ISLAMABAD - The PTI-led government is all set to present its first full-fledged annual budget for the next fiscal year in National Assembly today (Tuesday), which would mainly focus on fiscal consolidation by reducing expenditures and increasing revenues.

The PTI government had already presented two mini-budgets in last 10 months after coming to power. However, the incumbent government will present its first full budget for the next fiscal year today (Tuesday). Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh will present the budget in National Assembly after getting approval from the federal cabinet.

Sources said combined efforts would ensure financial discipline, reduce crucial fiscal deficit and expedite economic recovery. The government is likely to allocate Rs1.1 to Rs1.2 trillion in the next budget for defence and Rs2.8 trillion for debt servicing for the next fiscal year. For subsidies, the government has decided to grant Rs217 billion for the power sector. For Ehsas Programme, which included funds for BISP, Baitul Mal and Zakat programme, an allocation of Rs190 billion will be made in the next budget. 

The government has proposed the size of the national development outlay at Rs1.837 trillion with provincial contribution of Rs912 billion. The government put the federal development programme at Rs925 billion which included PSDP unchanged at last year’s Rs675 billion and an unexplained block allocation of Rs250bn as ‘alternative financing’ to be raised through private sector financing.

10pc

increase in salaries from grade 1-16,

5-7.5pc

for grade 17-19, no increase for grade 20-22

10pc

increase in

pension likely

The government has proposed Rs5.550 trillion tax collection target for Federal Board of Revenue (FBR). The government will have to take additional taxation measures worth Rs1.5 trillion in the budget to meet proposed tax collection target of Rs5.5 trillion. Some of the proposed revenue measures are revising tax concession given to the salaried class by the previous PML-N government. About Rs100 billion will be generated by reversing some income tax exemptions and about Rs100 billion by restoring taxes on telecom services. The government is likely to impose sales tax on five export-oriented sectors – textile, leather, carpets, surgical and sports goods to mobilise Rs75-80 billion additional revenue in the budget for next fiscal year. At present, the textile, garments, leather, surgical goods and sports goods manufacturers enjoy zero-sales tax facility on their exports.

The Ministry of Finance will present different options for increasing salaries of the civil servants in federal cabinet meeting. One of the proposals is to increase salaries of employees from grade 1 to 16 by 10 per cent and 5 to 7.5 per cent for grade 17 to 19 and no increase for grade 20 to 22. Similarly, according to another proposal, the government may increase salaries of grade 1 to 19 by 10 per cent and for grade 20 to 22 by 5 to 7.5 per cent. Pension may be increased by 10 per cent. However, the federal cabinet would take the final decision on it.

The government has decided to keep the GDP growth target at four per cent during the next fiscal year, compared to a growth of 3.3 per cent during the current fiscal year. The government is setting a target of total investment-to-GDP ratio at 15.8 per cent for the next fiscal year, slightly higher than the current year’s provisional rate of 15.4 per cent. Of this, the fixed investment-to-GDP ratio is targeted to increase to 14.2 per cent from the current year’s missed target of 15.6 per cent. The fixed investment during the current fiscal year is provisionally anticipated at 13.8 percent. The target for national savings-to-GDP ratio is set at 13 percent for the next fiscal year, compared to the current year’s provisional estimate of 11.1 percent, which is well behind the 13.1 percent target.

The government is projecting next fiscal year’s inflation at 8.5 per cent on the basis of rising commodity prices. The agriculture sector is targeted to grow by 3.5 per cent. Similarly, the industrial sector is expected to grow by 2.4 per cent. The services sector is targeted to grow by 4.8 per cent in 2019-20. Trade deficit is projected at 9.2 per cent of GDP during the next fiscal year. Exports are targeted to increase by 6.2 per cent and imports by 2.1 per cent. Current account deficit for the next fiscal year is projected at 2.8 per cent of GDP, compared to 4.4 per cent this year.

Meanwhile, the National Assembly Business Advisory Committee decided on Monday that federal budget for the next fiscal year will be presented in the National Assembly today (Tuesday).

In the chair of Speaker Asad Qaiser committee decided that budget session will continue till June 29. It was agreed that general discussion on the budget will be initiated from June 14.

Advisor to the prime minister on finance and revenue will wind up the general discussion on the budget on June 25. It will be followed by discussion on appropriation in respect of charged expenditure 2019-2020.

According to officials, the budget will emphasize on austerity, fiscal discipline, external sector management and protection of the poor.

It was also decided that during the budget session there would no Question Hour or call attention notices and session would continue on Saturdays.