Ishaq Dar unveils federal budget for FY 2023-24 with total outlay of 14.5tr

ISLAMABAD: Federal Minister for Finance and Revenue Senator Ishaq Dar on Friday presented the federal budget for Fiscal Year 2023-24 with a total outlay of Rs14.5 trillion, ARY News reported.

The National Assembly (NA) session began with recitation of the Holy Quran followed by the national anthem. Prime Minister Shehbaz Sharif is also in attendance.

At the outset of his speech, the finance minister compared the economic performances of Pakistan Muslim League-Nawaz (PML-N) and Pakistan Tehreek-e-Insaf (PTI) governments.

“During the PML-N previous tenure, inflation was at 4 percent,” Ishaq Dar said, adding that Pakistan Stock Exchange (PSX) was ranked 5th in South Asia’s best performing market.

The minister noted that the PML-N completed new projects to meet the ‘shortage of electricity’ in the country.

“The infrastructure and motorways were developed, while employment opportunities were also created,” Dar said, adding that the country’s economy prospered during the PML-N’s tenure.

He further said that the PTI government ‘deliberately’ ruined Pakistan’s Economy through energy subsidies. “The PTI government’s incompetence led to the current challenges the country was facing,” he added.

“The previous government broke an agreement with International Monetary Fund (IMF) and damaged the country’s reputation”, he said, adding that public debt and liabilities were “doubled during PTI’s four-year tenure”.

“Circular debt rose to Rs129 billion per annum during PTI’s four-year-rule”, he pointed out. He further lambasted the PTI government for ‘destroying the country’s economy’, saying that the previous rulers laid ‘economic mines’ for the next regime.

Ishaq Dar maintained that the Pakistan Democratic Movement (PDM) government was taking ‘corrective measures to bring the economy back on track’ after PTI disaster. “By the help of Almighty Allah, the government saved Pakistan from getting default and exposed conspiratorial elements,” he added.

“Current account deficit decreased drastically during fiscal year 2022-23,” he said, adding that the incumbent government adopted “austerity measures” to reduce the deficit, Finance Minister

“The current government significantly reduced unnecessary expenditure”, the minister said, adding that despite a huge increase in interest payments, the fiscal deficit was decreased.

Ishaq Dar noted that the “PTI’s selected government prioritised political interests over national”, adding that the people of Pakistan know who “tried to save the country and who pushed it towards destruction”.

The finance minister pointed out that the country has faced major economic problems due to floods.

MAJOR POINTS AND ANNOUNCEMENTS

GDP growth target set at 3.5 percent

No new taxes for the upcoming year

IT sector being granted SME status

Budget 2023-24

Giving details of the federal budget 2023-24, the finance minister for the next year, GDP growth had been budgeted at 3.5 per cent, terming it a “modest target”.

Ishaq Dar said that this budget is “not an election budget” and is focusing on the “elements of the real economy”.

The total expenses’ estimate, Dar said was set at Rs 14.46 trillion out of which, Rs7.3 trillion would be spent on interest payment. He said the budget deficit was expected to remain 6.54pc and the primary balance would be a surplus of 0.4pc to GDP.

The tax collection of the Federal Board of Revenue (FBR) for the FY 2024 has been targeted at Rs9.2 trillion out of which the provincial share would be Rs5.276 trillion.

The federal non-tax revenues, he said would be Rs2.963 trillion while total income of the federal government would be Rs6.887 billion.

Ishaq Dar said that an amount of Rs950 billion was being allocated for the development projects under Public Sector Development Programme (PSDP) 2023-24.

Apart from this amount, he said an additional amount of Rs 200 billion would also be part of the development budget that would be managed through public private partnership.

He said that for the country’s defence and civil administration, Rs 1.8 trillion and Rs 714 billion would be provided respectively whereas Rs 761 billion had been allocated for payments of pensions of the employees.

Agriculture Sector

Ishaq Dar noted that agriculture sector was the backbone of our country’s economy. Along with other measures, the government has increased the agricultural loans to Rs2250 billion from Rs1800 billion.

The minister announced that Rs30 billion has been allocated to shift 50,000 agricultural tube-wells will be shifted to solar energy.

Moreover, all taxes and duties have been removed from import of quality seeds. Dar added that food processing units will also be tax-free.

“Rs10 billion has been allocated for business and agricultural loan scheme, while Rs6 billion for import of fertilizers,” he added.

Dar announced that the government has removed all “taxes and duties” on machinery used to increase rice production while taxes on the import of saplings have also been removed.

IT Sector

Referring to Information Technology (IT) Sector, Ishaq Dar said that the incumbent government has decided to grant it the status of Small and Medium Enterprises (SMEs).

The finance minister announced that the income tax relief on IT imports has been extended till June 2026. “Furthermore, Rs5 billion venture capital fund will be established for IT sector,” he added.

The government has also decided to provide professional training to 50,000 IT graduates.

He said freelancers have been exempted from sales tax registration and returns for annual exports worth $24,000 in order to facilitate business environment. In addition, a simple one-page income tax returns form is being launched for them.

Industry and export sectors

The finance minister announced that an export council of Pakistan was being constituted under the supervision of Prime Minister (PM) Shehbaz Sharif to take important decisions with regards to exports of the country.

The council will meet every six months with PM in chair for review and promotion of exports, the federal minister added.

Ishaq Dar further said that sales tax has been exempted for local purchase through Online Market Place to promote exports of mineral and metals.  Custom duty on Pet Scrap is also being decreased from 20pc to 11pc.

He said the minimum tax on all Listed Companies is being reduced from 1.25pc to 1pc while 5pc regulatory duty was also being abolished on Synthetic Filament Yarn which is not manufactured in the country to promote the textile industry.

Energy Sector

For Energy Sector, the finance minister said the government is exempting the solar panel, inverter, batteries and relevant raw material from custom duty in budget 2023-24.

He said the government was also launching Bonded Bulk Storage Policy for Petroleum products to control shortage in their supply chain.

Under this scheme, a Foreign Supplier will import crude oil and POL products through its own financial sources and store them in Bonded Bulk Storage in Pakistan and later the oil marketing company or any Refinery will be allowed to purchase these products from the Foreign Supplier in time of need.

Education sector

Turning to the education sector, Ishaq Dar said that Rs65 billion rupees have been earmarked for the current expenditures of Higher Education Commission (HEC) and Rs70 billion for its development expenditure in budget 2023-24.

The minister announced the establishment of Pakistan Endowment Fund for which Rs5 billion have been earmarked.

He said this fund will provide merit-based scholarships to the students of high schools and colleges. “Our target is that no talented student remains deprived of education owing to lack of resources,” he added.

Overseas Pakistanis

Ishaq Dar announced that 2pc final tax for purchasing Immovable Property under Foreign Remittance by Overseas Pakistanis was also being abolished.

He said Fast Track Immigration to facilitate Overseas Pakistanis will be provided at all airports in the country while a special scheme will be launched for giving major rewards to Remittance Cards Holder through a transparent draw.

Women empowerment

During his budget speech, Ishaq Dar said that Rs5 billion have been earmarked for women empowerment.

This included skill development, easy loans for businesses and training programs. He said concession in taxes will also be given to women entrepreneurs.

Salaries and pensions

Speaking of the “relief measures” for salaried class and pensioners, Ishaq Dar announced that 35pc adhoc relief allowance will be given to federal government employees of scale one to 16, while 30 percent adhoc relief will be given to employees of scale 17 and above.

He said that the pension has been increased by 17.50pc. Moreover, the minimum wage has been increased to Rs32,000 from Rs25,000.

He said that mileage allowance has been enhanced by 50pc, while additional charge/current charge/deputation allowance is being increased from Rs12,000 to 18,000.

Orderly allowance was being enhanced to Rs25,000 from Rs17,500. Meanwhile, a 100pc increase in the special conveyance allowance for disabled raising the amount from Rs2,000 to Rs4,000. He announced that constant attendant allowance military has been enhanced to Rs14,000 from Rs7,000.

He also said that EOBI pension has been increased to Rs10,000 from Rs8,500. Furthermore, House Building Finance Corporation Scheme was being introduced for the indebted widows.

Under this scheme the government of Pakistan will pay the loan of the widows to the tune of Rs1 million. He said the deposit limit in the martyrs’ accounts at CDNS is being enhanced to Rs7.5 million from Rs5 million, while the deposit limit on Behbood Saving Certificates is also being enhanced to Rs7.5 million.

‘No new taxes’

During his budget speech, Ishaq Dar announced that no new tax is being imposed this year. “It is the effort of the government to provide maximum relief to the people,” he added.

The finance minister said the government’s efforts were to enhance employment opportunities and facilitate the businesses in order to promote exports which will help enhance the foreign exchange reserves.

Pakistan’s economy turmoil 

Pakistan’s economy is in turmoil amid financial woes and the delay in an agreement with the International Monetary Fund (IMF) that would release much-needed funding crucial to avoid the risk of default.

The budget is being keenly watched as the government is caught between a painful fiscal adjustment reforms agenda set by the IMF, and to make room for any relief to the people ahead of a national election scheduled in early November.

For the outgoing fiscal year 2022-23, which ends on June 30, the country’s GDP growth fell to 0.29% against last year’s annual budget target of 5%, and a revised projection of 2% by the central bank.

Inflation posted at 38% in May is the highest in Asia. The IMF’s $1.1 billion funding, stalled since November, is critical for Pakistan to unlock other bilateral and multilateral financing to avert a debt default.