ISLAMABAD: In the new budget for 2023-24, the federal government has projected 3.5 percent GDP growing against 0.29 percent in the outgoing fiscal year.
Total expenditures are estimated at Rs 14.6 trillion.
The budget appears a tough task for the coalition government as it would have strike a delicate balance between voters’ friendly budgetary measures while meeting IMF conditions.
On the IMF front, it seems unlikely that the government will be able to complete the IMF program on time, which has been delayed since November, as the budget FY2023-24 is expected to be aligned with boosting business activities in Pakistan in difficult times, Mettis Global reported today.
Since elections are expected within this CY23, it is true that government will present a vote-winning budget on Friday.
The higher revenue will likely be a key theme with various tax measures under consideration as the next tranche hinges on the government’s firm commitment to fiscal targets, according to market experts.
| Key Figures | |||||
|---|---|---|---|---|---|
| FY20 | FY21 | FY22 | FY23E | FY24B | |
| GDP Growth | -0.90% | 5.70% | 6.00% | 0.29% | 3.50% |
| Agriculture | 3.90% | 3.50% | 4.40% | -1.00% | 3.50% |
| Industrial | -7.80% | 10.50% | 9.80% | -2.30% | 4.30% |
| Services | -1.20% | 6.00% | 6.20% | 1.80% | 3.60% |
| CPI Inflation (Average) | 10.60% | 8.90% | 11.70% | 29.30% | 21.00% |
With tight economic conditions including heightened fiscal crisis and external imbalances, the key challenges for the government are to achieve the below-mentioned targets:
- The total outlay for the fiscal year 2023-24 is estimated at Rs14.5 to Rs14.70 trillion (12.4% to 14.2% of GDP) as against the budget of Rs9.6tr in FY2022-23.
- The fiscal deficit target is expected to be Rs6.8tr in FY24, which would be around 6.5% of the GDP.
- Ministry of Planning has set a GDP growth target of 3.5% for FY24 as compared to 0.29% GDP growth expected within FY23.
- The revenue collection target for FBR has been set at Rs9.2tr (8.76% of GDP) for FY24, up by 23% YoY as compared to the budget target of Rs7.5tr for FY23.
- The non-tax revenue will be Rs2.5tr (2.4% of GDP) as compared to Rs1.6tr (2% of GDP) estimated for FY23.
- The total expenditure target has been set at Rs14.6tr for FY24 (13.9% of GDP), which is around 12% YoY higher than budgeted in FY23.
- The government is likely to set aside Rs7.6-8tr for interest payment for the FY24 budget and Rs1.8tr is likely to be set aside for the Defense sector.
- For pension, the government is expected to set a target of Rs780bn for FY24 as opposed to Rs550bn budgeted in FY23.
- The government is likely to set a target of Rs980bn for power subsidies, however, the Energy Ministry has demanded Rs1.54tr in power subsidies for FY24.
- The current expenditure is expected to rise 15% YoY, worth Rs13.2tr for FY24. This uptick in current expenditure is mainly due to higher interest expenses up by a significant 30% YoY against the budget of FY23.
- The development expenditure is expected to be at Rs1.35tr in FY24 against Rs964bn in FY23.
- The public sector spending (PSDP) target for FY24 will be at Rs950bn against Rs727bn budgeted in the FY23.
- The Planning Ministry is also proposing an allocation of Rs150bn through Public Private Partnership
- Assuming no current account deficit and debt rollover by friendly countries and their
- institutions, a shortage of $4-6bn in FY24 is expected.
- Overall manufacturing sector is expected to project a growth of 4.3%, followed by agriculture sector growth of 3.5% and service sector growth of 3.6% for FY24.
- Investment level for FY24 is projected to be set at 15.1% of the GDP as compared to 13.6% set in the FY23 budget.
- National Savings Rate is expected at 13.4% of GDP.
- Inflation for FY24 is expected to be around 21% as compared to 29% for FY23 and compared to the 8-10% historical average
- The ministry is expected to set aside Rs7.6tr for debt servicing.
