ISLAMABAD - The federal government will present the annual budget with total outlay of around Rs4.45 trillion in the National Assembly today (Friday) amid ambitious economic growth of 5.7 percent for the upcoming financial year 2016-2017.

Finance Minister Ishaq Dar would announce the PML-N government’s fourth budget in the lower house of the parliament with a deficit of Rs1.28 trillion (3.8 percent of the GDP).

The federal cabinet has already approved the budget on Monday, which was chaired by Prime Minister Nawaz Sharif from London through video link. The budget will be growth oriented aimed to generate employment opportunities.

The government would likely impose new taxes worth Rs170 billion to achieve its mammoth revenue collection target of Rs3,635 billion in the fiscal year to come.

It may increase the salaries of the civil servants by 7-10 percent after merging one or two previous adhoc relief in their basic salaries. Pensions are also likely to be enhanced by 7-10 percent.

The PML-N government would announce a special relief package for reduction in input costs for agriculture and industrial sectors to boost exports and economic growth rate.

The PM has directed Finance Minister Dar to reduce the urea prices in the budget to reduce the problems of the farmers.

The government would give top priority to the power sector with a total investment plan of Rs410 billion: Rs157 billion to be provided from the budget and Rs253 billion by Wapda, the National Transmission and Dispatch Company and generation companies.

The government is proposing to increase defence spending by over 10 percent to Rs860 billion, up by Rs79 billion from last year.

It would allocate Rs1.354 trillion for debt servicing, Rs245 billion for pensions and Rs169 billion for subsidies. Similarly, it would also kept Rs107 billion for the Benazir Income Support Programme (BISP) for the financial year 2016-2017.

Tax collection target for the Federal Board of Revenue (FBR) has been set at around Rs3,600 billion while non-tax collection target is fixed at Rs950 billion for the upcoming fiscal year.

Pakistan’s foreign exchange reserves target has been fixed at $23.6 billion and tax-to-GDP ratio has been projected at 12.5 percent in the next fiscal year.

The government would impose new taxes worth of Rs170 billion in the budget. The government has increased taxes on cigarettes, cold drinks, mineral water, mobile phones, cosmetics, garments, tea, coffee, sugar, cement and mobile phones, which would increase the price of these commodities.

Meanwhile, the government has also decided to impose 1 percent withholding tax on life insurance and 4 percent for general insurance.

The government is likely to increase dividend income tax rate to 20 percent for non-filers of income tax returns against the existing rates of 17.5pc. It also approved 3pc withholding tax on cars leased by banks and such companies.

The cabinet has approved 10pc sales tax on meat, poultry. The poultry and animal feed to be charged 5pc sales tax. A 17pc tax is approved on soya bean meal, sunflower seed.

Budget document proposes zero GST (general sales tax) on five exports sectors.

The government will keep GDP growth target at 5.7pc for the next fiscal year on the basis of a 3.5pc growth in the agriculture sector, 7.7pc in industry and 5.7pc in the services sector.

Export target for next fiscal year has been set at $24.8 billion - up from $22.3 billion as per provisional estimates for the current year; however, imports are projected to rise by a larger amount - from $39.4 billion to $45.2 billion in 2016-17, leading to a rise in the projected trade balance from $17 billion to $20.5 billion.