islamabad - The new government would announce the annual budget 2013-2014 in the first or second week of the June envisaging GDP growth target at 4.5 per cent and budget deficit target at 5.8 per cent of the GDP for the next financial year.

Sources informed that government, to be formed after the general elections, would not be able to present the budget by the end of May, as it would take time to form cabinet and to settle other issues. Therefore, the government is likely to present the annual budget in the first or second week of June 2013 in the parliament.

Sources informed that total budget outlay would be around Rs 3.2 trillion for the next financial year 2013-14. The size of nominal GDP is projected at Rs 26.742 billion for the upcoming fiscal year. According to draft of the BSP 2013-14, the budget for the next fiscal year has projected a growth in Gross Domestic Product (GDP) at 4.5 per cent that was estimated at 4.3 percent for the ongoing year. The budget deficit has been estimated at Rs 1,620 billion (5.8 percent of the GDP) with provincial surplus of Rs 70 billion for the next fiscal year 2013-14.

The government will earmark Rs 627 billion for defence, showing an increase of 10 percent raise against revised budget of Rs 570 billion of the present fiscal year. Allocation for the Public Sector Development Plan (PSDP) will be increased to Rs 450 billion in the fiscal year 2013-14 against the Rs 360 billion of the year 2012-13.

The government would allocate Rs 1.149 trillion for the interest payments in the upcoming financial year 2013-14 against Rs 1.028 trillion earmarked for the current fiscal year 2012-13. The government would allocate Rs 155 billion for the pension for next fiscal year 2013-14 as against Rs 141 billion of the year 2012-13. The government would keep Rs 278 billion for the federal government service delivery as compared to Rs 262 billion of the ongoing financial year.

Meanwhile, the government has planned to release Rs 364 billion for subsidies in 2013-14 against Rs 237 billion earmarked for 2012-13 which witnessed an increase of 5.5 percent in revised estimate giving a total of Rs 345 billion. Federal government will slash grant to provinces to Rs 54 billion in next year from Rs 57 billion earmarked in budget of the ongoing year. Grant to other than provinces will be increased to Rs 393 billion in 2013-14 from Rs 383 billion in 2012-13.

The estimated total revenue (tax and non-tax) in 2013-14 will be Rs 2.833 trillion and FBR’s target would be Rs 2.675 trillion. The projected amount for non-tax revenue has been estimated at Rs 689 billion. Gross revenue will be Rs 3.522 trillion. Federal government will transfer Rs 1.628 trillion to provinces under the NFC Award after which net revenue available to the federal government is estimated to be Rs 1.894 trillion.

The government has planned to increase tax to GDP ratio to 10 per cent of the GDP in next financial year 2013-14. Investment to the GDP would enhance to 13.6 percent of the GDP from 12.6 percent and consumption to the GDP would bring down to 93.4 per cent in next fiscal year from 94.5 percent of the current year. Meanwhile, the public debt would be reduced to $57.5 billion in next financial year 2013-14 from $60.4 billion of the current year.

Meanwhile, exports would increase to $26.1 billion in next year 2013-14 from $25.3 billion of the current year 2012-13. Imports are projected at $42.6 billion and remittances at $15.5 billion in 2013-14. The State Bank of Pakistan’s forex reserves in 2013-14 are estimated at $5.2 billion against $ 8.1 billion at the time of budget announcement.

Meanwhile, the Federal Board of Revenue has proposed load of taxation measures of Rs 200 billion for the next financial year 2013-2014. The major taxation measures include proposed increase in the standard rate of sales tax from 16 to 17 percent, imposition of the federal excise duty (FED) on commodities on which exemption was granted in budget (2012-13) and imposition of sales tax on items subjected to sales tax zero-rating at domestic stage.

The government may impose standard rate of sales tax on domestic zero-rated items instead of introducing a lower sales tax rate of 2-3 percent.

The government is also contemplating to reduce the FED slabs on cigarettes from three to two percent that would generate additional revenue and also to increase the tax on all imports by one percent in the upcoming budget 2013-2014.