Pakistan’s Finance Minister, Muhammad Aurangzeb, unveiled a Rs 18.9 trillion budget for the upcoming fiscal year, aiming for 3.6% GDP growth. This ambitious plan seeks to balance major growth with fiscal consolidation.
The budget boasts a total outlay of Rs 18.9 trillion, a 30% increase from the previous year. Revenue is projected at Rs 17.8 trillion, with net revenue after provincial transfers reaching a significant Rs 10.4 trillion — a whopping 48.7% increase.
A key driver of this growth is an ambitious Rs 13 trillion tax collection target set for the Federal Board of Revenue (FBR), representing a 38% rise from the previous year. Analysts acknowledge the challenge but believe new tax measures could bring Pakistan closer to this target.
Expanding the tax base is a central focus. The government aims to widen the net without overburdening existing taxpayers. This will involve digitising tax policies and implementing crucial reforms within the FBR.
Taming inflation remains a top priority. The budget sets an inflation target of 12% for the next fiscal year, building on the progress in reducing price pressures. In May 2024, inflation stood at 11.8%, significantly improving on the previous year’s highs.
However, the budget deficit remains a concern, projected at 6.9% of GDP. Additionally, a hefty Rs 9.8 trillion is allocated for debt servicing, highlighting the burden of external debt.
Despite these challenges, the budget prioritises social programs. The Benazir Income Support Programme (BISP) received a 27% increase to Rs 592 billion, aiming to support low-income families.
Recognising the importance of the private sector in revitalising the economy, the budget prioritises measures to encourage domestic and foreign investment. Additionally, the government acknowledges the need for structural reforms to address economic imbalances. This includes fostering investment, boosting economic output, and promoting exports.
While ambitious plans require careful execution, the budget outlines a path forward for Pakistan’s economy. Pakistanis can look forward to continued focus on tax reforms, inflation control, attracting investment, implementing structural reforms, and even more sustainable economic development.