wherein no new taxes have been imposed.
The budget i.e. the Finance Bill is said to be prepared by the IMF instead of Federal Board of Revenue (FBR) and Ministry of Finance and Revenue. An official said it was a practice since ages that the Federal Board of Revenue (FBR) was closed for three days before the budget and officers of FBR, Ministry of Finance and others were confined at the FBR for preparing the budget proposals. However, this time there was no such practice and an imported budget has been presented.
Among the major figures he revealed on the floor of the National Assembly, the Federal Board of Revenue (FBR) revenue target was kept at Rs4.95 trillion for next year while defence allocations amounted to around Rs1.3 trillion. The federal development programme was budgeted at Rs650 billion to support growth prospects.
He said the total size of the budget or the total expenditure budget for the next year was Rs7,136 billion slightly higher than the budgeted figure for the previous year.
Of this total, current expenditure for the next fiscal was budgeted at Rs6,345 billion, higher than the Rs6,193 budgeted last year, Azhar said. Of this, Defence Affairs make up Rs1,289 billion, up 11pc from the previous year, with interest payments making up Rs2,946 billion.
Allocations for education have been budgeted at Rs83.3 billion, up 7.9pc from last year’s Rs77.2 billion. Health allocations for the next year have more than doubled (130pc rise) to Rs25.5 billion from last year’s Rs11 billion.
Hammad Azhar revealed that the total expenditure for public sector development projects (PSDP) for the next fiscal year had been budgeted at Rs1,324 billion, which is 18pc below last year’s budget.
Of this, federal PSDP has been allocated Rs650 billion while Rs676 billion has been allocated to provinces.
The fiscal deficit, he said, would be 7pc of the GDP and has been budgeted at Rs3,195 billion for FY2021. The minister lamented that the deficit had been increased manifold during regimes of the previous governments but said this government will try to keep it in check.
Azhar said the government will pull out the economy from a 0.4pc contraction and is aiming for a 2.1pc growth in GDP for fiscal year 2021.
Consumer Price Index (CPI) inflation for fiscal year 2021 has been budgeted at 8.3pc, down from a projection of 13pc last year.
Total revenue, he said is budgeted at Rs6,573 billion, of which net federal revenue will be Rs3,700 billion.
Azhar went on to reveal that of this total revenue, Federal Board of Revenue (FBR) tax collection has been budgeted at Rs4,963 billion, which is lower than the original budgeted amount of Rs5,555 in last year’s budget. The minister stressed during his speech that the government wants this to be a relief budget due to the crises brought on by the pandemic and the government is imposing no new taxes for the new year.
Austerity and belt-tightening remain the focus of the upcoming budget for which every section and arm at the federal and provincial level would be required to contribute and sacrifice.
With FY2021 finance bill, the government aims to give a strong message to the world that it is “fiscally responsible despite severe challenges” and will prudently utilise whatever fiscal space becomes available through international flows.
Besides a tight lid on civil expenditures, subsidies would be targeted and reduced, debt would be smartly structured and cash disbursements for relief and stimulus would be linked to the availability of fiscal space to rein runaway fiscal pressure. Fiscal deficit is being targeted around 9pc of the GDP.
No fresh posts would be created during the year and utmost care would be taken in filling unavoidable posts. Generally, vacant posts for over six and nine months would be considered for abolition.
Similarly, the posts and ministries of devolved subjects would be actually transferred to the provinces including higher education and major hospitals in major cities.