Federal Budget
In a highly anticipated move, Finance Minister Muhammad Aurangzeb presented the first federal budget for the fiscal year 2024-25, with a total outlay of Rs18.9 trillion.
The budget, hailed by analysts as broadly aligned with IMF guidelines, aims for a modest 3.6 per cent GDP growth, emphasizing fiscal consolidation and compliance with international standards.
Despite the gravity of the occasion, the budget presentation was not without its share of political theatrics.
Opposition lawmakers, notably absent in previous budget sessions, disrupted proceedings with chants of “go, Nawaz, go,” underscoring the charged political atmosphere. However, Aurangzeb remained composed and steadfast in delivering his speech.
The budget for the upcoming year is widely perceived as strategically crafted to meet IMF requirements for securing a larger and longer bailout.
Analysts, including Mohammad Sohail, Chief Executive of Topline Securities, lauded the budget for its adherence to IMF guidelines, foreseeing positive outcomes for fiscal consolidation.
Key highlights of the budget include:
- Total spending estimated at Rs18.9 trillion, reflecting a significant increase from previous years.
- Ambitious tax revenue target set at Rs13 trillion for the Federal Board of Revenue (FBR), aiming for a 38 per cent increase from the previous fiscal year.
- Increase in petroleum levy on various fuels, signaling efforts to bolster revenue streams.
- GDP growth target set at 3.6 per cent for the fiscal year 2024-25.
- Budget deficit projected at 6.9 per cent of GDP, indicating fiscal challenges that need to be addressed.
- Emphasis on import incentives for raw materials used in key sectors such as solar panels and lithium-ion batteries, aimed at stimulating domestic manufacturing.
- Acknowledgment of the government’s efforts to address economic challenges, with a focus on the leadership of Prime Minister Shehbaz Sharif in steering economic reforms.
Aurangzeb underscored the importance of Pakistan’s economic revitalization, urging collective efforts to capitalize on opportunities for growth.
He commended the government’s achievements in stabilizing key economic indicators, such as inflation and foreign exchange reserves, attributing these successes to strategic policymaking.
In terms of tax policy, the government aims to broaden the tax base, enhance documentation of the economy through digitization, and implement a progressive taxation regime to ensure equitable burden-sharing.
Aurangzeb reiterated the government’s commitment to protecting vulnerable segments from the impact of inflation while pursuing fiscal discipline.
Looking ahead, Aurangzeb called for a shift towards a market-driven economy, aligned with global standards, to foster sustainable growth and investment.
He emphasized the need for structural reforms in sectors like energy and state-owned enterprises, highlighting the government’s determination to address economic imbalances.
The presentation of the budget sets the stage for a robust debate in the National Assembly, where stakeholders will scrutinize the proposed allocations and policies.
As Pakistan navigates economic challenges, the budget serves as a roadmap for steering the country towards stability and prosperity, guided by the principles of fiscal prudence and reform.
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