Finance Minister Aurangzeb unveils Budget 2024-25 with total outlay of Rs18tr

ISLAMABAD: Minister for Finance and Revenue Muhammad Aurangzeb on Wednesday presented Pakistan’s budget for the fiscal year 2024-25 with a total outlay of Rs18.877 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.

Meanwhile, the opposition lawmakers belonging to Pakistan Tehreek-e-Insaf (PTI)-backed Sunni Ittehad Council stood on their desks, raised slogans against government and PML-N president Nawaz Sharif. They even tore the copies of the Finance Bill 2025.

Analysts expect the budget for the fiscal year to June 2025 to set ambitious fiscal targets as it looks to strengthen the case for a new bailout deal with the International Monetary Fund (IMF).

In Pakistan’s economic survey on Tuesday, the government said GDP would expand 2.4% in the current year, missing the budgeted target of 3.5%, despite revenues being up 30% on year, and the fiscal and current account deficits being under control.

Pakistan is in talks with the IMF for a loan estimated to range from $6 billion to $8 billion, as it seeks to avert a default for an economy growing at the slowest pace in the region.

But a recent economic uptick following stabilisation measures and falling inflation, as well as an interest rate cut by the central bank on Monday, have made the government optimistic about prospects for growth.

At the outset of his speech today, Finance Minister Aurangzeb said that PM Shehbaz Sharif and his team should be congratulated over his efforts in past one year to revive economy. He vowed that Pakistan will soon be on the path of inclusive and sustainable economic growth.

“I am thankful to the leadership of the coalition partners in the government, including Nawaz Sharif, Bilawal Bhutto Zardari, Khalid Maqbool Siddiqui, Chaudhry Shujaat Hussain, Abdul Aleem Khan and Khalid Hussain Magsi, for their guidance in making of budget 2024,” he said.

Muhammad Aurangzeb believes that despite political and economic challenges, the government’s progress on the economic front in the past one year has been impressive. He urged Pakistan to capitalise on a fresh opportunity to revitalise its economy.

“Under PM Shehbaz Sharif’s leadership, we have pursued a homegrown agenda that has enabled us to overcome current economic challenges and boost the pace of development.”

He acknowledged the challenges faced by Pakistan’s economy, which had been struggling with depleted foreign reserves, a 40 per cent depreciation of the rupee, stagnant economic growth, and soaring inflation.

He commended the government for securing a crucial nine-month IMF programme in June 2023, which helped Pakistan avoid economic collapse.

“The previous IMF programme was ending, and a new deal was essential to prevent a default. I commend Shehbaz Sharif’s government for their efforts in securing the programme,” he said.

Muhammad Aurangzeb confirmed that a long-term loan deal with the International Monetary Fund (IMF) to bail out Pakistan’s economy will provide relief to inflation-broken masses, whose incomes have hit stalled in recent years.

The minister highlighted the significant improvement in economic indicators, crediting the PM and his team for their efforts. “Inflation stood at 11.8pc in May, a notable achievement considering the challenges. We’re on the right track, and inflation is likely to decrease further in the coming days,” he said.

MAJOR POINTS AND ANNOUNCEMENTS

GDP growth target set at 3.6pc

Inflation rate projected at 12pc

Development budget set at Rs1500bn

18pc sales tax on smartphones

Reforms to control pension expenditure

101pc increase in development budget

Development projects for Azad Kashmir, merged districts

17 major development projects

25pc increase in salaries for BPS1-16

20pc increase in salaries for BPS17-22

15pc increase in pensions for retired employees

Minimum monthly wage increased from Rs32,000 to Rs37,000

Privatisation top priority

Sales tax to be applied to various goods, services

5pc FED proposed on new plots, residential commercial property

Establishment of Danish schools in AJK, GB, Balochistan and Islamabad

Penalty for selling smuggled cigarettes

MAJOR ALLOCATIONS IN BUDGET 2023-24

Rs597 billion allocated for BISP

SME credit to be increased to Rs1100bn

Rs79bn allocated for IT sector

Rs267bn allocated for energy sector

Rs206bn allocated for water resources

Rs7bn allocated for FBR reforms, digitalisation

Rs86.9bn allocated for promotion of remittances

Rs1,400 allocated for PSDP

Rs2,122bn to be provided for defence

Rs839bn for civil administration

 

Pakistan Budget 2024-25

Outlining the budget points, Finance Minister Muhammad Aurangzeb said that the gross domestic project (GDP) growth target for the fiscal year 2024-25 is fixed at 3.6pc, whereas the inflation rate is expected to remain 12pc.

He said that the budget deficit to GDP during the period under review is estimated at 6.9pc, whereas the primary surplus during the review period is projected at 1.0pc of the GDP.

The minister said that the Revenue collection of the Federal Board of Revenue is estimated to Rs12,970 billion during up-coming fiscal year, adding that tax revenue collection during the current fiscal year grew by 38 percent and the provincial share would be Rs7,438 billion.

He said that the non-tax revenue targets of the federation are fixed at Rs3,587 billion, whereas the net income of the federal government would be Rs9,119 billion.

The total expenditures of the federal government is estimated at Rs18,877 billion out of the total amount of Rs9,775 billion would be spent on interest payments.

The government has allocated Rs1,400 billion for Public Sector Development Program in its current budget, adding that an additional amount of Rs100 billion would be allocated under Public Private Partnership, he added.

This year, Muhammad Aurangzeb said, over all development budget was the highest in the country’s history comprising Rs1,500 billion.

Meanwhile, an amount of Rs1,014 billion is also allocated for pension expenses, adding that Rs1,363 billion are allocated for the subsidy of the gas, electricity and other sectors.

The finance minister announced a 101 per cent increase in the development budget, noting that 81pc has been allocated for ongoing schemes and 19pc for new schemes.

He also announced development projects in Azad Kashmir and merged districts, adding that completion of ongoing development projects will be government’s top priority. “The government would focus on export, equity, empowerment, environment, and energy under the 5-E framework,” he added.

Muhammad Aurangzeb said that 17 major development projects have been included in the budget.

The government has allocated Rs5 billion allocated for the Quaid-e-Azam Health Tower in Islamabad, Rs7bn for development projects in the poorest districts, Rs6bn for the Karakoram Highway project, Rs4bn for digitalisation of the national economy, Rs2bn for the establishment of Danish school in Islamabad and Rs5bn for the establishment of 7 Danish schools in Azad Kashmir and Gilgit-Baltistan.

Referring to the energy projects, the minister said Rs21bn has allocated for a 600 MW power plant in Jamshoro, Rs14bn for a 500 kV transmission line in Lahore, Rs18bn for the Karachi Coastal Power Project and Rs45bn for the Mohmand Dam Hydro Power Project.

The budget also includes relief measures for government employees, including: 25pc increase in salaries for BPS1-16, 20pc increase in salaries for BPS17-22 and 15pc increase in pensions for retired employees. Meanwhile, minimum monthly wage has been increased from Rs 32,000 to Rs 37,000.

The finance minister acknowledged the difficulties faced by government employees despite economic challenges.

Session delay

The budget session started with a nearly two-hours delay after the PPP voiced reservations on the development allocations.

The Bilawal Bhutto-led party earlier decided not to attend the Pakistan Budget 2024 session in National Assembly, but the PML-N managed to placate them.

Later, the PPP lawmakers attended the session to complete the required quorum without party chairman Bilawal Bhutto Zardari.

Earlier, Khurshid Shah said the party had reservations with regard to the Public Sector Development Programme (PSDP) budget and that the PPP should have been taken into confidence for the budget.

“It was decided that the PSDP for the four provinces would be decided together,” he said while speaking to the media.